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Apple's $110 Billion Mistake

Throughout 2024, stock markets anticipated that Apple (AAPL) would report a double-digit percentage drop in iPhone sales. Last week, the firm offset weak iPad and iPhone sales by announcing a massive $110 billion stock buyback. It also hiked its dividend to 25 cents a share, up by 4%.

The dividend increase is somewhat comparable to Alphabet’s (GOOG) dividend yield. first-time-ever dividend. GOOG stock now pays a 0.19% dividend yield, compared to Apple’s 0.50% yield.

Sales Fall

Apple posted iPhone sales of $45.96 billion. Sales weakened primarily from trouble in China. Although the media credits domestic brands like Huawei and Xiaomi for taking Apple’s market share, China’s economic weakness is the primary reason. Wearables and iPads accounted for $5.56 billion and $7.91 billion in revenue. This is down by 17% and 9.6%, respectively.

Risk from Stock Buyback

Apple silenced bears with the aggressive stock buyback last Friday. AAPL stock gained 5.98%, erasing much of the YTD loss. Shares are now down by 4.75% in 2024.

The long-term prospects for Apple may prove worrisome. The firm is rewarding shareholders and management as core sales decline. Apple could have invested in innovating the iPhone, iPad, and Macbook technology. Without major product changes, consumers will delay upgrading their devices.

Samsung overtook Apple as the #1 smartphone manufacturer. Its Flip and Fold phone devices are winners. Apple needs a similar product win that resonates with its loyal fans.

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