Core business generates £100m cash pile for Apple

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Apple Logo Photo

iPhone maker Apple is handing back £39 billion to shareholders via a share buyback scheme.

The massive hand out shouldn’t hurt the company too much since it has around £94 billion in cash stashed in the bank.

The company is also aiming to raise dividends by 15%.

There’s been an increasingly vocal campaign from shareholders and institutional investors for access to the cash for some time because, they say, the money is earning less than 1% in interest and if the company has no use for the hoard then they should hand it back.

News of the share buyback came as Apple announced the first decline in sales for years with an announcement that this current quarter’s sales will be below those of the same period last year.

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Share prices drop

Economic analysts say this could be time to worry for Apple since most companies generally begin handing out cash to shareholders when growth is stalling and when struggling to find ways to invest in the business.

However, Apple is still expanding quickly, compared with other large firms, and the cash pile is a result of the iPhone’s incredible success.

The increasing clamour for Apple to hand over its cash reserves has led to a drop in share prices in recent months – falling by 40% since iPhone 5 was launched last September.

Apple watchers say things should improve and this quarter is generally quiet for customers since many are waiting for the new iPhone which is usually unveiled in the autumn.

Apple’s chief executive Tim Cook said: “Apple’s share price decline of the last two quarters has been frustrating for everyone but we will continue to do what we do best which is to create innovative products.”

New product mystery

He added that the company’s role was not to boost stock prices.

Along with a slide in sales, Apple has also announced the first decline in profits in 10 years though net income was £6.1 billion, or £6.50 per share.

The Apple only began paying a share dividend last summer and has been buying back shares, though just enough to dilute the numbers created by the corporation’s employee stock option programme without making a dent in cash reserves.

However, analysts say that investors believe Apple will not launch another revolutionary new product like the iPhone or iPad again, and the recent buyback underlines this belief.

However, other Apple watchers believe the firm does have a slew of new products in the pipeline since the company puts massive investment into research and development, and much of this work is kept away from investors.

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