An Apple stock split has been approved for the first time in nine years
, as the technology giant attempts to boost its stock price by luring back investors who have been hesitant to invest in the company for fear of slowing sales growth and rumors of an innovation lull.
Announced on Wednesday, the move would result in the iPhone maker exchanging seven shares for each that is held on June 2, lowering its share price to about $75 apiece from the current $525 a share, Bloomberg News reported
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The move was part of Apple's fiscal second-quarter earnings report and is in part a result of the weaker than expected performance of the Apple stock over the past 18 months. Having hit its peak in September 2012, Apple's stock has since been lowered by 25 percent. In comparison, Standard & Poor's 500 has climbed by 28 percent during the same period, The Associated Press noted
The last time Apple split its stock price was in February 2005. Since then, the company’s stock has increased nearly 12-fold.
In a conference call Wednesday, Apple CEO Tim Cook told analysts that Apple's stock price "does not reflect the full value of the company."
Following the stock split announcement, Apple's stock soared in extended trading Wednesday by $41.40, nearly 8 percent, to $566.15, the AP reported.
In addition to the stock split, Apple will also be increasing its quarterly dividend by 8 percent to $3.29 per share, up from $3.05 per share.
The lower share price will likely give Apple the opportunity to join the Dow Jones Industrial Average
. With its $525 share price, Apple's inclusion in the stock index would have given the company an influence over its scaled average.
"Really the only barrier keeping Apple out of the Dow was that high price tag," Richard Moroney, CEO at Horizon Investment Services in Hammond, Indiana, told Bloomberg News. "It’s the biggest company, it’s clearly a quality company with a long record of success and it’s the leader in its industry -- all things the keepers of the Dow Jones Industrial Average look for."
With a $75 per share stock price, Apple's stock would be about the 18th biggest in the Dow.
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The lowered share price would also make "the stock more attractive to the smaller buyers," according to Burnham Asset Management Corp. fund manager Jon Burnham.
"It’s better priced and more people will buy it," Burnham told Bloomberg News.
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