CUPERTINO -- Apple (AAPL) announced Tuesday that it would increase the cash it plans to push back to its shareholders to a total of $100 billion, including purchasing shares back from investors in a program it called the largest in corporate history.
The tech giant increased its plans by $55 billion through its dividend and share-repurchase program. Apple will increase the dividend it pays to investors by 15 percent to $3.05 per share while committing an extra $50 billion to buying back shares. Apple now plans to repurchase $60 billion worth of shares through the end of 2015, which it called "the largest single share repurchase authorization in history" in the announcement.
"We are very fortunate to be in a position to more than double the size of the capital return program we announced last year," CEO Tim Cook said in Tuesday's news release. "We believe so strongly that repurchasing our shares represents an attractive use of our capital that we have dedicated the vast majority of the increase in our capital return program to share repurchases."
Apple said that it will borrow money in order to execute its plan, with more details promised in the future. Standard & Poor's immediately announced that it had assigned Apple an "AA+" corporate credit rating.
Apple has faced calls for a greater cash return to its shareholders, most famously from David Einhorn, who runs Greenlight Capital, a large investor in Apple. Einhorn sued to keep Apple from changing its governance rules to make it harder to establish a preferred set of shares with a higher dividend for large investors, succeeding in keeping the cote from being held at Apple annual shareholders meeting March 1.
In its earnings report for the first quarter of 2013, also released Tuesday, Apple said it had $145 billion in cash, but much of that is held overseas to avoid repatriation taxes.
"Most of Apple's cash is overseas, so what they have to do is take debt in the U.S. that is probably collaterized with the money overseas," Morningstar analyst Brian Collelo explained in an interview with Reuters.
"We were hoping Apple would make such a move and I think investors are encouraged by it," he added.
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