360° Coverage : Apple Splits Stock 7-For-1, Will Splash $130B In Cash On...

1 Updates

Apple Splits Stock 7-For-1, Will Splash $130B In Cash On Investors

Apr 23 2014, 5:01pm CDT | by

Talk about burying the lede. Apple announced a 7-for-1 stock split Wednesday, but not until the last sentence of a press release heralding an upsized capital return program to $130 billion and...

Filed under: news

 
 
 

18 weeks ago

Apple Splits Stock 7-For-1, Will Splash $130B In Cash On Investors

Apr 23 2014, 5:01pm CDT | by

Talk about burying the lede.

Apple announced a 7-for-1 stock split Wednesday, but not until the last sentence of a press release heralding an upsized capital return program to $130 billion and alongside the company’s quarterly earnings report. (For more on Apple’s results, follow Mark Rogowsky’s live blog.)

The split does nothing to change the value of Apple’s shares — 7 shares at $75 apiece are worth the same amount of money as one share at $525 — but could make Apple shares more accessible to individual investors who can’t pony up hundreds of dollars for a single share of stock. That argument loses steam though when considering that retail brokerages like TD Ameritrade often report Apple is among the most widely-traded stocks by clients.

Shareholders of record as of June 2 will receive six additional shares for each Apple share they own, and the stock will start trading on a split-adjusted on June 9.

Apple last split its stock in 2005, when the company was a different animal all together and two years before the debut of its most successful product, the iPhone. Since then, even as the stock surged to ever-higher highs, the company steadfastly refused to split.

It wasn’t just the late Steve Jobs who opposed a split either. At the company’s 2012 annual meeting, when shares were not far from where they stand today, Tim Cook dismissed the idea of a split by saying they “do nothing for shareholders,” Bloomberg reported at the time.

The split though is hardly the only thing Apple is doing these days that had been anathema during Jobs second reign at the helm. In fact, the capital return increase to $130 billion — up to $90 billion in buybacks and an 8% dividend hike to $3.29 per share that will cost $11 billion per year — marks what amounts to a significant departure from the Jobs era, when the company hoarded cash and investors were content to let them do so with the expectation that it would be put toward innovative new products and massive products.

Unrest has grown in the years since Jobs’ death though. Even though Cook presided over the stock’s rise to its all-time high, Apple has yet to release a product that could be considered anything but evolutionary during his tenure. Pressure on the CEO and his board has also been mounting, with first David Einhorn and then Carl Icahn urging (sometimes none to gently) the company to return more of its capital to shareholders.

Icahn tweeted Wednesday that he’s on board with Apple’s bigger buyback. “Believe we’ll also be happy when we see new products,” he wrote.

Agree completely with $AAPL‘s increased buyback and extremely pleased with results. Believe we’ll also be happy when we see new products.

Carl Icahn (@Carl_C_Icahn) April 23, 2014

The upsized buyback and dividend won’t be coming out of the repatriation of foreign cash though. Apple plans to tap the credit markets once again — at home and abroad — after selling $17 billion worth of bonds last May in its first debt offering in nearly 20 years.

“We’re confident in Apple’s future and see tremendous value in Apple’s stock,” Cook said in the announcement,” so we’re continuing to allocate the majority of our program to share repurchases.” Considering the stock was at about $600 when Apple first launched its capital return program in 2012 and subsequently topped $700, he certainly can’t be accused of buying at the top.

As for Apple’s actual business, Wednesday’s second-quarter results came in ahead of expectations on the bottom line, with profits of $10.2 billion, or $11.62 per share, on $45.6 billion in revenue. That was against Wall Street’s consensus call for earnings of $10.14 per share. Apple sold 43.7 million iPhones during the quarter, which marked a 17% increase from a year ago, but only 16.4 million iPads, 16% fewer than a year ago.

Shares of Apple rallied 7.8% to $565.65 in after-hours trading following the earnings release Wednesday. That would put split-adjusted shares at just over $80 a piece, a level that might be more approachable for the so-called “mom and pop” investor, but could also draw the attention of the index committee that decides the makeup of the price-weighted Dow Jones industrial average. That 30-stock gauge has kept Apple at arms length for years because its lofty price would skew the measure without a change to its formula.

Follow @SchaeferStreet

The 10 Names Retail Investors Traded Most In 2013

 
Update
1

18 hours ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tra ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

13 die of Ebola in DRC
Kinshasa, Aug 29 (IANS) A total of 13 people, including five doctors, died of Ebola virus disease in the Democratic Republic of Congo (DRC), the country's Minister of Public Health Felix Kabange told Xinhua Friday.
 
 
How birds learnt to fly
New York, Aug 29 (IANS) Birds have an innate ability to maneuver in mid-air, a talent that could have helped their ancestors learn to fly rather than fall from a perch, says a study.
 
 
Millions of mites crawling on your face right now!
New York, Aug 29 (IANS) Are you aware that your face is brimming with living mites that feed on the oil our skin secretes and hide in tiny hair follicles? And no, they are not pooping on you as they store up all the excreta until they die!
 
 
New tool maps how drug abuse affects brain
Washington, Aug 29 (IANS) In a first, researchers have developed a laser-based imaging tool to map how drug abuse disrupts blood flow to the brain.
 
 
 

Latest from the Network

Britain raises terror threat level
London, Aug 29 (IANS) British Home Secretary Theresa May Friday announced that Britain's Joint Terrorism Analysis Centre (JTAC) has changed the country's threat level from international terrorism from "substantial" to...
Read more on Politics Balla
 
Jason Segel: mum hated my nude scene
Jason Segel's mum hated his nude scene in 'Forgetting Sarah Marshall'. The 34-year-old actor has revealed that his mother failed to laugh when she first watched the scene where Jason gets naked in front of co-star...
Read more on Movie Balla
 
Filming resumes for Star Wars Episode VII
Filming for 'Star Wars Episode VII' has resumed following Harrison Ford's recovery from injury. The Hollywood icon suffered an accident on set earlier this month, which meant he had to undergo surgery on his leg and led...
Read more on Movie Balla
 
India seeks Kuwait's help over arrested Indians
New Delhi, Aug 29 (IANS) India has sought Kuwait's assistance over the arrest of some Indian nationals following a brawl in that Gulf nation. "I understand that there was a brawl with nationals of some other countries...
Read more on Politics Balla
 
Sindhu in semis at Worlds, Saina ousted (Roundup)
Copenhagen, Aug 29 (IANS) Though Saina Nehwal's campaign once again came to an end in the women's singles quarter-finals, compatriot P.V. Sindhu kept the tricolour flying high and created history by reaching the semi-...
Read more on Sport Balla
 
No facts to substantiate accusations against Russia: Lavrov
Moscow, Aug 29 (IANS/ITAR -TASS) Russian Foreign Minister Sergei Lavrov Friday said accusations against Russia of invading Ukraine have been voiced repeatedly but the US and European countries have failed to...
Read more on Politics Balla
 
Two arrested for Indian man's murder in Singapore
Singapore, Aug 29 (IANS) Two suspects have been arrested in connection with the death of a 26-year-old Indian-origin technician in Singapore's Pandan Loop area, police said Friday. Murugaiya Suresh Kumar was found...
Read more on Politics Balla
 
Britney Spears talks 'sh***y day' after split
Britney Spears has opened up about her ''sh***y day'' following her split from David Lucado. The 32-year-old pop star, who is thought to have dumped her boyfriend yesterday (08.28.14) after a video emerged of him...
Read more on Celebrity Balla
 
Justin Bieber takes Selena Gomez horseback riding
Justin Bieber took Selena Gomez horseback riding in Canada on Wednesday (08.27.14). The 20-year-old pop star - who rekindled his romance with the singer a few weeks ago - proved that their relationship was back on track...
Read more on Celebrity Balla
 
Olivia Palermo to have second wedding ceremony
Olivia Palermo is planning to have a second wedding. The 28-year-old beauty tied the knot with Johannes Huebl in front of their family and two friends at a quiet park in Bedford, New York, in June and now the couple are...
Read more on Celebrity Balla