Apple is opening the doors to its bank vault,saying it will distribute $100 billion in cash to its shareholders by the end of 2015. At the same time,the company said revenue for the current quarter could fall from the year before,which would be the first decline in many years.
Apple CEO Tim Cook also suggested that the company wont release any new products until the fall,contrary to expectations that there would be a new iPhone and iPad out this summer.
Apple on Tuesday said it will expand its share buyback programme to $60 billion the largest buyback authorisation in history. It is also raising its dividend by 15 per cent from $2.65 to $3.05 per share.
That equates to a dividend yield of 3 per cent at current stock prices. The average yield for the 20 largest dividend-paying companies in the US is 3.1 per cent,according to Standard & Poors.
Investors have been clamouring for Apple to give them access to its cash hoard,which ended March at an unprecedented $145 billion. Apples tight grip on its cash,along with the lack of ground-breaking new products has been blamed for the steep decline in its stock price over the winter.
News of the cash bonanza coincided with the companys release of a poor quarterly outlook for the three-month period that ends in June.
Apple released its fiscal second quarter earnings after the stock market closed Tuesday. The companys stock initially rose 5 per cent to $425 in extended trading,then retreated $2.63,or 0.7 per cent,to $403.50 as the CEO talked about new products arriving in the fall.
The shares are still down 40 per cent from a peak of $705.07 hit on September 21,when the iPhone 5 went on sale. The decline in Apples stock price over the last couple of quarters has been very frustrating for all of us … but well continue to do what we do best, CEO Tim Cook said on a conference call with analysts. But he reinforced that the companys job is not to boost its stock price in the short term.
The most important objective for Apple will always be creating innovative products, he added. Apples results beat the consensus estimate of analysts who follow the company,though it posted its first profit decline in ten years. Net income was $9.5 billion,or $10.09 per share,down 18 percent from $11.6 billion,or $12.30 per share,in the same period a year ago. Revenue was $43.6 billion,up 11 percent from last years $39.2 billion.
Analysts were expecting earnings of $9.97 per share on revenue of $42.3 billion,according to FactSet.