Apple today announced that its Board of Directors has authorized another significant increase to the Company’s program to return capital to shareholders. The Company expects to utilize a total of over $130 billion of cash under the expanded program by the end of calendar 2015.
As part of the program, the Board has increased its share repurchase authorization to $90 billion from the $60 billion level announced last year. The Company expects to continue to utilize about $1 billion annually to net-share-settle vesting restricted stock units.
Additionally, the Board has approved an increase to the Company’s quarterly dividend of approximately 8 percent and has declared a dividend of $3.29 per common share, payable on May 15, 2014 to shareholders of record as of the close of business on May 12, 2014. The Company also plans to increase its dividend on an annual basis. With annual payments of $11 billion, Apple is among the largest dividend payers in the world.
From August 2012 through March 2014, Apple has spent $66 billion in cash on its capital return program.
To assist in funding the program, the Company expects to access the public debt markets during 2014, both domestically and internationally, for an amount of term debt similar to what the Company raised during 2013. The management team and the Board of Directors will continue to review each element of the capital return program regularly.
“We are announcing a significant increase to our capital return program,” said Tim Cook, Apple’s CEO, in a statement. “We’re confident in Apple’s future and see tremendous value in Apple’s stock, so we’re continuing to allocate the majority of our program to share repurchases. We’re also happy to be increasing our dividend for the second time in less than two years.”
The Board of Directors has also announced a seven-for-one stock split. Each Apple shareholder of record at the close of business on June 2, 2014 will receive six additional shares for every share held on the record date, and trading will begin on a split-adjusted basis on June 9, 2014.
Source: Apple Inc.
MacDailyNews Take: Boom! Boom! Boom!
Related article:
Apple smashes Street with revenue of $45.65 billion in Q214 – April 23, 2014
Stock flying high right now. Up over 8%
Stock market research has shown that buy-back programs do not have any long-term effect on stock price whatsoever, so what really happens is just some of stock holders sell their stock to Apple.
Probably just paying dividends would be more reasonable, but businesses are too used to stock buy back.
Buybacks have a direct effect of increasing EPS for remaining shares outstanding because of the reduced float, which increases stock price at any given P/E multiple. This assumes continued levels of earnings.
“Probably just paying dividends would be more reasonable” !! Can’t you READ! “Dividend of $3.29 per share!”
Every share Apple buys back is also one less dividend payment. Forever.
http://www.investopedia.com/articles/investing/112013/impact-share-repurchases.asp
fyi
So def a buy, no?
if the 7/1 stock split the Current value of $524 the stock will be worth $74.86 per share.
Holy sh* The stock jumped 40 points.
current price(AH) of $564 the 7/1 share price would be $80.57 each.
Hundred is the new seven hundred….
And you’ll see that before January 2015.
Make that February for the cynical.
Well, that should pretty well tank the stock.
No. The value remains the same, just spread out over more shares. And by lowering the per share price they put the stock back within the reach of retail investors, moving it away from the manipulating effects of institutional investors and hedge funds.
and the other thing that happens is that the price climbs back to pre stock split prices
I still can’t get through my head why Apple would split a stock it’s buying back, seems counterproductive.
Sorry, I was being sarcastic. I’m hip to the market. I’ve been an AAPL shareholder for a decade or more. Many times, good news seems to result in a falling stock price. I don’t really care as long as the company makes big money, they have a big future and I’m here for the long term. 🙂
To the moon Apple!!!
And all you idiot pundits and analists got caught again with your pants down.
And we haven’t had even one new product announcement yet!
And what little weenies you have … Even smaller than your brains!
We don’t seem to be hearing a peep from the “Fire Tim Cook” guys.
OINK !!!
BING!
So Apple will still give $3.29 dividend per share after the split? 😛 Wishful thinking on my part
It’ll pay 47¢ per share after the split.
That’s up from 3.05.
Yay, let’s piss away all our money (excuse me, all our borrowed money because our actual money is tied up overseas) and make the stock repurchase completely useless by splitting the stock! Money for everyone! Hooray!
… I mean, great if you’re a shareholder, at least in the short term. But they’re doing everything Wall Street wanted, every single damn thing, at the same time. This sounds like a mistake to me. A mistake of Sculleyan proportions.
You just might be an idiot.
A troll on a great day for Apple. We’re all laughing at you Josephine!
Ha
They keep upping the dividend, yet their cash holdings keep increasing. What exactly do you think they would do with another 10, 20, 50 billion that they can’t do with the $150 billion they already have?
I am a shareholder, and I do not mind getting some of it back in dividends, if only because I use them to buy more stock.
I’m not against them upping the dividend. But I AM against them spending huge sums of money when the bulk of their assets are offshore and can’t be brought into play without a steep, what is it, 35% tax?
The point is this: they can do a buyback increase, or a dividend increase, or a stock split, or whatever else. But doing ALL of that at the same time, taking on large amounts of debt that they’re not in a position to pay, is dangerous.
And the biggest reason Apple is doing all of this is to capitulate to money-hungry snakes like Carl Icahn and the other wolves of Wall Street. They’ve gone from not caring about what Wall Street’s stock-manipulating snakes want, to giving them everything. And now that they’ve opened the floodgates, there’s no going back.
Basically: Apple is trying to make everybody happy in the short term by gambling their future in the long-term.
And more importantly: all of these moves leave me wondering if it’s smoke and mirrors to distract from what is going to be a very disappointing second half of the year in terms of products. If they can fatten everyone up with money from AAPL the stock, maybe people won’t pay as much attention to Apple the world’s leading computer/smartphone manufacturer’s failings.
I realize that is a bit of a stretch, and I pray I’m wrong because I’m starting to warm up to the idea of a clownishly large iPhone, I’ve been salivating over a potential iWatch for two years, and I’m just itching to buy an updated Apple TV. I want Apple to release a lot of great products in the fall. But if they’re throwing money at Wall Street to keep people invested in the stock …
iPad sales were down. A seven for one stock split and an increase in buybacks helps soothe that wound. But it hasn’t gone unnoticed to those who pay attention. Luckily iPhone sales were more than predicted. Apple is no different than any other company, they all try to present a good appearance. And yes, these moves are certainly made to keep investors in the stock and attract more. Which it probably will accomplish. But it’s not evil it’s just business. No matter whether it’s Apple, Google, Microsoft or others, it’s just business.
Apple’s business is producing the user experience for its products possible.
Under Steve Jobs, Apple did such a good job of this that Steve could ignore AAPL and it worked out fine. (Yes, there were sell-offs and downturns and what-have-you, but overall AAPL rose tremendously.) Apple was so laser-focused on its TRUE business that it didn’t have to worry about the stock market game.
Now, Apple is no longer in that position. But caving in to every Wall Street demand doesn’t help Apple achieve its REAL business. If anything, it makes Apple more susceptible to outside manipulation.
Apple just basically did what Samsung does with its Galaxy crap-phones: loaded in each and every possible feature they could, just because the market “demanded” it. If they’re willing to do that in regards to AAPL stock, the side-business, the game, who’s to say they wouldn’t also do that with their products?
And once Apple does that, once they start following what “everyone else” tells them they should do, they’re cooked.
I’ve read through all your posts (did not vote up or down) , but I’ll like to point out that even with the huge buybacks and dividends Apple’s cash hoard is huge.
Even with the buybacks etc in recent years the cash hoard has GROWN. It was less than 100 b during Jobs time (less than 70 b if I remember correctly), it’s now 150+ b.
Apple just made 10 b this quarter in profit.
The stock split doesn’t hurt apple at all: technically it’s a zero but it might encourage smaller investors to buy in.
appeasing stockholders might be necessary, stockholders control the company, they vote for BOD who can hire or fire cook (and thus indirectly anyone in Apple as they control the CEO). Cook getting them off his back will allow him to run the company and like said they got so much cash left, it doesn’t matter about dividends etc. Ive likes Cook and from all indications he’s a sensitive dude (doesn’t like forstall etc), imagine if the BOD hired Nokia’s Elop or somebody like that and Ive quits ….
Another thing BIG CASH pile ATTRACTS GOVERNMENTS. You want governments (USA, China, Europe) to legislate more taxes (like Congress is trying to do in spite of Apple already paying all its USA taxes in full ) to take apple’s cash? I think Apple shareholders can spend the money more wisely than ($300 for an ashtray, $1000 lunch ) governments and politicians. A 200 Billion cash pile is simply too attractive to politicians.
You raise some good points, but the example of $300 dollars for an ashtray and so forth doesn’t take into account the instances than government does spend well.
And I recall reading somewhere that the reasoning behind such costs is not nearly as simple as we make them out to be, though they do grab headlines.
“I recall reading somewhere that the reasoning behind such costs is not nearly as simple ”
that intrigued me so I googled it:
Actually i made a MISTAKE: it did NOT cost a measly $300
the ashtrays cost $660.
perhaps they had great ‘reasoning’ except for the fact the Secretary of Defense doesn’t agree with you…. :
“Defense Secretary Caspar W. Weinberger, in a statement issued late today, said: ”There is no excuse for paying $659 for an ashtray. Not only will the Government recoup its money, but the Navy officers who authorized the purchase will be disciplined.”
This was in 1985 (in todays dollars… )
Of course the also revealed they paid 640 for a toilet seat, $400 for a socket wrench, and $7600 for a coffee maker.
as I used to work as an outside contractor for the Govt. I guarantee you the ‘reasoning ‘ continues to work well today …
I’m an aapl shareholder and I tell you I SPEND MORE WISELY THEN THEM and I HAVE MORE RIGHTS TO APPLE’S MONEY SINCE APPLE HAS ALREADY PAID ALL USA TAXES IN FULL (apple is USA’s biggest tax contributor ) …
This doesn’t change the effectiveness of the stock buyback. The value of the company doesn’t change. We just divide the pie into more pieces. By having smaller slices available, we can attract more folks who previously said “I don’t have enough cash on me for a big slice.” The idea is that it will create a little more demand in the short term for shares.
The buyback is to take shares off the market from the short sellers. They can still do that when they feel like they’re being undersold. It also reduces the dividend amount paid, which allows you to increase the dividend. All of this is designed to create upward pressure on the stock.
I think that Zombie Nation guy is cleaning up the mess he just made in his baggy pants.
So as others have indicated: 7:1 = about $75 a share. I’ve read a number of anti-split posts here over the past 2 years. How does a 7:1 split benefit Apple? Is this a gesture by Apple towards the smaller investor?
hopefully more smaller investors will buy in.
this will boost stock price.
Also people with a few shares of aapl might also opt to buy Apple products instead of something else. Apple might sell more macs, iPhones etc.
(it will take a lot of small investors but perhaps in time they can dilute the monster holdings of the hedge funds who play aapl like a yo-yo — making money up or down — with the help of their ‘analyst’ friends. )
Technically is does not make any difference whatsovever.
But the market is not rational and there is a lot of sentiment involved. This kind of split changes psychological barriers that may limit the stocks price.
Plus they have repurchased so many shares, the split will return the total outstanding shares closer to what they were previously.
That is not even close to correct. With all the share repurchases done so far, Apple has barely cracked 5% of all outstanding shares. There used to be a bit over 940 million outstanding shares; now there are some 890 million. After the stock is split, there will be some 6.3 billion outstanding shares — significantly more than just short of a billion before.
As a small shareholder, I’m extremely happy with the board’s decision. I will probably take some of today’s new found money and reinvest it back into Apple by buying a new Macintosh.
If you have1000 monkeys typing on a keyboard, eventually one of them will spell a word that’s in the English dictionary. Now, have a 1000 professional analysts predicting Apples poor results every quarter & the monkeys are looking pretty bright!
After the 7 for 1 split…how does the dividend factor in? Will there be the $3.28 per share come next payout?
No
$0.47/share
I figured…but a guy can dram.:)
Divide by 7 buddy!
when will Microsoft announce its profit and loss shit, i want to know about Microsoft performance for the Q214, and see how it compares with Apples result 🙂 what i also want to know is the losses incurred by the flop Surface 2, the surface 1 was a $800 million flop :):) iPad is KING, and there is NO SUBSTITUTE 🙂
Where’s Jay Morrison today? He must be dealing with a severe case of cognitive dissonance.
Jay Morrison is hibernated today, but not for long, he will reappear in no time to annoy Apple shareholders and fire Tim Cook. 🙂
Those asking about the dividend amount after the split. It will be 1/7th as much per share. This explains why the odd number of $3.29 for the new dividend as that is evenly divisible by 7 or 47 cents per share.
Post split the stock price will only need to go from tomorrow’s about 565 (80.7) to just over 100 to get to the old high. Much easier psychologically than from 565 to 705.
Correct! You nailed it. The sentiment alone will take the stock to $100.
I wondered about why the unusual number of a 7:1 split. I read that that puts the stock about in the middle of the DOW stocks price range. Apple could not be in the DOW previously because it is a share price based index. A $500 stock would unbalance the index and not even be considered.
The DOW adds and removes companies fairly regularly as companies change and become non-representative of the industry segment they are meant to represent. A 7:1 split was probably deliberately chosen with the DOW midpoint pricing in mind. The addition of Apple to the DOW would mean a lot of funds and investment vehicles that are designed to track the DOW would have to buy Apple shares in numbers that would reflect their DOW weighting. This will be a factor that should push the stock higher when (if) announced.
so were looking at share trading ranges after the split starting at $74.86($524) to $80.7($565) with trading changes between $.30 -$.75. correct on average? anything above $.80 would possibly not be realized till after 2 more quarters.
About Damn Time.
I started buying before the sunup and remember the 2-1 split @ $90 (if memory serves correct). I stopped buying in the low-mid 300’s due to the volatility, sense the stock was being manipulated and later that it was over valued as it approached $800.
sunup should be run up.
damn auto correct.
Right, the markets aren’t open before sunup !-)
I have 5 options now that are in the money already. Should I sell them before the split? Ty in advance!
Uh Ty, I would answer yes and no to your questions.
I have 5 options now that are in the money already. Should I sell them before the split?
Must say, I was not expecting a split. I thought they were out of style.
-jcr
:–{D
This is gonna be fun.
If I have call option in the money, how would it be factored after stock split?