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Apple announces 7-for-1 stock split, buybacks bumped to $90 billion

post #1 of 202
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Apple on Wednesday released its quarterly earnings for the second quarter of 2014, announcing a seven-for-one stock split coming in June, as well as a boost to share buybacks now capped at $90 billion.

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After announcing earnings of $45.6 billion in revenue and $10 billion in profits, Apple announced a split granting each AAPL stock owner six shares for each share owned, while its board raised buyback authorization to $90 billion.

Apple's 7-for-1 stock split will take place June 2, 2014, awarding each shareholder six additional shares of AAPL stock. Split-adjusted trading will begin on June 9.

"We are announcing a significant increase to our capital return program," said Apple CEO Tim Cook. "We're confident in Apple's future and see tremendous value in Apple's stock, so we're continuing to allocate the majority of our program to share repurchases. We're also happy to be increasing our dividend for the second time in less than two years."

The substantial repurchase authorization represents a $30 billion bump from its initial $60 billion plan, though the company warns that this coming quarter may see a drop in revenue from $38 billion to $36 billion.

In addition to the split, Apple's board approved an 8 percent increase its quarterly cash dividend up to $3.29 per share. That's up from the previous $3.05 per quarter.

The news juiced after-hours action, with AAPL trading up $42.17, or 8.31 percent as of this writing.
post #2 of 202
Go Apple!!!
post #3 of 202

AAPL up about 7% in after hours trading. +$38

post #4 of 202
smart companies always earns in smart ways still looking forward to the iPhone 6
post #5 of 202
Quote:
Originally Posted by lkrupp View Post
 

AAPL up about 7% in after hours trading. +$38

Don't be surprised if it is not up by $60 to $80 by Friday. When will this 7-1 take place? I suddenly own a lot more shares in Apple and couldn't be happier about it. 

post #6 of 202
Sweet! This should make the stock more affordable and hopefully increase in price 1smile.gif
post #7 of 202
Now We can start trading options , I wonder if there will be $ strike prices?
post #8 of 202
Quote:
Originally Posted by gwmac View Post
 

When will this 7-1 take place? I suddenly own a lot more shares in Apple and couldn't be happier about it. 

Shareholders of record at the end of June 2nd (record date) will receive six additional shares by June 6 (split date). Split-adjusted trading commences June 9th (ex date).

 

More info at Apple Investor Relations.


Edited by mpantone - 4/23/14 at 2:11pm
post #9 of 202
Quote:
Originally Posted by AppleInsider View Post

The substantial repurchase authorization represents a $30 billion bump from its initial $60 billion plan, though the company warns that this coming quarter may see a drop in revenue from $38 billion to $36 billion.

A mere $2B drop in revenue? They could make up for that in a certain patent court case...
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post #10 of 202
Would someone mind explaining to me what a 7-1 stock split is? What happens when you split stock? Or perhaps just point me go a useful area of the interwebs that can better explain it for me. Thanks.
post #11 of 202
Quote:
Originally Posted by Paul94544 View Post

Now We can start trading options , I wonder if there will be $ strike prices?

Why couldn't you before?

 

Options have always existed and they've even had mini options for a while now.

post #12 of 202

7 for 1?

 

Later it says 6 for 1.

 

More than likely 7 for 1.

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post #13 of 202
Quote:
Originally Posted by josephwinters View Post

Would someone mind explaining to me what a 7-1 stock split is? 

 

The stock splits in seven, that's all. Everybody holding 1 share of APPL before the split will have 7 shares of APPL after the split.

 

If the split happened today, which it won't of course, since I think it's not until June, but a share of AAPL would be worth about 80 bucks.

post #14 of 202

Sweet so on June 9th Apple shares will likely be trading around the $78 to $95 range I would guess. That will make it far more affordable to more people that simply couldn't afford a $500+ per share price. 

post #15 of 202
Quote:
Originally Posted by josephwinters View Post

Would someone mind explaining to me what a 7-1 stock split is? What happens when you split stock? Or perhaps just point me go a useful area of the interwebs that can better explain it for me. Thanks.


On June 2, for each share of Apple you own, you will have 7 shares instead, and the price of each will be divided by 7. For example, if 1 share was $700, you'll have 7 shares worth $100 each. It makes it easier to buy smaller portions of Apple (that's where my dividends going!)

post #16 of 202

pity anyone who shorted today.  bwahahaha...

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post #17 of 202

How are the dividends per share affected by this?  Are they now divided by 7 once the stock splits or are the still going to pay out the $3 something per share after the split?

post #18 of 202
Let's say you own 10 shares of AAPL worth $560 each - $5,600 total. In a 7-for-1 split you in theory wake up the next day and own 70 shares worth $80 each - $5,600 total. That is, the total shares at issue goes up by a factor of 7 but the price should drop an equal amount to reflect that.

Of course the real hope is that this makes the stock more accessible to small investors and thus increase each shareholders value a little.
post #19 of 202
Quote:
Originally Posted by josephwinters View Post

Would someone mind explaining to me what a 7-1 stock split is? What happens when you split stock? Or perhaps just point me go a useful area of the interwebs that can better explain it for me. Thanks.

Essentially you're getting 7x the shares of stock that are valued at 1/7th the per-share price.  So, hypothetically, instead of having 1 share of stock that's priced at $700, you'd have 7 shares that are priced at $100.

 

Generally speaking, this is a good thing.  It will make it more "affordable" to buy Apple stock, and could drive up the price more as smaller investors buy in.  As an example based on AAPL's closing price today of $524.75, the after-split price would be $74.96.  That will no doubt change a lot before June, however.

post #20 of 202
Quote:
Originally Posted by shurenuff View Post
 

How are the dividends per share affected by this?  Are they now divided by 7 once the stock splits or are the still going to pay out the $3 something per share after the split?

The dividend would be divided by 7 also, otherwise the yield would be ungodly.  Not that I'm against that.  :)

post #21 of 202

Quote:

Originally Posted by shurenuff View Post
 

How are the dividends per share affected by this?  Are they now divided by 7 once the stock splits or are the still going to pay out the $3 something per share after the split?

 

It'll be divided as well (but that was entertaining thought though, haha)

post #22 of 202

when your stock splits, pretty much nothing happens... your broker just multiplies your holding by 7 at the magic hour, and the price goes to 1/7th (and all the math on dividends, p/e, market cap... they all wash out).

 

This is definitely driving the liquidity of the stocks and driving the stock back into the consumer market.   Them buying up stock (which on the one hand concentrated the stocks into the buy and hold group, and arguably made employees a higher percentage of ownership), and then issuing a 7:1 split...    To me, the only thing this seems to do is make options plays 7X easier. (given that you have to do options at 100 share units, now you can make the play with effectively 14.3 shares)

 

Or is this part of Oppenheimer's grand plan on his exit?   Get down from a hair less than Biilion shares down to 850Million shares, and then go to 6Billion shares.  Those with the most shares wins?

post #23 of 202
Oh hells yes.

I know stock splits are technically meaningless, but AAPL has been weighed down by completely meaningless negative sentiment. A psychological reset like this might just get things moving up to a reasonable valuation.
post #24 of 202

Google is DEAD. And so is Microshaft.

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post #25 of 202
Quote:
Originally Posted by Freshmaker View Post
 

It will make it more "affordable" to buy Apple stock, and could drive up the price more as smaller investors buy in.  

I hear that argument a lot, but I'm not sure if I agree with it.

 

If somebody couldn't afford $500 a share, then some small investor buying a few shares for $80 won't make much difference in my opinion. It's the big players that count. The small investor doesn't mean crap. 

post #26 of 202
I do _NOT_ pity the poor fools who shorted APPL today before the news. "They" are all the usual whining market manipulators who try to tank the stock every quarter because they are unhappy that APPL only sold 50 million iPhones, when of course Apple should have sold 60 million according to their Wall Street Guesstimates. Let them eat their APPL 'shorts' today!
post #27 of 202
I like the split. It always felt odd trying to sell 14 shares. Now I can sell 100.
post #28 of 202
Quote:
Originally Posted by Freshmaker View Post

Quote:
Originally Posted by josephwinters View Post

Would someone mind explaining to me what a 7-1 stock split is? What happens when you split stock? Or perhaps just point me go a useful area of the interwebs that can better explain it for me. Thanks.
Essentially you're getting 7x the shares of stock that are valued at 1/7th the per-share price.  So, hypothetically, instead of having 1 share of stock that's priced at $700, you'd have 7 shares that are priced at $100.

Generally speaking, this is a good thing.  It will make it more "affordable" to buy Apple stock, and could drive up the price more as smaller investors buy in.  As an example based on AAPL's closing price today of $524.75, the after-split price would be $74.96.  That will no doubt change a lot before June, however.

People who could not afford $524.75 shares could drive up the price by buying $74.96 shares, or their impact could be insignificant.
According to Yahoo finance, institutional ownership of AAPL is 62% today. Let's see how that changes after the split.
post #29 of 202
Quote:
Originally Posted by island hermit View Post
 

7 for 1?

 

Later it says 6 for 1.

 

More than likely 7 for 1.

 

It says you will get six more shares. The AI article just isn't as clear as it could be. So after the split you have seven since you had 1 and got 6. So it is 7 to 1. 

post #30 of 202

The higher the stock value the less crazy fluctuations in the price. I thought that's why Google and Apple did not like splitting.

post #31 of 202
Quote:
Originally Posted by Phone-UI-Guy View Post
 

 

It says you will get six more shares. The AI article just isn't as clear as it could be. So after the split you have seven since you had 1 and got 6. So it is 7 to 1. 

 

"... announced a split granting each AAPL stock owner six shares for each share owned..."

 

Not clear? No. Just wrong.

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post #32 of 202
Quote:
Originally Posted by island hermit View Post

Quote:

Originally Posted by Phone-UI-Guy View Post

 

 



It says you will get six more shares. The AI article just isn't as clear as it could be. So after the split you have seven since you had 1 and got 6. So it is 7 to 1. 





 



"... announced a split granting each AAPL stock owner six shares for each share owned..."



 



Not clear? No. Just wrong.


 



It doesn't say you loose the one you had. 1smile.gif
post #33 of 202
That's one way to handle Wall Street. I'm sure the stock brokers are saying BUY! BUY! BUY!
post #34 of 202
Quote:
Originally Posted by island hermit View Post

Quote:
Originally Posted by Phone-UI-Guy View Post

 

It says you will get six more shares. The AI article just isn't as clear as it could be. So after the split you have seven since you had 1 and got 6. So it is 7 to 1. 

"... announced a split granting each AAPL stock owner six shares for each share owned..."

Not clear? No. Just wrong.

Clear and correct. How do you think splits are executed, if not by granting more shares to current owners?
post #35 of 202
Quote:
Originally Posted by Phone-UI-Guy View Post
 
Quote:
Originally Posted by island hermit View Post
 
Quote:
 
Originally Posted by Phone-UI-Guy View Post

 

 

 

It says you will get six more shares. The AI article just isn't as clear as it could be. So after the split you have seven since you had 1 and got 6. So it is 7 to 1. 

 

 

 

"... announced a split granting each AAPL stock owner six shares for each share owned..."

 

 

 

Not clear? No. Just wrong.

 



It doesn't say you loose the one you had. 1smile.gif

 

It doesn't say you have to give up your shares either in the headline... that makes it 8 for 1.

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post #36 of 202
A 7 for 1 stock split can be illustrated thusly:

If you own 10 shares at the current stock price of $700 per share ($7,000 valuation), you will end up with 70 shares at $100 per share ($7,000 valuation). This is 7 times the number of shares for one seventh the price per share.

This is an "additional" 6 shares per share owned.
post #37 of 202
Quote:
Originally Posted by brlawyer View Post
 

Google is DEAD. And so is Microshaft.

Um....NO.....they are not. All 3 companies will continue to exist and make money. 

post #38 of 202
Quote:
Originally Posted by josephwinters View Post

Would someone mind explaining to me what a 7-1 stock split is? What happens when you split stock? Or perhaps just point me go a useful area of the interwebs that can better explain it for me. Thanks.

 

Nothing happens particularly interesting. You get 7 times your shares at 1/7th of the price... so back to where you started.

 

Arguably pointless. Some people think it makes the shares more affordable, but in reality the number of people who buy single shares is a small fraction of the market.

post #39 of 202
Quote:
Originally Posted by quinney View Post


Clear and correct. How do you think splits are executed, if not by granting more shares to current owners?

 

First of all, you have to actually read my comment. Then proceed from there.

 

The headline says:  "Apple announces 7-for-1 stock split..."

 

The article says: "granting each AAPL stock owner six shares for each share owned..."

 

That is neither clear nor correct.

 

It should say:  "granting each AAPL stock owner an additional six shares for each share owned..."

 

There. Clear and correct.

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post #40 of 202
Quote:
Originally Posted by brlawyer View Post
 

Google is DEAD. And so is Microshaft.

 

That's the part people aren't seeing, but will sooner, rather than later.

 

Apple just cut the nut sack of large traders manipulating the stock by opening it up to become a rising stock once again, for small investors. The flexibility Apple will have against Google's overpriced stock and Microsoft's overly split stock to a point of being a dividend only buy will become more apparent with future acquisitions and potential new markets Apple jumps head long into with new products.

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