In a nod to its agitated and restless shareholders, Apple Inc. increased its dividend by 8%, boosted its stock buyback plan by $30 billion and also declared a 7-1 stock split, which is unusually large. The company made these announcements on Wednesday, when it also reported strong sales for its iPhone that have defied the expectations of analysts of a slowdown. The upcoming stock split, which is the first for the company since 2005 and also the greater-than-expected results that were reported by the company drove the stock of the iPhone maker up by 8% during after-hours trading, which is the highest level it has achieved since December.
After closing at a price of $524.75, the shares eventually changed hands at a cost of $564.99. Tim Cook, the company’s chief executive said that the buyback program had been expanded by the company from $60 billion to $90 billion because the company is of the opinion that its shares are undervalued. He added that this buyback would show people how much confidence the company has in regard to its future. The company said that altogether, instead of $100 billion, which was its previous target, it would return a total of $130 billion to its shareholders.
The quarterly results of the company eased concerns that the best days of the company were behind it. The biggest for this revenue is the iPhone, which contributes more than half of the company’s earnings. For the second quarter that finished on March 29th, the Cupertino, California giant reported profit of $10.22 billion, which is 7% more than the profit of $9.55 billion that the company had earned in the same quarter a year before. The earnings per share of the company also saw a rise of 15% as they went from $10.09 to $11.62, but this was mostly because the repurchase program had reduced the total number of shares.
As compared to a year earlier, revenue saw an increase from $43.60 billion to $45.6 billion. It had been estimated by analysts that the company would post revenue of $43.53 billion, which would give earnings per share of $10.18. It would have been the first time in 11 years that the company’s quarterly revenue declined, but that didn’t happen. As far as the current quarter is concerned, Apple Inc. said that it was expecting revenue somewhere between $36 billion and $38 billion. The company also announced that it had surpassed the expected iPhone sales of 38.2 million units as they had sold 43.7 million iPhones.
The CEO said that this strength concerned all the iPhones of the company, including the iPhone 5C they had introduced. He also said that it was the emerging markets that had bolstered the sales of its device. Globally, the company’s device has been losing market share against smartphones that are based on the Android operating system of Google Inc. However, the iPhone seemed to have done well in China during this particular quarter, which, after America and Europe, is the company’s third biggest market.