Apple announces largest-ever $110 billion share buyback as iPhone sales drop 10%

[Mr. Sparkle]

Source: CNBC

Apple reported fiscal second-quarter earnings on Thursday that were slightly higher than Wall Street expectations, but showed overall revenue down 4%, and iPhone sales falling 10%. Apple announced that its board had authorized $110 billion in share repurchases, the largest in the company’s history, and a 22% increase over last year’s $90 billion authorization.

Apple shares rose 3% in extended trading. Apple did not provide formal guidance, but Apple CEO Tim Cook told CNBC’s Steve Kovach that overall sales would “grow low single digits” during the June quarter. Apple posted $81.8 billion in revenue during the year-ago June quarter and LSEG analysts were looking for a forecast of $83.23 billion.

Apple reported $23.64 billion in net income, a 2% decrease from $24.16 billion in the year-earlier period. Overall sales fell 4% in the March quarter.

Cook told CNBC’s Steve Kovach that year-over-year sales suffered from a difficult comparison to the year-ago period, when the company realized $5 billion in delayed iPhone 14 sales from Covid-based supply issues.

Read more: https://www.cnbc.com/2024/05/02/apple-aapl-earnings-report-q2-2024.html

[PSPS]

1. Stock buyback means enormous raise to the CEO whose compensation rises with the stock price.

[jimfields33]

2. It's a weird thing. Yes the CEO gets a boost in bonus.

But everyone with a 401K benefits too. Yes a strange situation. I guess stock buyers like buybacks. I don’t understand it much. It might help in people’s statements coming out in July if the stock goes up.

[Igel]

9. And anybody in a stock fund or hedge fund.

Lots of non-hated-people.

Then again, a stock is just a loan that pays dividends.

I know I paid not just interest/dividends on my loans/mortgage, but endeavored to pay them off early.

So I didn't have to continue to pay interest. 6-year-car loan in 3.1 years, 30-year house mortgage in 14 years.

Imagine all the money I screwed the bank and FSA out of. How horrible. I could still be paying my mortgage, my tributary duty to the GSE whose profits go to the Treasury.

Note that had I not paid off my loan/mortgage, as a public school teacher I'd be struggling like my colleagues. Too many say, after getting their minimum $65k/year salary over 24 paychecks, that they pay most of their bills due the day after their check's deposited and still have debt. I'm in a position that I have credit card debt for the last 2 weeks--no more, and no other debt--and siphon funds over a certain amount off to a safety account and then buy short-term T-bills to help fund the Federal government. For a price, called "interest." Current-short-term interest rate was about 5%/year ... but since it's for 8-weeks ... I don't trust house insurance (and we won't talk I-bills), I don't want longer term. For now.

Point: the feds run on financing their debt. Under Clinton, briefly, they ran a surplus and paid down their debt. They "bought back" debt. This was a grand and glorious thing. Now the budgeted DOD budget is insane. Debt financing--I get an infinitesimal bit of that--is larger. Should the feds, like under Clinton, buy back (total) debt or not? If not, what %age of GDP should be paid for interest?

Or do the feds as our proxies just renege on debt--obligations and consequences are meaningless for those who own them, delightful shortchanges for those that think "we" have some honor and our word means something--hurting some foreign countries and lots of pensions, IRAs and other retirement funds, and people like me?

Yeah, yeah, the pain, it hurts.

[lonely bird]

15. Corporate bonds are loans

Stock is ownership.

[Voltaire2]

3. An absolute shit move that disinvests in the economy.

Once upon a time this was illegal.

[cstanleytech]

5. Ya, they really need to ban it as it's artificially increasing the stocks value.

[Voltaire2]

6. and instead of investing in, for example R&D or productive capacity - it is just extractive.

[former9thward]

8. Apple puts in hundreds of billions into R&D.

They can't be faulted for that.

[Roy Rolling]

14. Investing in R&D is to Apple's Benefit

The money is not spent altruistically to benefit the planet. It’s a necessary expense and a distraction here. Stock buybacks used to be illegal and the practice just gives 401k owners a cut of the action.

It is not the practice of a serious economy from a U.S. political party not serious about laws that benefit the United States. It corrupts.

[Voltaire2]

17. 30B vs 110B

Yes it has an R&D budget. However that spending has been dwarfed by it stock repurchases, including this massive one and the prior record setting buyback of 100B in 2018.

This sort of 'investment' is extractive, it is literally a disinvestment of corporate resources for short term stock gain. The chief beneficiaries are the corporate officers with enormous stock based option packages.

[emulatorloo]

16. Apple spends plenty in R&D n/t

[former9thward]

7. How is it artificial?

Its just math. If a company has 100 million shares outstanding and they sell at $100 then reducing that to 50 million should increase the value of the stock to $200 million assuming the same market capitalization.

[Igel]

10. Their money.

it's like saying that since I paid off my car loan and my house mortgage early--and pay off my credit card debt each month--I'm "disinvesting in the economy."

(Of course, the par value ignores market valuations.)

Note that since I now have excess cash I've taken to investing it in short-term T-bills. And am helping to fund--for a price--the federal debt.

It would obviously be "disinvesting" if the federal government, as it did under Clinton (the traitor?), to (D) braggadoccio to this day, "disinvested" by reducing the national debt.

Debt payment is good. I guess. (?)

[cstanleytech]

13. Because the stock price should be determined by the companies actual performance itself and not artificially.

[former9thward]

18. There is nothing artificial about it.

Companies issue stock and new stock all the time. Is that artificial? No.

[cstanleytech]

19. Yes, it is because the increase of the stock price is purely due to the buyback and not the performance.

[former9thward]

20. The stock price increases because of the reduction of stock shares.

It is a simple math equation. All people buying or selling stock knows it.

[hueymahl]

4. I would have preferred a dividend

But the this helps to line the pockets of Warren Buffet without him having to pay tax, so there is that.

[brooklynite]

12. Apple has been offering dividends for years....

And Warren Buffet isn't "richer" until he sells his shares.

[brooklynite]

11. I'm not selling my shares.