Introduction: Microsoft announces $60bn buyback; Apple hit by iPhone demand worries
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
It’s a tale of two tech companies this morning, as Microsoft announces a monster cash return to shareholders… and Apple is hit by fears of weak demand for its new iPhone 16.
Microsoft surprised Wall Street last night by unveiling a new $60bn (£45bn) stock-buyback program – a way of returning excess cash to investors – and raising its quarterly dividend by 10%.
The plan matches Microsoft’s largest ever share buyback plan, according to Bloomberg.
The scale of the move was unexpected, as Microsoft has been ramping up its investment to support artificial intelligence. The company had also disappointed shareholders at the end of July when it reported a slight slowdown in growth at its Azure cloud computing arm.
Its net income in the last year rose 22%, to $88bn, leaving it with over $75bn of cash on its books.
Microsoft is currently the world’s second largest company, worth around $3.2tn, behind Apple (at $3.3tn).
That gap narrowed yesterday, as Apple’s shares fell by 2.8% following analyst report that demand for the iPhone 16 was weaker than hoped.
Early pre-order data from BofA Global Research revealed shorter global shipping times for the iPhone 16 Pro models compared with last year’s 15 Pro models, in the first three days of pre-order sales.
TF International Securities’ analyst Ming-Chi Kuo calculated that pre-order sales for the iPhone 16 are around 12.7% lower than for last year’s iPhone 15.
Having analysed data on pre-order sales, delivery times and shipments, Kuo explained in a post on Medium:
The key factor is the lower-than-expected demand for the iPhone 16 Pro series.
However, not every analyst was concerned by the lack of meaningful growth in iPhone pre-orders.
D.A. Davidson analyst Gil Luria points out that the phone’s AI features are being rolled out gradually.
… which means the upgrade cycle will likely materialize over the next 12-18 months.”
The agenda
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10am BST: ZEW index of German economic confidence
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1.30pm BST: US retail sales for August
-
2.15pm BST: US industrial production for August
-
3pm BST: NAHB index of US housing market
Key events
Microsoft’s $60bn share buyback programme is the third-largest announced by any US company this year, Marketwatch reports.
The only companies to announce bigger share-repurchase authorizations so far this year are Apple ($100bn) and Alphabet ($70bn).
Chipmaker Nvidia and Facebook-owner Meta have both announced $50bn buybacks this year.
On the other side of the coin, though, Microsoft will still be one of the lowest-yielding stocks on the Dow Jones industrial average, even after raising its dividend by 10%.
Tech firms have traditionally paid lower dividends than average, focusing on using their cash to fuel growth and pay for acquisitions (although such large share buybacks shows they are strugging to pull this off).
Amazon mandates five days a week in office starting next year
Elsewhere in the tech sector, Amazon has announced it would require employees to return to the office five days a week, from the start of next year.
Andy Jassy, Amazon’s CEO, said in a note to employees.
“We’ve decided that we’re going to return to being in the office the way we were before the onset of COVID. When we look back over the last five years, we continue to believe that the advantages of being together in the office are significant.”
The e-commerce giant’s previous office attendance requirement for its workers was three days a week. Amazon workers can claim “extenuating circumstances” or request exceptions from senior leadership, according to Jassy’s memo.
“If anything, the last 15 months we’ve been back in the office at least three days a week has strengthened our conviction about the benefits.”
He cited improved collaboration and connection between teams as reasons for the new requirement as well as the ability to “strengthen our culture”.
Introduction: Microsoft announces $60bn buyback; Apple hit by iPhone demand worries
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
It’s a tale of two tech companies this morning, as Microsoft announces a monster cash return to shareholders… and Apple is hit by fears of weak demand for its new iPhone 16.
Microsoft surprised Wall Street last night by unveiling a new $60bn (£45bn) stock-buyback program – a way of returning excess cash to investors – and raising its quarterly dividend by 10%.
The plan matches Microsoft’s largest ever share buyback plan, according to Bloomberg.
The scale of the move was unexpected, as Microsoft has been ramping up its investment to support artificial intelligence. The company had also disappointed shareholders at the end of July when it reported a slight slowdown in growth at its Azure cloud computing arm.
Its net income in the last year rose 22%, to $88bn, leaving it with over $75bn of cash on its books.
Microsoft is currently the world’s second largest company, worth around $3.2tn, behind Apple (at $3.3tn).
That gap narrowed yesterday, as Apple’s shares fell by 2.8% following analyst report that demand for the iPhone 16 was weaker than hoped.
Early pre-order data from BofA Global Research revealed shorter global shipping times for the iPhone 16 Pro models compared with last year’s 15 Pro models, in the first three days of pre-order sales.
TF International Securities’ analyst Ming-Chi Kuo calculated that pre-order sales for the iPhone 16 are around 12.7% lower than for last year’s iPhone 15.
Having analysed data on pre-order sales, delivery times and shipments, Kuo explained in a post on Medium:
The key factor is the lower-than-expected demand for the iPhone 16 Pro series.
However, not every analyst was concerned by the lack of meaningful growth in iPhone pre-orders.
D.A. Davidson analyst Gil Luria points out that the phone’s AI features are being rolled out gradually.
… which means the upgrade cycle will likely materialize over the next 12-18 months.”
The agenda
-
10am BST: ZEW index of German economic confidence
-
1.30pm BST: US retail sales for August
-
2.15pm BST: US industrial production for August
-
3pm BST: NAHB index of US housing market