10 ms·

Apple Announces Plans to Initiate Dividend and Share Repurchase Program

• infiniteburp 15y ago
  Initiate? How about "re-instate dividend". Apple previously paid a dividend : http://finance.yahoo.com/q/hp?s=AAPL&a=08&b=7&c=1984&d=02&e=19&f=2012&g=v http://finance.yahoo.com/q/hp?s=AAPL&a=08&b=7&c=...
• brudgers 15y ago
  Not exactly surprising or bold, i.e. it is the easiest way to deal with the surplus of cash. However, it could be seen as an indicator that Apple's management cannot figure out how to use all that cash to continue the company's growth. In that sense, the announcement of a dividend is a bellwether moment.
  • sithwarrior 15y ago
    Or that is dosent need all of 100 billion dollars in cash to continue its growth.. If you look at the details, they will use 45 bil over 3 years, so in 2015 I believe they'll still have about 100 billion in cash.
    • shingen 15y ago
      They're now accumulating $40 billion per year in cash (for likely fiscal 2012 numbers). So they'll continue to add to the stock pile of cash most likely. By 2015, under this plan, they'll have perhaps $135 to $150 billion in cash, unless they increase the buy-backs or dividend further, and that's assuming their annual profit stops growing.
  • robryan 15y ago
    A big acquisition could just end up being a distraction from their core businesses. There is probably only so much you can spend on improving the current supply chain, $100 billion+ is a crazy large amount. What if they feel they can continue growth without spending every last cent?
    • melling 15y ago
      They could buy a well run supporting business and leave it alone. Diversifying outside your core business is a bit risky, of course.
      • maukdaddy 15y ago
        Apple does not want to become a conglomerate. No matter how "alone" you want to leave a subsidiary it will always be a distraction to management.
  • mbateman 15y ago
    A more positive way to see this is that Apple has become so profitable that they can continue funneling huge amounts of cash into everything that they want, and still have lots left over. But I agree with your sentiment. It's a bit sad that Apple seems to have maxed out their ability to use money on themselves.
  • shingen 15y ago
    As the world's largest corporation, they are now under intense scrutiny by the US Government, which prefers to leash all massive corporations. Apple is not allowed to spend its $100 billion buying companies, even if it wanted to. For example, they could buy HP and Dell and shut them down (maybe all PC manufacturers in fact, just with cash); such would not pass anti-trust concerns. They could buy Facebook with cash + stock; again, that wouldn't make it through anti-trust review. And so on. Even though they're not formally regulated under anti-trust just yet as, say, Microsoft was - their actions are indeed strictly limited by what the government will allow them to do.
    • nikcub 15y ago
      I can't think of a single business that Apple could buy (note: could buy, not 'look at the market cap and assume that is what it costs to buy the company') that would give it a level of control in an industry that the government would care about.
      • shingen 15y ago
        HP, Dell, Facebook, ARM Holdings, TXI, Cisco, Google, Amazon, Oracle, Intel, AT&T, Verizon. Apple could buy any one of them, either through friendly or hostile means. Not a single one of those would make it through anti-trust. Shareholders for Cisco would love to get $200 billion for their company; the US Government would never allow it in a million years. Shareholders for Amazon would love to get $200 billion, and they'd likely outvote Bezos' family holdings to agree to the purchase. Larry Ellison would sell Oracle for $300 billion in a heartbeat, and all shareholders would agree. Intel shareholders would instantly take a $300 billion bid; the US Government would never allow that purchase either. Apple also would never be allowed to gobble up either of the telecom monsters; AT&T shareholders would take a cash + $250 billion in shares deal, and Verizon shareholders would easily sign off on a $200 billion deal. I think Apple would love to own their own telecom network, given their love of all things integrated. The things they could probably do in owning something like Verizon's network would be astounding. It would never be allowed.
        • 15y ago
• nikcub 15y ago
  The expectation of a larger dividend is what has been driving the share price up recently (which is why it will probably fall today). I don't know where that expectation came from. First Apple had the problem of repatriating international funds, so this was never going to be a $30, $50 or $100 (some crazy estimate) dividend. Second all precedent from similar companies issuing a first dividend (well not first for Apple, but first for the 'new' Apple) such as Microsoft and Cisco is 1-2%. I don't think the buyback will be very effective, not against the bigger dividend expectation. 1.8% is about par. I am surprised they didn't split the stock. Question now is how far the stock will fall today before picking back up again later on as yield-focused funds buy into the new action.
  • csomar 15y ago
    It's actually trading +1.67% (pre-market).
    • nikcub 15y ago
      which is up on Fridays close but down a few points on the highs reached in after-market over the weekend (~609). get a better sense a bit after the markets open and then at the end of the day today. this news should be a disappointment, but nothing about the hysteria around AAPL surprises anymore.
      • csomar 15y ago
        The day ended. Apple closed on +2.6% over $600 for the first time.
  • smackfu 15y ago
    For MSFT, they started dividends in Feb 2003, but then did a huge one time dividend in Nov 2004, $3.08 / share or about 11% of their stock price at the time. So there is precedent for tech companies issuing large dividends to get rid of cash stockpiles.
    • nikcub 15y ago
• bdz 15y ago
  why they are announcing this 30 minutes before the actual conference call?
  • jrockway 15y ago
    Because investor conference calls are not Macworld keynotes. The call is for questions, not "one more thing".
• bluedevil2k 15y ago
  They make more money every quarter than they plan to pay out with dividends or stock repurchases - so their cash hoard will continue to grow...just more slowly now.
• jsumrall 15y ago
  After reading the article about SpaceX, I think Apple should start their own program. They can afford it. SpaceX is being paid less than 2 billion to go to the space station. I'm thinking: iRocket iSpaceShip iStation See, there a product family already. And the best part is that the iSpaceShip can only dock with an iStation. So you gotta buy everything.
  • astrodust 15y ago
    Apple has shown it's unwilling to invest in things it can't turn into a huge win. It's not being run by Howard Hughes.
• bbhacker 15y ago
  I am in no position to tell Apple how they should spend their money but after reading the articles about Elon Musk today I can't help but imagine how the world could be changed to become a better place with all this money. And I don't mean that Apple should give money away to charities. Why not invest in space exploration , electric cars, self-driving cars, medical devices, green energy,... It is not Apple's core business, but "phones" have not been the business of "Apple Computer" as well. Apple has moved humanity forward with the personal computer and mobile phones. I don't want them to stop with computers, smartphones, tablets or TVs. I want Apple to aim for more than just consumer electronics - but I guess we won't see that happening.
  • tptacek 15y ago
    They can't, unless they believe they'll be profitable doing it. It's not their money. That's a difference between Apple and Musk.
    • jcfrei 15y ago
      that's not true. it is their money - the shareholders probably just wouldn't like the move and as a result, apples stock price would plummet (but that doesn't really need to bother them - it's not like somebody's just gonna buy the currently most expensive company in the world). however what would bother me more as an investor would be that apple apparently has no idea what to do with all that money (how about expanding R&D even more, like microsoft? and develop the next gen input devices (after touchscreens))
      • brown9-2 15y ago
        The shareholders of Apple are the owners of Apple. They get the final vote in the end, although it has to be translated through boards of directors and management.
      • lusr 15y ago
        The Apple Board of Directors has a fiduciary duty to investors. If they take action that causes the share price to fall dramatically, thereby losing investor value, you can be pretty sure the Board will not last very long so yes it would matter.
• themichael 15y ago
  This is a strategic shift to turn the apple shareholder basis from a hedgefund hotel to a dividend fund stock. Very smart as in a deflationary shock hedge fund liquidate profitable assets first. With the recent AAPL performance the stock is probably on top of the list. Most interesting fact of the call: "Apple had a record weekend" Tim Cook (referring to sales start of the new ipad.)
• rmc 15y ago
  Why are Apple doing this? I don't know much about stock and companies with money, but people on this thread are implying that Apple must get rid of it's cash? Why? Surely cash is good? Safety net? What if the sales plummet you don't go out of business, etc. etc.?
  • brown9-2 15y ago
    Apple believes that it can offer a better return on that cash by giving some portion of it back to it's owners/shareholders than by continuing to hold it all in reserve. That's really all this is about.
    • WettowelReactor 15y ago
      Thank you. This is the first time I have seen dividend explained in a matter that makes sense.
  • nikcub 15y ago
    the Wall St logic is that since Apple are not spending the cash and it is just sitting there and earning almost nothing then you are better off giving it back to investors to invest for themselves (buying t-bills isn't hard, we can do that ourselves). the century old idea of stocks (and what buffet et al subscribe to) is about generating a yield from profits. the secondary effect is that now those types of investors will buy into Apple since it yields a dividend, like a good old blue chip stock should (which in-turn raises demand for the stock, which in-turn raises the share price - meaning the cash is being put to better use).
    • veyron 15y ago
      They were pressured by wall street to actually do something with the money. I for one would have liked to see apple carry the cash balance. Sure they aren't making much from the cash, but I'm pretty sure there are better uses of the money. For example, why not buy a few suppliers?
      • 15y ago
• Porter_423 15y ago
  What Apple will do with its cash has long been a topic for discussion, with analysts and investment specialists crying for a dividend
• programminggeek 15y ago
  I hate to say this is a bad idea, but dividends signal to the market that you have no better way to spend your money than just giving it back to investors to spend elsewhere. Combining a stock buyback plan is smart at least because perhaps they can balance the two and counteract the dividend effect by buying up shares. In reality Apple could probably just become a private company by buying back most/all the public shares, but I doubt they want to do that. There are obvious PR benefits to being the "most valuable" or "most profitable" public company in the world. Also, as far as space travel and exploration, that makes no sense for Apple. Apple is not a company that invests huge in R&D projects that won't pay off for decades. It would ruin their incredible focus on what they are doing now and for the next 5 or so years. If you get too far out ahead, you build things the world isn't ready for yet or you stop executing on the here and now products and services. Apple's still got a ton of room for potential growth on phones, pc's, and tv's. There are also a whole slew of "post pc" computing interfaces and devices that haven't even been dreamed up yet. Space travel would be a distraction.
  • ohashi 15y ago
    What are their other options other than simply accumulating cash and not being able to spend it versus a dividend. Having a war chest is nice, but at a certain point it's being wasted if you could basically buy any company on earth tomorrow if you wanted.
  • Me1000 15y ago
    Apple's cash reserves grew about $30B last year, they're announcing that they're going to spend $45B over the course of 3 years. Assuming the current cash reserve growth continues at the same rate, I really don't think the market will look at the dividends as not knowing how to spend their money...
    • astrodust 15y ago
      They know how to spend the money they have. The "problem" is that they keep making tons more.
  • ANH 15y ago
• debacle 15y ago
  It makes sense - this isn't a dividend to lure investors, it's an effort to reduce their cash reserves to a more sane level. There's nothing out there right now that Apple has use for that they can't buy, so why not reduce their reserves a bit?
• outside1234 15y ago
  The best part of this is that it is leadership for the rest of S&P 500 to start paying a dividend when they can't effectively invest parts of their income stream. The alternative is something like Microsoft, which couldn't invest the money but still tried with all sorts of terrible acquisitions. This is a better alternative for shareholders.
• Osiris 15y ago
  With $100B in the bank, I keep thinking that Apple could do a lot more to disrupt of lot of industries. They could afford to build an entirely new wireless carrier, from scratch (I understand spectrum might be an issue). They could create an entire newly kind of music label that redefines how artists are compensated and how labels make money. Or they could create their own new book publishing company that breaks with the traditions of the big publishers to make e-Books the focus and more affordable. They could probably buy up most of their entire supply chain. So they must have good reasons for not wanting to use those funds to distrupt those other industries more than they already have. I'm sure they don't want to get out of their core competencies, but setting up subsidiary businesses would seem like a good way to get what they want.
  • Cushman 15y ago
    It's the first one that excites me. Apple could completely upend the wireless market by selling data service at cost as a loss-leader for their devices-- or even building lifetime unlimited data into the price of every Apple device. Compared to the cost of building the network, what's $100 million on lobbying to nab some free spectrum? Alas, I think the current arrangement is working too well for Apple to want to take that kind of insane risk. Shame.
    • deleted 15y ago
      [deleted]
    • kytmizuno 15y ago
      I think spectrum is quite a bit more expensive than that. Qualcomm recently sold a spectrum block to ATT for nearly $2 billion. Granted it was probably a more desirable block (lower 700 Mhz) than most others.
      • Cushman 15y ago
        Yeah, that's a good point. But even a billion dollars wouldn't put it out of their price range. I'd also imagine they could drum up serious public support by offering to give everyone free cell service, and maybe squeak out a legislative discount. But I guess it's all a pipe dream anyway.
• drawkbox 15y ago
  The only time Apple had a dividend before was the time when Jobs was not there and innovation left (87-mid 90s). Let's hope this does not signal that. As a shareholder I'd preferred if they just kept and invested the money in new products. Why not use that money to speed up the real Apple TV? Screen tech? Storage? There are still lots of advancements left in handheld and this levels the playing field a bit. Apple hoarding cash was intimidating to competitors. Jobs would not have done this. It was the first thing they did when he left in the late '80s and the first thing he ended when taking back over in the mid 90's.
  • WiseWeasel 15y ago
    Apple has only become this profitable by abandoning their early days' Not Invented Here syndrome, when they used to design and build their products from soup to nuts, and instead riding the wave of innovation by specialized third party suppliers with off-the-shelf solutions. They have long discovered that it's much less risky and much more profitable to let others do the fundamental component development work, and focus on integration of third party solutions, with occasional guidance towards meeting their goals. Even for a company the size of Apple, it can be difficult to predict where the industry will go, and a few mistakes can leave you dependent on some expensive proprietary technology dead-end while the rest of the industry passes you by with lower prices and superior functionality. It's much cheaper and just as effective against competitors to tie up the world's supply of DRAM than to build a foundry and make all those chips yourself.
    • drawkbox 15y ago
      True but it is a better path for many things. PowerPC sucked, once they went *nix and Intel it blew up. ARM and flash memory for devices, they push that as well that is not just reserved for Apple's use. Also OpenGL ES won the battle on mobile quietly due to Apple's support of Khronos and the mobile markets they created. Webkit, html5, canvas and more are direct results of their investment and extra cash. I hope that continues. LLVM is another area they have taken to another level. There certainly isn't anything wrong with making better what is out there and at the same time creating the basis for other products (i.e. Chromium from WebKit) so you really own more of the market as a whole and the direction it takes. As a game developer, the way OpenGL ES flat out won on devices with no real challenge from Microsoft on DirectX is amazing on that front alone. I'd say whatever they were doing with their money since the mid-90's was right.
• allwein 15y ago
  Everyone here is missing the real goal of this dividend: removing uncertainty; In much the same way that the stock was held back while Steve was alive because there was so much uncertainty about his health, but since his death the stock has been on a $200+ rampage. There's been speculation about what Apple might do with it's cash hoard for so long and the uncertainty has always been weighing on some investor's minds. By actually doing something with some of it, they've laid a path and removed the uncertainty. Investor psychology is a really crazy thing.
• xefer 15y ago
  It will be interesting to know how much the dividend is. Owners of Apple shares can of course take the money and use it to buy Apple products. It's as if one benefit of being an owner is, you get company a discount.
• tonyx 15y ago
  My intuition doesn't feel good about this. Whatever Tim Cook says, if apple draw attention away from product innovation into optimizing for financial markets and pleasing shortsighted loyalty-less public market investors, it would no longer be the Apple that we have come to know over the past decade.
  • deleted 15y ago
    [deleted]
• w1ntermute 15y ago
  Although it's not part of their core business, from the news that's leaked about Steve Jobs' discussions with a CBS exec who refused to license CBS content because he felt he would be cannibalizing their profits, perhaps Apple could purchase one of these stations to spur the adoption of a new model for TV watching. It might cost them a pretty penny at first, but if it forces the other broadcasters to fall in line, it would be worth it. Another obvious "lateral" purchase would be a cellular company. It doesn't make sense to keep pandering to the desires of the likes of AT&T and Verizon (4 GB data limit on LTE iPad WTF?) when there's so much more potential that could be realized with a good data plan for iDevices.
  • grandalf 15y ago
    I imagine both of these would have been seriously considered if it weren't for antitrust concerns.
• laconian 15y ago
  Uh oh. I remember when Microsoft announced a similar program. That really kicked off the malaise that MSFT's in now.
• wildster 15y ago
  Apple should buy a US mobile carrier and do it right.
• joelmaat 15y ago
  Buy at the market peak. Genius.
• chj 15y ago
  iOS still sucks in many ways. I hope they are not content with themselves. By the way, why not reduce the share they get from app developers if they are so rich now? Apparently it would be in better hands.
• velus 15y ago
  So instead of increasing employee wages they decide to piss the money away and give it to the Wall Street fat cats...
• velus 15y ago
  And this for people who don't understand how stock buyback "works" The stock purchased is "canceled". Yes, canceled. So if a company has no operation but 100 billion in cash, after a stock buyback of 100 billion, the company is worth $0. It's a super bad deal for the employees who sees nothing, but great for Wall Street traders