- Tech giant in £88bn buyback
- Footsie reaches a record
Apple added more than £145bn to its value last night after revealing the largest share buyback in corporate history.
The iPhone maker saw its shares rise more than 7 per cent as it revealed it will spend £88 billion buying its own shares from investors.
The tech giant also increased its quarterly dividend by 4 percent.
The share price rally left Apple valued at £2.3bn, making it worth more than the entire UK FTSE 100.
Only two Footsie companies – AstraZeneca and Shell – are worth more than the £145bn Apple made in a single day.
Momentum: The share price rally left Apple valued at £2.3 trillion, making it worth more than the entire FTSE 100 in the UK.
Apple’s promise to return cash to shareholders lifted spirits on trading floors around the world.
Morale was also boosted by figures showing that only 175,000 jobs were created in the United States last month. It was much smaller than expected and revived hopes that the Federal Reserve will press ahead with interest rate cuts in the United States this year.
There were fears the central bank would not cut rates at all as it struggles to control inflation.
But Paul Ashworth, chief North American economist at Capital Economics, said the jobs report “puts rate cuts back on the table,” but added: “Don’t completely rule out rate cuts this year.”
Wall Street’s main benchmarks soared higher, while the FTSE 100 hit an all-time high of 8,248 yesterday before closing at a record high of 8,213.49.
Apple’s share buyback plans overshadowed a drop in revenue in the three months to the end of March – down 4 per cent to £72bn. The company has suffered in recent months and recently lost its crown as the world’s largest phone maker to South Korean giant Samsung.
However, Apple CEO Tim Cook told reporters that iPhone sales increased in mainland China in the latest quarter. He has also remained optimistic about the company’s growth and has focused his attention on the group’s work in artificial intelligence.
Cook said more about this would be revealed “in the coming weeks.” Deepwater Asset Management’s Gene Munster said: ‘I think the most important thing is that the business is holding together and preparing for what should be accelerated growth over the next three quarters. That’s why stocks are up.
The buyback brings Apple in line with its Silicon Valley rivals who have been trying to attract investors.
In February, Meta – owner of Facebook, Instagram and WhatsApp – announced that it would pay dividends for the first time. And last week, Google owner Alphabet unveiled its own £56bn share buyback.
Danni Hewson, head of financial analysis at brokerage AJ Bell, said: “Growth stocks need to demonstrate that they continue to grow at a rate that satisfies their shareholders.” Once that growth slows, and Apple is a prime example, buybacks or dividends may persuade investors to keep the faith.
