Apple To Use Share Buybacks To Satisfy Investors

Apple (NASDAQ: AAPL) is expected to announce plans to return between $100 billion and $150 billion to shareholders through an expansion of its share buyback program and an increase in its dividend. Analysts are predicting that Apple will hike the program by $150 billion to a cumulative total of $450 billion by 2020. Apple is also expected to increase its quarterly dividend to 94.5 cents a share from 63 cents.

The potential share buybacks and dividends follows the passage of the new tax bill in the U.S. late last year. The passage of the bill will make it cheaper for Apple to bring back the money that it is currently holding overseas. Apple is believed to be holding more than $250 billion outside of the country. Apple’s CFO stated that the company would provide an update on that money with this quarter’s financial results.

The moves come amid concerns about Apple’s most important product: the iPhone. The consensus estimate among analysts is for Apple to have sold 53 million iPhones for the quarter ending in March. That would be a slight increase from the 50.8 million iPhones sold in the same quarter last year. The iPhone accounted for more than 60 percent of Apple’s revenue last year.

Many believe that Apple missed the mark with its latest iPhone launches. The iPhone X $999 starting price was too much for some consumers. Two other new devices, the iPhone 8 and 8 Plus, looked similar to the iPhone 6 and 6 Plus models from about three years earlier.

In the future, Apple is preparing to launch a new lower-cost iPhone that looks similar to the iPhone X and has some of the same features. According to people with knowledge of the matter, the iPhone will use an LCD display that’s about half the cost of the OLED screen in the iPhone X and have an aluminum casing instead of stainless steel. Its price is expected to be close to $700, a price level that’s proven successful for Apple in the past.

Chief Executive Tim Cook has also turned his focus to services as a path to growth. In February, Apple reported the services segment saw 18 percent growth, rising to $8.4 billion. This was down slightly from $8.5 billion earned in the previous quarter and missed analyst expectations of $8.6 billion. Wall Street expects $8.4 billion in services revenue this quarter, according to a Thomson Reuters poll of 17 analysts.

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