Apple surprises with major share buyback

Profit down 18%

The results of the second quarter of the
financial year of Apple were highly anticipated, but CEO Tim Cook had no other
choice than to admit Apple had a drop in profit for the first time since the
third quarter of 2003.

Still, the results were better than originally
expected: compared to a year earlier profits dropped by 18%, but analysts had
predicted an average drop of 18.9%. It has to be said that predictions were
particularly pessimistic: many analysts believe the glory days of Apple are over.

Rise in sales thanks to growth markets

Sales also were slightly better than expected and rose to 43.6 billion dollar (33.5 billion euro), 11.2 percent more than in
the same quarter of the previous financial year. Analyst predictions were
around 42.26 billion dollar (32.5 billion euro). A reason for the growth is the
rising demand of iPhones and iPads in especially growth markets.

In total 37.4 million iPhones and 19.5 million
iPads were sold. As was to be expected, the sales of Mac-computers stagnated at
almost 4 million units.

Buyback of 50 billion dollar

The biggest surprise were the plans of Apple to buy back 50 billion dollar of its own shares by the end of 2015. This is mainly
a counter-action to the persisting criticism the company is getting about its
enormous pile of cash, which is about forty percent of the company’s market value.

Earlier this year influential American hedge
fund manager David Einhorn filed a lawsuit against Apple, because he believed
the technology giant should put more effort in creating a higher value for
shareholders. Apple seems to be tackling that problem: with the buyback Apple
will have 77 billion euro flow back to shareholders between now and 2015.

Extraordinary about the buyback is it puts Apple
that had a pile of cash worth 112 billion euro at the end of March, in debt.
This is because two thirds of the money is abroad an can only be transferred to
California at a heavy fiscal cost.