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Apple Announces Biggest Stock Buyback In History

Consumer electronics giant Apple (AAPL) has announced that it will buyback $110 billion U.S. of its own stock, the largest share repurchase program ever by a publicly traded company.

The new share repurchases represent a 22% increase over last year’s $90 billion U.S. authorization. In addition to the buyback, Apple said it would pay a $0.25 U.S. dividend going forward, a $0.01 U.S. increase.

The stock buyback and dividend hike were announced with Apple’s first-quarter financial results.

The Silicon Valley-based company reported earnings per share (EPS) of $1.53 U.S., which beat Wall Street forecasts of $1.50 U.S.

Revenue in the January through March quarter totaled $90.75 billion U.S., which topped analyst estimates of $90.01 billion U.S.

Apple’s stock is up 6% in premarket trading on news of the stock buybacks and Q1 results.

However, while investors largely cheer the new share repurchase program, Apple’s earning print contained some troubling signs.

Overall sales declined 4% from a year earlier, while iPhone sales, which account for half of Apple’s revenue, fell 10% year over year during the quarter.

Looking at individual electronic devices, iPhone sales came in at $45.96 billion U.S. in Q1 versus $46 billion U.S. that was expected.

MacBook sales totaled $7.5 billion U.S. compared to $6.86 billion U.S. estimated, while iPad revenue amounted to $5.6 billion U.S. versus $5.91 billion U.S. that was forecast.

Apple’s “other products” revenue reached $7.9 billion U.S. in Q1 compared to $8.08 billion U.S. that was anticipated, and the company’s “services” revenue reached $23.9 billion U.S. versus $23.27 billion that was forecast on Wall Street.

Apple’s gross margin in the quarter was 46.6%, which matched analyst estimates.

Chief executive officer (CEO) Tim Cook blamed the iPhone sales miss on tough year-over-year comparisons. Apple declined to provide any guidance for the current second quarter or full year.

However, on an earnings call, Apple finance chief Luca Maestri said that the services division should continue growing the same rate as the past two quarters.

Apple’s iPhone revenue fell 10% due to weakening sales in the key market of China and as global demand for the current version of the smartphone softens.

Total sales in Greater China, Apple’s third largest region, decreased 8% to $16.37 billion U.S. during the quarter.

The “other products” segment that includes the Apple Watch and AirPod headphones saw sales decline 10% year over year in Q1.

The sales declines were partially offset by MacBook computer sales that rose 4%.

During the quarter, Apple released its first new product in more than five years, the Vision Pro virtual reality headset. However, it was not clear how sales have been for the device that retails for $3,500 U.S.

The company’s “services” category continues to be a bright spot for Apple, with sales rising 14.2% year over year in Q1.

Services includes revenue generated from subscriptions, warranties, licensing deals with search engines, and payments. The company counts over one billion paid subscriptions, including for its Apple+ streaming service.

Prior to today (May 3), Apple’s stock had declined 7% this year to trade at $173.03 U.S. per share.