Apple’s $110 billion share buyback plan is the largest in US history, shares rise 7.9% despite falling sales – Firstpost

Apple CEO Tim Cook. Apple now has 6 of the top 10 stock buybacks in US history. Image credit: AFP

With its recent announcement of a $110 billion share buyback program, Apple has once again surpassed its own record for the largest buyback value ever announced in the United States.

This move surpasses Apple’s previous authorization of $100 billion for share buybacks in 2018, according to data compiled by market research firm Birinyi Associates dating back to 1999.

In fact, Apple now occupies the top six spots on the list of the 10 biggest stock buyback announcements ever made in the United States. Other notable companies included in this list are Chevron Corp. and Alphabet Inc., highlighting Apple’s dominance in this aspect of corporate finance.

Following the announcement, Apple shares rose as much as 7.9 percent in post-market trading, indicating a strong investor response to the buyback program. If these gains hold up on Friday, the move could add more than $190 billion in market value to the company.

This significant increase in market value comes as a welcome change for Apple investors, who have seen the tech giant lag behind its Magnificent 7 peers throughout the year leading up to Thursday’s close. While Apple shares have seen a 10 percent drop, the broader S&P 500 index has seen growth of more than 6 percent.

With a 4 percent increase in its cash dividend and authorization for an additional $110 billion share buyback program, Apple demonstrated its commitment to shareholder value, making it the largest buyback initiative in the history of the company.

Despite a slight drop in quarterly revenue, Apple’s performance beat analyst estimates, suggesting a possible resurgence in the smartphone market despite tough competition and regulatory challenges.

Apple’s fiscal second-quarter revenue fell 4 percent to $90.8 billion, beating analysts’ average estimate of $90.01 billion. Analysts and experts hailed this achievement as notable, with Steve Sosnick, chief strategist at Interactive Brokers LLC, describing it as “a staggering number.”

CEO Tim Cook expressed confidence that revenue growth will return in the current quarter, indicating positive prospects for the company’s trajectory.

The rise in Apple’s shares following its report raised its stock market value by more than $160 billion, indicating investor confidence in the company’s resilience and future prospects.

While Apple faces challenges across its business, including intensified competition and regulatory scrutiny, the company remains focused on its long-term growth strategy.

Apple CFO Luca Maestri provided insight into the company’s outlook and expects double-digit growth in services and iPad revenue for the current quarter. Additionally, Apple expects gross margins of between 45.5 percent and 46.5 percent for the fiscal third quarter.

Despite a 10.5 percent drop in iPhone sales to $45.96 billion, Apple saw growth in some markets, particularly China. The company’s revenue decline in China was not as steep as analysts expected, indicating resilience in a crucial market.

Apple’s continued investments in research and development, particularly in artificial intelligence (AI), underscore its commitment to innovation. CEO Tim Cook expressed optimism about the company’s prospects in generative AI and highlighted significant investments in the burgeoning field.

As Apple races to integrate AI into its products, the announcement of a massive buyback program may reassure investors concerned about the company’s stock performance.

With earnings per share exceeding Wall Street estimates and sales in the services segment exceeding expectations, Apple’s strong performance reflects its ability to meet challenges and capitalize on opportunities in the changing technology landscape.

While sales in the iPad and wearable segments fell below analyst expectations, Mac sales beat projections, boosted by the success of the new MacBook Air models.

As Apple continues to innovate and adapt to changing market dynamics, its recent financial results underscore its resilience and long-term vision for sustainable growth.

(With contributions from agencies)

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