Apple More Than Doubles Capital Return Program to $100 Billion

apple_logoAlongside today's earnings release, Apple also announced a major increase in its capital return program, boosting the previous $45 billion program to $100 program.

The company announced a 15% increase in dividend payments, but Apple is making a significant increase in its stock buyback initiative, taking advantage of the company's depressed stock price to reduce the amount of stock available on the market.

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.

As part of the newly-expanded capital return program, Apple does plan to take on debt and will announced its plans on that aspect of the program at a later date.

“We are very fortunate to be in a position to more than double the size of the capital return program we announced last year,” said Tim Cook, Apple’s CEO. “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.”

Apple notes that it will continue to evaluate its capital return strategy on an annual basis and will look to optimize the use of excess cash through its mix dividends, stock buybacks, and settling of restricted stock unit grants to employees.

Following Apple's announcement, Moody's gave Apple an Aa1 credit rating with a stable outlook, indicating that the company's obligations should be considered of high quality and hold low credit risk.

Top Rated Comments

Mike Valmike Avatar
111 months ago
It would have been better if Apple just focused on making products and strengthening the business, seems strange that it became such a priority to get rid of the cash. What will happen a few years down the line, what if they can't generate same revenues anymore? The cash should have been left alone because the more money Apple has the safer the position they will be in the future.

That WAS the plan. Apple had survived the '90s with no shortage of luck and fortunate attraction of capital on what Jobs executed as combination royal gamble and sympathy play. Once bitten (ha ha), Apple seemed content to make sure it had sufficient funds on hand to weather the next dozen challenges from Microsoft-esque nemeses anywhere, be they Google, Samsung, or whichever opportunistic conglomerate arose next.

Then, Einhorn's shenanigans made it clear that, much like Heorot, the Mead Hall in the epic "Beowulf," Apple's cash hoard was too much of a target for the Grendel we know as Wall Street looters and pillagers. Rather than seeing its treasure bled away by such brigandry, Apple is using that cash to wrest control away from Wall Street and reduce the aggregate clout of external shareholders, increasing the company's freedom to do what it wants long-term. If Apple's cash hoard had been big enough to take the company private, be assured, Cook would have made it happen. Then, under no pressure whatever from Wall Street and beholden only to its own sales performance going forward, Apple would have been free to pursue all the blue sky research it wanted and reap the rewards of any consumer applications developed thereby.

And that still might happen. But it could take a while before it does.
Score: 5 Votes (Like | Disagree)
keysofanxiety Avatar
111 months ago
Can someone please explain this to me in English? :/

They buy their own stock so less people have it, thus making it more of a rare commodity, increasing its value.

I think that's how it works, anyway. :confused:
Score: 4 Votes (Like | Disagree)
Demonofelru Avatar
111 months ago
That's a stupid move.

The only reason a corporation needs shareholders, or a high stock price, as a living entity, is to have cash for its development.

Returning cash means the shareholders are a burden on the operations of the company instead of being a help, and to be at the mercy of Wall Street if it needs later more cash.

Keeping 60 billions cash means Apple don't need to heed shareholders for 5 years at least.

I can't understand why Tim Cook would do this, the shareholders are not stupid enough to request a change of management. Except if he wants to inflate the management stock options, but even that is very short term, he can't announce 60 billions buy back everyday.


Of course Apple doesn't need it's shareholders NOW, but they needed or wanted the cash infusion when they went public. The shareholders are collectively the company. That's like getting a loan to open a business, the business is widely successful then not wanting to pay back the bank since you don't need the loan anymore, it doesn't work that way.

About shareholders not being stupid enough to vote out management although in my opinion it would be a horrible idea, I think you under estimate the possibility. Who knows it is possible that the company would be more successful under new management, again I highly doubt it, but seeing an equity drop this much causes people to get emotional and want the head of someone warranted or not.
Score: 2 Votes (Like | Disagree)
SockRolid Avatar
111 months ago
... Apple is making a significant increase in its stock buyback initiative, taking advantage of the company's depressed stock price ...

The real culprit behind all this mindless anti-Apple bullishness?
Could be Apple itself, working to get a better deal on its own stock.

Think of it this way. AAPL is still higher than when Tim Cook took over.
Apple's hardware, software, and services are selling extremely well.
And all of this in the middle of a worldwide recession.

What better time for Apple to buy back its own stock for the ride up?
Not just over the next few quarters. For the next decade or more,
as the world economy gradually recovers. Just in time for the full
Apple television solution to start disrupting the TV industry...
Score: 2 Votes (Like | Disagree)
Dulcimer Avatar
111 months ago
I can see Apple going private in 5-10 years time and not needing to be beholden to Wall Street. Interesting move indeed.

Impossible. The amount of money involved is extremely high. Too high for Apple, even.
Score: 2 Votes (Like | Disagree)
Apple Corps Avatar
111 months ago
They buy their own stock so less people have it, thus making it more of a rare commodity, increasing its value.

I think that's how it works, anyway. :confused:
That is what they say - but how has it worked so far? I think it is a boondoggle waste of money.

They have roughly 1 billion shares in the market

Spending $50 billion will buy back 125 million shares @ $400 share.

They will now have 875 million shares on the market PLUS new incentive shares for employees. $50,000,000,000 just disappeared from the balance sheet, investors don't have squat to show for it.

If Apple had spent $50,000,000,000 on a special dividend = $51 per share.

This is a ripoff.
Score: 2 Votes (Like | Disagree)

Related Stories

studio buds family

Beats Studio Buds Debuting Today With Active Noise Cancellation, Stemless Design, and More for $150

Monday June 14, 2021 8:00 am PDT by
We've seen a lot of teasers about the Beats Studio Buds over the past month since they first showed up in Apple's beta software updates, and today they're finally official. The Beats Studio Buds are available to order today in red, white, and black ahead of a June 24 ship date, and they're priced at $149.99. The Studio Buds are the first Beats-branded earbuds to truly compete with AirPods...
airtag in hand

Apple Enhancing AirTags Anti-Stalking Measures With Android App and Shorter Sound Intervals

Thursday June 3, 2021 11:10 am PDT by
Apple is enhancing AirTags security to prevent stalking using the Bluetooth devices, Apple told CNET today. Apple is already sending out over-the-air updates to AirTags that will shorten the amount of time before an unknown AirTag alerts you if it is in your possession. At the current time, AirTags play a sound after three days of being away from their owner. After the update, AirTags will...
maxresdefault

Here's How Apple's New iPhone to iPhone Data Migration Feature Works in iOS 12.4

Tuesday July 23, 2019 1:20 pm PDT by
Apple this week released iOS 12.4, the newest version of iOS 12 available for iPhones and iPads. One of the new features in iOS 12.4 is an updated data migration option that uses device to device transfers rather than relying on iCloud. Apple didn't provide much information on the new data migration feature, so we thought we'd check it out in our latest YouTube video. Subscribe to the ...
youtube apple tv

YouTube Discontinuing 3rd-Generation Apple TV App, AirPlay Still Available

Wednesday February 3, 2021 3:09 pm PST by
YouTube is planning to stop supporting its YouTube app on the third-generation Apple TV models, where YouTube has long been available as a channel option. A 9to5Mac reader received a message about the upcoming app discontinuation, which is set to take place in March.Starting early March, the YouTube app will no longer be available on Apple TV (3rd generation). You can still watch YouTube on...
macos catalina legacy system extension alert

Apple Begins Warning Users That 'Legacy System Extensions' Won't Work With a Future Version of macOS

Wednesday March 25, 2020 9:53 am PDT by
Apple has shared a new support document that indicates kernel extensions — which it calls "legacy system extensions" — will not be compatible with a future version of macOS because they "aren't as secure or reliable as modern alternatives."System extensions are a category of software that works in the background to extend the functionality of your Mac. Some apps install kernel extensions, which...
os x mountain lion macs 16x9 2

Apple Makes OS X Lion and Mountain Lion Free to Download

Wednesday June 30, 2021 12:19 pm PDT by
Apple recently dropped the $19.99 fee for OS X Lion and Mountain Lion, making the older Mac updates free to download, reports Macworld. Apple has kept OS X 10.7 Lion and OS X 10.8 Mountain Lion available for customers who have machines limited to the older software, but until recently, Apple was charging $19.99 to get download codes for the updates. As of last week, these updates no...
airtag precision finding

AirTag Includes U1 Chip for 'Precision Finding' Feature

Tuesday April 20, 2021 12:11 pm PDT by
Apple's long-awaited AirTag was finally unveiled today, and as expected, the small circle-shaped accessories can be attached to items like wallets, keys, and more to allow them to be tracked in the Find My app. As was rumored ahead of release, each AirTag is equipped with a U1 chip, and on devices that also have U1 chips, there's a Precision Finding feature. U1 Ultra Wideband chips are...
iOS 15 General Feature Yellow

Everything New in iOS 15 Beta 6: SharePlay Disabled, Safari Redesigned and More

Tuesday August 17, 2021 2:12 pm PDT by
Apple released the sixth beta of iOS 15 just a week after the fifth beta, but the new update brings some of the most significant tweaks that we've seen to iOS 15 during the beta testing period. Safari Redesign Apple in iOS 15 beta 6 has added a toggle to move the Safari address bar to the top of the interface, which returns Safari to an iOS 14-like design and mitigates all of the Safari...
m1 macbook air

Kuo: Mini-LED MacBook Air Coming in Mid-2022

Thursday July 22, 2021 7:48 pm PDT by
Apple will release a new version of the MacBook Air around the middle of 2022, Apple analyst Ming-Chi Kuo said today in note to investors seen by MacRumors. The upcoming MacBook Air will feature a 13.3-inch mini-LED display, which would make it the second Mac to gain mini-LED technology after the 2021 MacBook Pro, which is rumored to include a mini-LED display and is expected to launch later ...
2016 macbook pro flexgate b

Apple Faces Another Class-Action MacBook Pro ‘Flexgate’ Lawsuit

Thursday August 20, 2020 6:43 am PDT by
Another class-action complaint has been lodged against Apple, which claims that the company was aware of a MacBook Pro design flaw that caused some devices to have backlight display issues (via Apple Insider). The so-called "flexgate" problem was present in some MacBook Pro models manufactured between 2016 and 2017. The problem appears as dark patches along the bottom of the MacBook Pro's...