Apple unlocks more cash as profit falls

Apple on Tuesday bowed to investors’ demands to share more of its $145 billion cash pile, while posting its first quarterly profit decline in more than a decade.

By Poornima Gupta (Reuters)

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Published: Thu 25 Apr 2013, 11:26 PM

Last updated: Fri 3 Apr 2015, 7:57 AM

The new expanded capital plan includes issuing debt for the first time to fund $100 billion in share repurchases and higher dividends until the end of 2015. That doubles the amount from a programme set up last year and makes Apple the largest dividend-paying company in the world.

The company’s shares, which last week closed below $400 for the first time since December 2011, rose briefly. But they retreated after chief executive Tim Cook told analysts on a conference call that “some really great stuff” was coming in the fall and 2014. That suggested Apple would have no new products in the market for the next few months.

Apple relies heavily on new product launches to drive revenue growth. It recently refreshed its offerings in October, unveiling the 7.9-inch iPad mini and an updated full-size iPad. The new capital plan came as Apple’s fiscal second quarter profit slid 18 per cent. While revenue rose 11 per cent, it slowed sharply from 2012 and previous years. Cook also acknowledged that Apple’s once stratospheric growth had tempered but stressed that the company’s position remained strong. “Though we’ve achieved a credible scale and financial success, we acknowledge that our growth rate has slowed and our margins have decreased from the exceptionally high level we experienced in 2012,” he said, in an unusually frank admission of the company’s less upbeat circumstances.

In the last couple of years, demand for Apple’s iPhones and iPads has tended to ebb ahead of expected launches, which analysts said would hurt its profit for the current quarter.

Apple is forecasting revenue of $33.5 billion to $35.5 billion this quarter, lagging Wall Street’s average projection of $38.2 billion. Once considered a near sure-fire bet by Wall Street, worries about slowing growth and narrowing margins have made Apple’s shares among the worst performers this year.

Apple’s shareholders will now get an annual dividend of $12.20 per share, making Apple one of the highest dividend-paying companies. With about 940 million shares outstanding, Apple will return $11.5 billion to shareholders over 12 months, an amount that exceeds the market value of 200 other corporations in the S&P 500.

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