Apple repurchases $14 billion of its stock in 2 weeks since posting 1Q results
In this Thursday, May 9, 2013 photo, people walk near the Apple store in Santa Monica, Calif. (AP Photo/Reed Saxon)
Michelle Chapman, The Associated Press
Published Friday, February 7, 2014 7:39AM EST
Last Updated Friday, February 7, 2014 1:15PM EST
NEW YORK -- Apple has repurchased $14 billion of its stock in the two weeks after its first-quarter financial results and second-quarter revenue outlook disappointed investors.
Its shares rose in morning trading Friday.
Apple bought $12 billion of the shares through an accelerated repurchase program and $2 billion on the open market, the company confirmed.
Late Thursday Apple Inc. CEO Tim Cook said in an interview with The Wall Street Journal that the company was "surprised" when its stock dropped 8 per cent the day after its earnings report and revenue outlook. He told the newspaper he wanted to be "aggressive" and "opportunistic."
Apple has grown accustomed to being a leader in the technology sector. In the Steve Jobs era, consumers and investors alike eagerly awaited each new product announcement and have been rewarded as devices like the iPhone and iPad won accolades for innovation and pushing technology forward.
But with each new innovation over the years, there have been increasingly higher expectations for the future. So when Apple's first-quarter iPad and iPhone sales were not as big as expected by investors, and its second-quarter revenue forecast fell short of Wall Street's view, the stock got dinged.
In the past year Apple's shares have started losing some ground due to concerns about slowing growth and increasing competition.
And with the smartphone market becoming inundated with options, Apple may be hard pressed to lift its stock back to where it stood at its peak price of more than $700 in September 2012. That was before investors began to fret about fiercer competition in mobile devices and Apple's lack of a breakthrough product since the iPad came out nearly four years ago.
But Apple isn't sitting idle. Its $14 billion stock buyback signals the company remains confident in its business. This is good news for investors, including Carl Icahn. The billionaire activist investor has been pressuring Apple to boost its share repurchases. Just last month Icahn raised his stake in Apple, revealing on Twitter that he'd put another $500 million into Apple stock. He already owned about 4.7 million Apple Inc. shares worth more than $2.5 billion.
Icahn has said he wants the Cupertino, Calif., company to spend $50 billion buying back its own stock during the current fiscal year ending in September.
Apple has repurchased more than $40 billion of its shares in the last 12 months.
The company's stock added $6.79, or 1.3 per cent, to $519.50 in morning trading. Apple shares are up almost 11 per cent since a year ago.