Apple’s latest quarterly report was released Wednesday evening, and the company beat estimates for revenue and earnings per share, but the big news is about Apple the stock, not Apple the company that used to create innovative products.
Apple is splitting its stock 7-for-1 in order to lower the share price, while also raising its dividend and adding another $30 billion to its share-repurchase program. A company with as much cash on hand as Apple can surely raise its dividend and repurchase some shares without creating any problems. I tend to think dividends are a better way to send money back to shareholders than repurchases.
The big headline from the announcement is the stock split. By splitting the stock, the company lowers its per-share price, which the company apparently hopes will attract new investors. It also means the stock will likely be added to the Dow Jones Industrial Average, which it had been excluded from before because its stock price was too high.
I’m not entirely convinced about the value of attracting investors who wouldn’t by a stock that trades for more than $500 but would buy one that trades for about $80. It’s possible that more investors would consider buying the stock, but why does the management at Apple care? Is it because more potential buyers could mean a bump to the total value of the company?
I’d much prefer that CEO Tim Cook and the rest of the people in charge at Apple spent their time working on new products, the company’s last truly new product, the iPad, was introduced in 2010. Speaking of iPads, Apple sold 16.35 million tablets in the most-recent quarter, compared to 26.04 million in the prior quarter and 19.48 million in the year-ago period. So sales of the company’s newest product line are already starting to fall. Aren’t you glad you’ll be able to buy a greater number of shares soon?
Sales of the iPhone helped boost the company’s quarterly revenue, but even there, the news isn’t all good. Sales volumes were up, but the average selling price fell by $41, suggesting that the company is selling a lot more iPhone 4Ss than flagship 5Ss. For the record, the 4S was announced on Oct. 4, the day before Apple’s founder, Steve Jobs, died.
That means Apple is a technology company whose sales are tied to a pair of devices that are several years old. Sure there are plenty of rumors about some a watch, or some kind of television device, but we’ve been hearing those same rumors for years.
If I were an Apple investor (I’m not), I’d be very concerned that Apple’s management seems to be focused on managing the stock, and not a company that used to be a major innovator in the technology sector.
— Market Intelligence Center