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I don't know much about finance. Why would Apple return money back to its shareholders? Doesn't it already do that by paying a dividend?

CapitalistCartr 10y ago
That's what the parent is talking about. Sometimes companies pay out a large, one-time dividend. The other way to pay out to shareholders is to buy back shares on the market. Each approach has its strengths.
cavisne 10y ago
Their corporate responsibility is the maximize return to shareholders. If they cant do anything with the money (and seems they cant) they should be returning it with larger dividends, buy backs etc. If they did do something with the money, i wonder if automation is at the stage where they could invest in local supply chains and bring iphone manufacturing to the US. Chinese labour is not as cheap as it used to be, all the parts are still in china for now though.
justin66 10y ago
> Why would Apple return money back to its shareholders? They're obligated to obey the wishes of the shareholders, who are the owners of the company. If the shareholders want it, the shareholders get it. (That's assuming the shareholders haven't been suckered into buying shares without voting rights, etc.)
cowsandmilk 10y ago
To expand on some other people's comments: Dividends are post-tax and have to be brought back to the US before they are paid out. Apple has a whole bunch of money sitting overseas that it has not paid taxes on. So, if Apple brings it back to pay to shareholders as a dividend, 40% goes to the US government and 60% to shareholders. Let's say Trump tells Apple (and other companies) they can bring the money back with a 10% tax. Now, the shareholders get 90% of the money as a dividend, which is 1.5X the 60%. In order to pay dividends and not pay taxes, Apple has actually gone the route of borrowing money. So, they borrow money in the US and pay a low interest rate while their cash sits overseas.
- dzhiurgis 10y ago
  > In order to pay dividends and not pay taxes, Apple has actually gone the route of borrowing money. So, they borrow money in the US and pay a low interest rate while their cash sits overseas. Wow really. That's clever but also weird. Don't they sustain themselves US being largest market?
- deleted 10y ago
  [deleted]
- eridius 10y ago
  > Apple has a whole bunch of money sitting overseas that it has not paid taxes on. To clarify: they haven't paid US taxes on it. They've paid whatever taxes are levied by the foreign countries they're operating in, but the US also double-taxes that same money if it's brought back into the US.
  - kilotaras 10y ago
    I may be wrong but my understanding is US taxes the difference between foreign and domestic tax rates.
  - DanielBMarkham 10y ago
    Also once they pay tax (again) on it to get it into the U.S., it gets taxed a third time if they distribute it to the shareholders.
nebabyte 10y ago
> Why would Apple return money back to its shareholders? Doesn't it already do that by paying a dividend? Did you read the post?

CapitalistCartr 10y ago

That's what the parent is talking about. Sometimes companies pay out a large, one-time dividend. The other way to pay out to shareholders is to buy back shares on the market. Each approach has its strengths.

cavisne 10y ago

Their corporate responsibility is the maximize return to shareholders. If they cant do anything with the money (and seems they cant) they should be returning it with larger dividends, buy backs etc. If they did do something with the money, i wonder if automation is at the stage where they could invest in local supply chains and bring iphone manufacturing to the US. Chinese labour is not as cheap as it used to be, all the parts are still in china for now though.

justin66 10y ago

> Why would Apple return money back to its shareholders? They're obligated to obey the wishes of the shareholders, who are the owners of the company. If the shareholders want it, the shareholders get it. (That's assuming the shareholders haven't been suckered into buying shares without voting rights, etc.)

cowsandmilk 10y ago

To expand on some other people's comments: Dividends are post-tax and have to be brought back to the US before they are paid out. Apple has a whole bunch of money sitting overseas that it has not paid taxes on. So, if Apple brings it back to pay to shareholders as a dividend, 40% goes to the US government and 60% to shareholders. Let's say Trump tells Apple (and other companies) they can bring the money back with a 10% tax. Now, the shareholders get 90% of the money as a dividend, which is 1.5X the 60%. In order to pay dividends and not pay taxes, Apple has actually gone the route of borrowing money. So, they borrow money in the US and pay a low interest rate while their cash sits overseas.

dzhiurgis 10y ago
> In order to pay dividends and not pay taxes, Apple has actually gone the route of borrowing money. So, they borrow money in the US and pay a low interest rate while their cash sits overseas. Wow really. That's clever but also weird. Don't they sustain themselves US being largest market?
deleted 10y ago
[deleted]
eridius 10y ago
> Apple has a whole bunch of money sitting overseas that it has not paid taxes on. To clarify: they haven't paid US taxes on it. They've paid whatever taxes are levied by the foreign countries they're operating in, but the US also double-taxes that same money if it's brought back into the US.
- kilotaras 10y ago
  I may be wrong but my understanding is US taxes the difference between foreign and domestic tax rates.
- DanielBMarkham 10y ago
  Also once they pay tax (again) on it to get it into the U.S., it gets taxed a third time if they distribute it to the shareholders.

nebabyte 10y ago

> Why would Apple return money back to its shareholders? Doesn't it already do that by paying a dividend? Did you read the post?