Apple Increases Dividend, Share Buybacks In Bid To Appease Investors

The news came as part of Apple’s strong second quarter earnings report. The company also announced a 7-for-1 stock split.

The Associated Press

Apple's strong second quarter results took a backseat to a slew of other announcement the company made Wednesday, among them a dividend increase of 8%, an additional $30 billion increase in its stock buyback program to $90 billion and a 7-for-1 stock split.

On the numbers, Apple beat analysts estimates for both revenue and net income. The company reported revenue of $45.6 billion and net income of $11.6 billion, against expectations of $43.6 billion on revenue and $10.2 billion on net income.

While the company sold more iPhones than analysts projected — 43.7 million units versus 37.7 million — it sold less iPads, only moving 16.4 million units against and expected 19.7 million.

The earnings results coupled with increased dividend and share buybacks and stock split sent Apple shares soaring in after-hours trading after closing down for the day. Apple shares ended trading at $524.75, down $6.95, but leapt more than 7%, or around $40, to roughly $565 in after-hours trading.

Patience among Apple investors had beeb wearing thin lately in the absence of a dramatic new product launch. Chief Executive Tim Cook has born the brunt of that pressure, with his tenure thus far marked by product refinement, international expansion and iteration rather than innovation. That has kept Apple's business strong and stable, but hasn't been able to ignite new growth. While Cook has hinted on previous earnings calls in the last year that new products would be launching throughout 2014, nothing new has been launched thus far. The company is widely rumored to release a new version of its Apple TV set-top box and, eventually, a wearable device, but there is still no indication when these might come.

Throughout its resurgence, Apple's staggering revenue and profit growth has been on the strength of new products: the original iPhone, the revamped iPhone 4 and its follow-up devices, and the iPad and its later iterations. The company tried diversifying its phone lineup this year with the iPhone 5c, but it was largely met with lukewarm reaction and didn't provide much growth for Apple, which has basically been treading water for the past several quarters. (The company is still bringing in an insane amount of money, to be sure, but it isn't growing at the rate that it is accustomed to).

All this is overshadowed by the fact that Apple has more than $150 billion in cash. While companies like Google and Facebook are aggressively making large purchases that could potentially lead to new businesses — like the Oculus Rift for Facebook and Nest for Google — Apple seems content to sit on its cash, letting it trickle out through dividends and share repurchases. This has drawn a lot of criticism, as most other technology companies are in fact increasing their spending on research and development and acquisitions, while Apple seemingly is not.

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