At an unusual turn of events, Apple seems to have changed its outlook as far as their commitment to their shareholders is concerned, as it announced at a press release on 23rd April in California about the advent of a new program, under which it plans to increase the return capital to shareholders by a major amount, and usher in new changes in its share in the market as far as stock repurchase is in the question. Taking out some words from the official press release:-
“The Company expects to utilize a total of $100 billion of cash under the expanded program by the end of calendar 2015. This represents a $55 billion increase to the program announced last year and translates to an average rate of $30 billion per year from the time of the first dividend payment in August 2012 through December 2015.”
“As part of this program, the Board has increased its share repurchase authorization to $60 billion from the $10 billion level announced last year. This is the largest single share repurchase authorization in history and is expected to be executed by the end of calendar 2015. Apple also expects to utilize about $1 billion annually to net-share-settle vesting restricted stock units.”
Going by the details of the program as announced by Apple, the company plans to increase the amount of debts in order to keep up with the expansion programs. Apple has also announced a 15% increase in the dividend for the quarter, with it declaring a dividend of $3.05 per common share. Also, the repurchasing of stocks could only mean that Apple intends to reduce the number of shares it has present in the stock market. Whether it will dissolve those shares or if it is a move on behalf of Apple going under the sentiment of undervalued stocks, which remains to be seen. Meanwhile, here is what the top honchos of the technology giant had to say about the newly announced program,
“We are very fortunate to be in a position to more than double the size of the capital return program we announced last year. We believe so strongly that repurchasing our shares represents an attractive use of our capital that we have dedicated the vast majority of the increase in our capital return program to share repurchases.”- Tim Cook, Apple’s CEO.
“We will continue to return capital to shareholders through dividends, share repurchases, and cash used to net-share-settle vesting RSUs. We continue to generate cash in excess of our needs to operate the business, invest in our future, and maintain flexibility to take advantage of strategic opportunities.” – Peter Oppenheimer, Apple’s CFO.
As has been evident in the past few years, Apple has been one of the largest dividend payers in the world, with an annual dividend payment of around $11 billion. With this program, they have taken that to a completely new level, with shareholders sporting a happy smile as they continue to benefit from their association with the company. Following Apple’s announcement, experts from the market are praising this move, terming Apple as having a steady outlook and deeming their current program to be of high quality.
