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  • Apple Caps Buybacks at $90 Billion


    Apart from its blockbuster earnings report, Apple made equally monumental headlines with the extension of its capital return program.

    Earlier today, Apple not only announced a seven-for-one stock split, the company also upped share buybacks, now capped at $90 billion.

    Apple says it 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," Apple explains, "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."

    As we understand it, the Board also approved an increase to the company’s quarterly dividend of approximately 8 percent and has declared a dividend of $3.29 per common share. That's payable next month, May 15, 2014 to shareholders of record as of the close of business on May 12, 2014.

    Lastly, Apple says it plans to increase its dividend on an annual basis. With annual payments of $11 billion, Apple is now "among the largest dividend payers in the world."

    “We are announcing a significant increase to our capital return program,” said Tim Cook, Apple’s CEO, in a statement provided to press. “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.”

    Source: Apple
    This article was originally published in forum thread: Apple Caps Buybacks at $90 Billion started by Michael Essany View original post
    Comments 10 Comments
    1. thazsar's Avatar
      thazsar -
      Well, I'm out... I wanted to do a 91 billion dollar buyback. Apple and their stupid rules....!
    1. SpidermanAPV's Avatar
      SpidermanAPV -
      I would love some Apple stock... If only I could find a few hundred (or thousand) dollars laying around...
    1. znbl's Avatar
      znbl -
      Why does Apple need to buy back so much of their stock? What's the reason for this?
    1. lilpetabread's Avatar
      lilpetabread -
      Quote Originally Posted by znbl View Post
      Why does Apple need to buy back so much of their stock? What's the reason for this?
      It's basically Apple reinvesting in it's own company. It's a VERY good sign, as it shows that Apple is very confident in their company. It's very good news.
    1. znbl's Avatar
      znbl -
      Quote Originally Posted by lilpetabread View Post
      It's basically Apple reinvesting in it's own company. It's a VERY good sign, as it shows that Apple is very confident in their company. It's very good news.
      I'm afraid I don't understand this connection between buying back stocks and Apple's confidence. I really don't understand the need to reclaim stocks from stock holders.
    1. lilpetabread's Avatar
      lilpetabread -
      Quote Originally Posted by znbl View Post
      I'm afraid I don't understand this connection between buying back stocks and Apple's confidence. I really don't understand the need to reclaim stocks from stock holders.
      It's just a vote of confidence. Instead of, for example, investing in an island and building hotels on it to make money, they're taking their money and buying their own stocks (unsold stocks obviously, and they're going to be collecting dividends off of it.) And to me as a shareholder, that looks very good on their part. They are investing in themselves instead of investing into other companies. If they felt they were going to lose money on the stocks they just purchased, they wouldn't have bought it...which is why I say, it shows they are confident about their company. I hope this makes sense lol.
    1. znbl's Avatar
      znbl -
      Quote Originally Posted by lilpetabread View Post
      It's just a vote of confidence. Instead of, for example, investing in an island and building hotels on it to make money, they're taking their money and buying their own stocks (unsold stocks obviously, and they're going to be collecting dividends off of it.) And to me as a shareholder, that looks very good on their part. They are investing in themselves instead of investing into other companies. If they felt they were going to lose money on the stocks they just purchased, they wouldn't have bought it...which is why I say, it shows they are confident about their company. I hope this makes sense lol.
      Ok, I didn't realize this only applied to unsold stocks, thank you for clearing that up. What I'm not clear on, though, is I honestly don't understand how buying your own stocks to collect dividends in the end means anything, as you would be paying yourself, right, so how does that make you any additional money? Wouldn't that be like withdrawing money from your bank account, then turning around and depositing it back again? (And FWIW, thank you for baring with me thus far. I genuinely want to understand what I'm obvious missing here.)
    1. lilpetabread's Avatar
      lilpetabread -
      Quote Originally Posted by znbl View Post
      Ok, I didn't realize this only applied to unsold stocks, thank you for clearing that up. What I'm not clear on, though, is I honestly don't understand how buying your own stocks to collect dividends in the end means anything, as you would be paying yourself, right, so how does that make you any additional money? Wouldn't that be like withdrawing money from your bank account, then turning around and depositing it back again? (And FWIW, thank you for baring with me thus far. I genuinely want to understand what I'm obvious missing here.)
      Well, you see. They are paying themselves. No profit, yes. But. Those dividends are being paid to themselves, as opposed to you or me. If I owned that stock that they just purchased, they'd have to pay me a dividend on it. But they sort of reserved that stock by buying it, and for as long as they own it, they won't have to pay anyone a dividend on it. I know is kind of hard to explain/understand, but all in all, it's just a huge display of confidence seeing them invest in themselves.
    1. znbl's Avatar
      znbl -
      Quote Originally Posted by lilpetabread View Post
      Well, you see. They are paying themselves. No profit, yes. But. Those dividends are being paid to themselves, as opposed to you or me. If I owned that stock that they just purchased, they'd have to pay me a dividend on it. But they sort of reserved that stock by buying it, and for as long as they own it, they won't have to pay anyone a dividend on it. I know is kind of hard to explain/understand, but all in all, it's just a huge display of confidence seeing them invest in themselves.
      Thank you again, that does help. I just don't really see why it would increase confidence. If anything, I would have thought that buying your own stock would mean there is more stock around that could potentially be purchased by investors, which I would have thought would decrease the value (having more of something typically drives the price down in general S&D scenarios.) I'm guessing this isn't actually the case or they likely wouldn't be doing it; I'd just like to know how exactly is this connected to confidence boosting? Thanks.
    1. SpidermanAPV's Avatar
      SpidermanAPV -
      Quote Originally Posted by znbl View Post
      Thank you again, that does help. I just don't really see why it would increase confidence. If anything, I would have thought that buying your own stock would mean there is more stock around that could potentially be purchased by investors, which I would have thought would decrease the value (having more of something typically drives the price down in general S&D scenarios.) I'm guessing this isn't actually the case or they likely wouldn't be doing it; I'd just like to know how exactly is this connected to confidence boosting? Thanks.
      I could be wrong as I have not ever studied this in depth, but from my understanding stock is the actual financial ownership of a company. Anyone who owns stock owns a fraction of the company of which it owns the stock. The reason a company sells the stock it has is to earn money from the sale. So pretty much, when a company sells you stock what they're doing is giving you a small piece of ownership in that company in return for your money. If a company is buying stock back, this means that they have more than enough money and don't see themselves needing more in the near future, so they're taking ownership back. Again, I'm not sure how clear or true this is, but it's my understanding of how this works.