Apple Inc plans to share more of its steadily growing $145 billion cash pile, bowing to investors' increasingly strident demands and sending its shares higher.
The tech giant plans to return $100 billion of cash to shareholders under an expanded program, which includes issuing debt for the first time. The company will increase share repurchases and offer a higher dividend to the end of 2015.
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It marks a $55 billion increase to a program unveiled just a year ago.
Shares of the company, which were halted before the release of its earnings results, jumped 6 percent. They pared gains and were trading lower.
Apple also posted on Tuesday fiscal second-quarter revenue that beat Wall Street's expectations as iPhone and iPad sales surpassed investors' lowered expectations.
But profit declined for the first time in a decade and revenue, although rising 11 percent, was a sharp slowdown from 2012 and in previous years.
CEO Tim Cook acknowledged on a conference call with investors that Apple's growth rate had slowed, but stressed that the company's position remained strong.
Apple earned $9.5 billion or $10.09 a share in the quarter, down from $11.6 billion or $12.30, a year earlier.
The company reported better-than-expected second quarter revenue of $43.6 billion, beating Wall Street's average forecast for $42.3 billion, according to Thomson Reuters I/B/E/S.
Apple's shareholders will now get an annual dividend of $12.20 per share, making Apple one of the highest dividend-paying companies. With about 940 million shares outstanding, Apple will return $11.5 billion to shareholders over 12 months, an amount that exceeds the market values of 200 other corporations in the S&P 500.
In a rare move, the company also said it plans to raise debt for the expanded program, but did not provide any details. Investors have urged the company to borrow rather than repatriate money from abroad, where much of its cash is parked, to avoid incurring heavy taxes.
Apple's gross margins, which most investors closely watch, came in at 37.5 percent in the second quarter, compared to expectations for 38.5 percent.
While Apple is still growing, it's pace of growth has slowed as high-end smartphone adoption approaches saturation in the developed world and it goes head-to-head with increasingly aggressive rivals in developing countries like China and India where cheaper models are more popular.
Wall Street has zeroed in on Apple's industry-leading margins, which it fears is under pressure as Samsung Electronics and other Google Inc Android software adopters flood the market with lower-priced models.
(Reporting By Poornima Gupta; Editing by Bernard Orr)