APPLE made an aggressive bid to keep shareholders on its side last night, unveiling the biggest share buyback in history and promising a host of revolutionary new products.
The massive repurchasing programme was announced as the technology giant reported its first profit fall in a decade and warned that growth would flatline over the next three months.
Apple said it would more than double the cash it is returning to investors, taking the total value of its three-year capital return programme to $100bn (£65.5bn). This includes a $60bn stock repurchase scheme – which Apple said was the biggest in history – as well as a 15 per cent increase in its quarterly dividend.
The move is a vigorous push from Apple to retain the trust of its shareholders, following a dramatic decline in the company’s value in recent months. Its share price has fallen from highs of above $700 in September to $400 recently, as the phenomenal growth of recent years has flatlined.
Apple revealed last night that revenues in the first three months of 2013 had hit $43.6bn, an 11 per cent rise on the same period last year but a much slower rate than investors have become used to, as competition from the likes of Samsung intensifies. Profits, meanwhile, fell from $11.6bn to $9.5bn due to the lower margins associated with the cheaper iPad mini and older versions of the iPhone. The last time profits fell, in early 2003, Apple had just launched its iTunes store, the iPod was 18 months old and the iPhone was four years away.
“We know [the results] didn’t meet everyone’s expectations and though we’ve achieved a lot, we’ve acknowledged that our growth have slowed and margins have decreased,” chief executive Tim Cook said. “The [share price] decline over the last few months has been very frustrating to all of us but Apple remains very strong and we will continue to do what we do best.”
Sales of the iPhone – Apple’s most lucrative asset – only grew modestly, but Cook pledged that new products would be coming this year. Although notoriously tight-lipped about new technology, Apple is believed to be making a smart watch as well as a TV set. “We have a tremendous culture of innovation with a relentless focus on making the world’s best products, we’ve got a lot more surprises in the works,” Cook said.
In the quarter, Apple sold 37.4m iPhones, compared to 35.1m a year ago, and iPad sales, driven by the iPad mini, were 19.5m, against 11.8m.
The buyback sent Apple shares up in after-hours trading, although they pared back gains later on to stay flat.