David Einhorn of Greenlight Applauds Apple Dividend Boost
NEW YORK (TheStreet) - After waging and then withdrawing a battle with Apple
"We applaud Apple's decision to borrow money and return excess capital to shareholders, an idea that was off the table only months ago," a Greenlight Capital spokesperson said on behalf of the fund.
"This positive development represents a more shareholder friendly capital allocation policy and demonstrates the conviction of Apple's management and board in the Company's future."
Greenlight Capital titled its preferred stock proposal iPrefs, however, the hedge fund withdrew a shareholder lawsuit surrounding the payout earlier in 2013.
The company's dividend yield is about 3% based on Apple's current share price of about $404. Apple's annual dividend payments will be about $11 billion as a result of a 15% increase to its payout.
"Apple is among the largest dividend payers in the world, with annual payments of about $11 billion," the company said of its increased dividend payout.
To pay its increased dividend and fund a $50 billion increase in its share repurchase authorization to $60 billion, Apple said in a Securities and Exchange Commission filing it will borrow money.
"In conjunction with the expanded return of capital program, the Company plans to borrow and expects to announce more details about this in the near future," Apple said, without disclosing its lenders.
In second-quarter earnings, Cupertino, Calif.-based Apple reported second-quarter results that met analyst expectations, earning $10.09 per share on $43.6 billion in revenue.
The company sold 37.4 million iPhones in the quarter compared to 35.1 million in the year-ago quarter, while iPad sales rose 65% year-over-year to 19.5 million units per year.
Analysts polled by Thomson Reuters forecast the tech giant to earn $10.01 per share on $42.31 billion in revenue. Analysts surveyed by Estimize were looking for earnings of $10.70 per share on $42.76 billion in sales.
Apple shares were falling less than 1% in after-hours trading to $404.31. Shares have fallen over 23% in 2013 and nearly 30% in the past 12 months.
-- Written by Antoine Gara in New York