Tech Giant Apple Extends Share Buyback Program By $90B
Technology giant Apple Inc. (NASDAQ: AAPL) has extended its share buyback program by $90bn, according to its latest quarterly report…
Technology giant Apple Inc. (NASDAQ: AAPL) has extended its share buyback program by $90bn, according to its latest quarterly report filed with the U.S. Securities and Exchange Commission (SEC). The company repurchased $39bn in shares in the six months ended April 1, 2023, and has committed to spend $90bn more on it. It also raised its quarterly dividend from $0.23 to $0.24 per share, returning more money to investors as its profit margins remain strong.
- Stock buybacks refer to a company using its cash holdings to buy its own shares on the open market. It is an alternate way (to dividends) of returning money to shareholders and helps boost share prices.
- Stock buybacks are also more tax-efficient to shareholders; the proceeds constitute capital gains and are taxed at a lower rate than dividends, which are considered ordinary income. But last year, the U.S. government introduced a small 1% tax that publicly-traded companies now pay on share repurchases; President Biden initially proposed 4%.
Apple is no stranger to stock buybacks. The company began repurchasing shares in 2012 and has spent nearly $600bn in total. It has also spent north of $100bn on dividends since 2012. Bloomberg Intelligence predicts the tech giant will have paid out $1 trillion in dividends and stock buybacks by 2025.
Apple chief executive Tim Cook assumed his position in 2011, and shareholders have made bank under his leadership. The company’s market value was under $400bn when Cook took over and has soared to $2.75 trillion; add stock buybacks and dividends of over $700bn, and shareholders have benefited greatly. In 2022, Apple reported a record net income of $100bn, making it America’s most profitable company by a wide margin.
- Apple reported $95bn in net sales in the quarter ended April 1, 2023, a slight haircut from $97bn in sales in the same period last year. Net income in the latest quarter was $24bn, slightly down from $25bn in the same period last year.
- Apple has conquered the North American and European markets and is looking towards emerging markets like India, the UAE, and Mexico for growth. The famous iPhone brings in the bulk of revenue: $51bn out of $95bn in the latest quarter. The company also has a booming “Services” division, which includes products like the App Store, Apple Pay, iCloud, Apple Music, Apple TV, etc.
Apple’s stock rose 4.7% on Friday following the company’s quarterly earnings announcement.