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

Posted:
in AAPL Investors edited September 2014
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.

Wangfujing Apple Store


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.
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Comments

  • Reply 1 of 188
    gwmacgwmac Posts: 1,795member
    Go Apple!!!
  • Reply 2 of 188
    lkrupplkrupp Posts: 6,530member

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

  • Reply 3 of 188
    smart companies always earns in smart ways still looking forward to the iPhone 6
  • Reply 4 of 188
    gwmacgwmac Posts: 1,795member
    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. 

  • Reply 5 of 188
    nasseraenasserae Posts: 3,152member
    Sweet! This should make the stock more affordable and hopefully increase in price :)
  • Reply 6 of 188
    paul94544paul94544 Posts: 1,027member
    Now We can start trading options , I wonder if there will be $ strike prices?
  • Reply 7 of 188
    mpantonempantone Posts: 1,348member
    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.

  • Reply 8 of 188
    philboogiephilboogie Posts: 7,435member
    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...
  • Reply 9 of 188
    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.
  • Reply 10 of 188
    apple ][apple ][ Posts: 8,360member
    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.

  • Reply 11 of 188

    7 for 1?

     

    Later it says 6 for 1.

     

    More than likely 7 for 1.

  • Reply 12 of 188
    apple ][apple ][ Posts: 8,360member
    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.

  • Reply 13 of 188
    gwmacgwmac Posts: 1,795member

    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. 

  • Reply 14 of 188
    originalgoriginalg Posts: 381member
    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!)

  • Reply 15 of 188
    drowdrow Posts: 121member

    pity anyone who shorted today.  bwahahaha...

  • Reply 16 of 188

    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?

  • Reply 17 of 188
    noelosnoelos Posts: 101member
    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.
  • Reply 18 of 188
    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.

  • Reply 19 of 188
    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.  :)

  • Reply 20 of 188
    originalgoriginalg Posts: 381member

    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)

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