Earlier in April, David Einhorn of hedge fund Greenlight Capital applauded the iPhone maker's decision to finance the dividend increase and boost to its share buyback authorization, after waging and then withdrawing a battle with the smartphone pioneer to pay out a perpetual preferred stock dividend. "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 on April 23. "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. Apple said in earnings it will increase its quarterly dividend to $3.05 a share as part of a plan to return $100 billion in cash to shareholders by the end of 2015. 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.
Apple previously said its bond offering, filed on Tuesday, will be used to pay for the company's increased dividend and its $60 billion share repurchase authorization. "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 on April 23. The company's annual dividend payments will be about $11 billion as a result of a 15% increase to its payout, topping Dow stalwarts such as ExxonMobil ( XOM) and AT&T ( T), according to an April analysis from Moody's.
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. -- Written by Antoine Gara in New York Follow @AntoineGara