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Apple shares cash pile as it launches dividend and share buyback scheme
Apple shares cash pile as it launches dividend and share buyback scheme
(6 days later)
Apple has announced a plan to start handing back some of its cash hoard of almost $100bn to shareholders.
Apple has announced a plan to start handing back some of its cash hoard of almost $100bn to shareholders.
The company is to pay its first dividend to shareholders since 1995, three years before Apple started its record breaking run of new releases, which began with the iMac in 1998.
The company is to pay its first dividend to shareholders since 1995, three years before Apple started its record breaking run of new releases, which began with the iMac in 1998.
Tim Cook, the firm's chief executive, said Apple would start paying a quarterly stock dividend of $2.65 a share beginning in July, and said Apple's board had authorised a $10bn share buyback.
Tim Cook, the firm's chief executive, said Apple would start paying a quarterly stock dividend of $2.65 a share beginning in July, and said Apple's board had authorised a $10bn share buyback.
It helped Apple shares close above $600 for the first time. They rose 2.7% in New York to $601.10, in the process helping the S&P 500 finish within 10% of its historic closing high reached in October 2007.
It helped Apple shares close above $600 for the first time. They rose 2.7% in New York to $601.10, in the process helping the S&P 500 finish within 10% of its historic closing high reached in October 2007.
"We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure," said Cook. "Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program."
"We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure," said Cook. "Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program."
During a conference call on Monday, less than two weeks after the launch of the latest iPad, Cook was pressed about future releases.
During a conference call on Monday, less than two weeks after the launch of the latest iPad, Cook was pressed about future releases.
Cook refused to be drawn, but said that the decision to pay money back to shareholders would not alter Apple's focus on innovation. "These decisions will not close any doors for us," he said.
Cook refused to be drawn, but said that the decision to pay money back to shareholders would not alter Apple's focus on innovation. "These decisions will not close any doors for us," he said.
Apple is now the most valuable company in the world, with a market capitalisation of close to $546bn. Only six firms have ever been worth more than $500bn: Apple, Cisco, Exxon Mobil, General Electric, Intel and Microsoft.
Apple is now the most valuable company in the world, with a market capitalisation of close to $546bn. Only six firms have ever been worth more than $500bn: Apple, Cisco, Exxon Mobil, General Electric, Intel and Microsoft.
At the end of December the company had been sitting on cash, cash equivalents and short-term and long-term marketable securities worth about $97.6bn.
At the end of December the company had been sitting on cash, cash equivalents and short-term and long-term marketable securities worth about $97.6bn.
Speculation about a dividend and share buyback had been mounting for some time. Some analysts had feared this would be a turning point for Apple and that its years of massive growth may be coming to an end. In the quarter running up to Christmas, Apple more than doubled its profits from the same period the year before, as sales of iPhones and iPads continued to soar.
Speculation about a dividend and share buyback had been mounting for some time. Some analysts had feared this would be a turning point for Apple and that its years of massive growth may be coming to an end. In the quarter running up to Christmas, Apple more than doubled its profits from the same period the year before, as sales of iPhones and iPads continued to soar.
Initial reaction to the announcement was subdued, with Apple's share price rising just over 1.2% to $593.83 a share in morning trading.
Initial reaction to the announcement was subdued, with Apple's share price rising just over 1.2% to $593.83 a share in morning trading.
Colin Gillis, an analyst at BGC Partners in New York, said the announcement was in line with expectations, but added that Apple now faced a period of intense competition as Amazon, Samsung and others looked to take market share in tablets.
Colin Gillis, an analyst at BGC Partners in New York, said the announcement was in line with expectations, but added that Apple now faced a period of intense competition as Amazon, Samsung and others looked to take market share in tablets.
Apple passed the $500bn mark at the end of February, and Gillis calculates that so far the six other firms to reach that mark have lasted 90 to 180 days above that level.
Apple passed the $500bn mark at the end of February, and Gillis calculates that so far the six other firms to reach that mark have lasted 90 to 180 days above that level.
"The competition isn't going to roll over, and they'll compete on price," said Gillis. Apple has traditionally charged a premium for its products.
"The competition isn't going to roll over, and they'll compete on price," said Gillis. Apple has traditionally charged a premium for its products.
But other analysts said Apple's latest move would help it attract new shareholders more interested in gaining income from dividends. Stanley Wu, an analyst at Sterne Agee and Leach, said: "Long term, there are a great number of funds in the US that want yields, and this should help them expand their shareholder base."
But other analysts said Apple's latest move would help it attract new shareholders more interested in gaining income from dividends. Stanley Wu, an analyst at Sterne Agee and Leach, said: "Long term, there are a great number of funds in the US that want yields, and this should help them expand their shareholder base."
He said it would put further pressure on Google to start paying a dividend.
He said it would put further pressure on Google to start paying a dividend.
Comments
24 comments, displaying first
19 March 2012 4:37PM
They could have use some billions to pay back the many poor souls who were suckered into buying over-expensive gadgets with shiny corners. Or pay a little more to the even poorer souls that have to make these shiny corners for a literal pittance in China. But I guess they are not that altruistic in spite of their patronising smug friendliness.
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19 March 2012 5:04PM
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19 March 2012 5:26PM
Dear oh dear
Suckered? The ultimate cop out. I was suckered into buying it??? Have you no capacity to make up your own mind? Do you believe that the rest of us are thickies? Can't make up our own minds?
Most people seem to be happy with what they spent their hard-earned cash on. Those who aren't made a mistake. Tough luck. Think better and more next time.
China: All been said. If you believe that an iPad should cost $4,000 and that the Chinese should be even poorer than they are, then you are right. If you believe, like me, that the poorer people of this world have a right to become less poor you'll believe that a wage 25% higher than the rest of the local manufacturing wages which has increased over the last 10 years by multiples of inflation every year is the way to go. They are catching up. It will be uncomfortable for lazy people when they do.
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19 March 2012 5:39PM
I was hoping they would use the cash surplus to purchase the US. Heaven knows they would do a better job of managing the country than those bozos in Washington, DC.
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19 March 2012 6:48PM
I would have been nice to see them improve the standard of living for the poor Chinese SLAVES that do its bidding....now that would have been money well spent!!
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19 March 2012 6:59PM
"that the poorer people of this world have a right to become less poor you'll believe that a wage 25% higher than the rest of the local manufacturing wages which has increased over the last 10 years by multiples of inflation every year is the way to go."
Things wrong with this: 1.) This is an article essentially about how prosperous a company Apple are. They quite literally have so much wealth that they are running out of things to do with it, so they are giving some to their shareholders. Somehow I feel like this decision to pay 25% more than local employers didn't hurt much for them.
2.) Vague Google searching leads me to find that the average chinese slave laborer makes $17/day. It is not uncommon to read of 18 hour workdays, as well. Let's under-estimate, however. Let's pretend they are working 8 hour days. At 17 dollars a day, that comes to TWO DOLLARS and TWELVE CENTS. 25% higher? That would be FIFTY THREE CENTS higher.
Yes, all hail the altruistic, forward-thinking Apple for raising wages 25% above the local slave market! Bra-VO!
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19 March 2012 7:46PM
Couple of possibilities. Apple have run out of ideas in which to invest. Secondly, typical behavious of senior managers who buy back shares at the top of the market in order to sell their own shares back to the company at a healthy profit. Enrepreneurism is such a blessing with the jobs it creates in China and the never ending innovation of ways of boosting their own bank accounts.
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19 March 2012 7:48PM
perhaps they realise they can't grow any more, blood sucker company.
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19 March 2012 7:59PM
Perhaps they're saving some cash to give out free asbestos lined Nu iPad cases. Reports coming in from all over the web of them running too hot to hold and shutting down to cool.
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19 March 2012 8:38PM
Hey Apple, why not do something really meaningful? Use that money to build some factories here in the USA, and show some love, not hubris, to the people who actually buy your stuff in droves. The day you put "Made in the USA" on your products I will be a convert, until then, your just fruit.
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19 March 2012 8:41PM
Oople, Gapple, Gaggle, Aggle?
Link to this comment:
19 March 2012 8:42PM
I think this has more to do with managing the price of Apple shares listed on NASDAQ.
Their share price has almost doubled in the last 6 months so all share options given to employees recently (esp the thousands given to senior management) could be worthless if the share price drops from its dizzingly high current value. If they really believed their current share price is realistic then they would carry out a stock split.
Apparently, Steve Jobs was against share buy backs and dividends since he believed the money should be invested in new products and technologies.
I used to work for American companies. I know all about senior managements' strategy to control the share price for their own gain.
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19 March 2012 9:45PM
Well my new iPad is absolutely fine - I'll take personal experience over internet rumour any day of the week.
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19 March 2012 10:23PM
Which means I have to discount your report as well.
There's still people that claim their iPhone4 has never dropped a call when it was touched in the bad place as well.
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19 March 2012 11:00PM
Am I missing something with this dividend payout. Who are the people who own the majority of the shares and also receive shares as part of their pay packages? the high up executives.
Essentially, all this is, is a nice big bonus to all the executives of the company.
They prattle on about being a socially responsible company, they could have used the money to set up a manufacturing base in America. It would have created loads of jobs and would probably have helped them reduce their dependence on the controversial overseas factories.
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20 March 2012 12:33AM
They could have use some billions to pay back the many poor souls who were suckered into buying over-expensive gadgets with shiny corners.
Or given iPads, Macs and iPhones to dumb idiots who were suckered into purchasing Windows and Android.
Sauce for the goose ...
Link to this comment:
20 March 2012 2:04AM
I really can't stand the iPad! not supportive of Flash coupled with Verizon's slow service, has made me want to hurl it across the room a few times. The Samsung's Galaxy phone/tablet duo looks promising.
If you want to know more about the new ipad before you buy it
Link to this comment:
20 March 2012 7:26AM
Perhaps they're saving some cash to give out free asbestos lined Nu iPad cases. Reports coming in from all over the web of them running too hot to hold and shutting down to cool.
Too hot to hold and shutting down to cool, you say? Reee-eee-eeeally. Do link to these reports, and not just one. Link to a lot of them. Enough to make me think it's an actual real problem as opposed to grossly over-exaggerated internet rumour and bullshit. Thanks.
Link to this comment:
20 March 2012 7:54AM
This comment was removed by a moderator because it didn't abide by our community standards. Replies may also be deleted. For more detail see our FAQs.
20 March 2012 2:05PM
@DrCreep:
Talk me though this, I'm not sure I'm getting it. I asked someone to post evidence of reports "flooding in" about the iPad 3 being too hot to touch and shutting down, because in my opinion it sounded like a load of internet over-reaction and nonsense.
And you responded by linking to an article in which a bunch of people are getting a few dollars after going at Apple with a class action lawsuit over something that was an issue with the iPhone 4 over two years ago.
Seriously? Please.
Link to this comment:
20 March 2012 2:06PM
(sorry, not "over two years ago" - I meant to say "almost two years ago")
Link to this comment:
20 March 2012 2:08PM
I really can't stand the iPad! not supportive of Flash coupled with Verizon's slow service, has made me want to hurl it across the room a few times.
Well first of all if you needed Flash and bought an iPad expecting to get it, you only have yourself to blame because it's no secret. Secondly, if you are experiencing slow service with Verizon what's that got to do with the iPad?
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Chief executive Tim Cook announces tech giant will pay first dividend since 1995 in quarterly stock offering of $2.65 a share
Apple has announced a plan to start handing back some of its cash hoard of almost $100bn to shareholders.
The company is to pay its first dividend to shareholders since 1995, three years before Apple started its record breaking run of new releases, which began with the iMac in 1998.
Tim Cook, the firm's chief executive, said Apple would start paying a quarterly stock dividend of $2.65 a share beginning in July, and said Apple's board had authorised a $10bn share buyback.
It helped Apple shares close above $600 for the first time. They rose 2.7% in New York to $601.10, in the process helping the S&P 500 finish within 10% of its historic closing high reached in October 2007.
"We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure," said Cook. "Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program."
During a conference call on Monday, less than two weeks after the launch of the latest iPad, Cook was pressed about future releases.
Cook refused to be drawn, but said that the decision to pay money back to shareholders would not alter Apple's focus on innovation. "These decisions will not close any doors for us," he said.
Apple is now the most valuable company in the world, with a market capitalisation of close to $546bn. Only six firms have ever been worth more than $500bn: Apple, Cisco, Exxon Mobil, General Electric, Intel and Microsoft.
At the end of December the company had been sitting on cash, cash equivalents and short-term and long-term marketable securities worth about $97.6bn.
Speculation about a dividend and share buyback had been mounting for some time. Some analysts had feared this would be a turning point for Apple and that its years of massive growth may be coming to an end. In the quarter running up to Christmas, Apple more than doubled its profits from the same period the year before, as sales of iPhones and iPads continued to soar.
Initial reaction to the announcement was subdued, with Apple's share price rising just over 1.2% to $593.83 a share in morning trading.
Colin Gillis, an analyst at BGC Partners in New York, said the announcement was in line with expectations, but added that Apple now faced a period of intense competition as Amazon, Samsung and others looked to take market share in tablets.
Apple passed the $500bn mark at the end of February, and Gillis calculates that so far the six other firms to reach that mark have lasted 90 to 180 days above that level.
"The competition isn't going to roll over, and they'll compete on price," said Gillis. Apple has traditionally charged a premium for its products.
But other analysts said Apple's latest move would help it attract new shareholders more interested in gaining income from dividends. Stanley Wu, an analyst at Sterne Agee and Leach, said: "Long term, there are a great number of funds in the US that want yields, and this should help them expand their shareholder base."
He said it would put further pressure on Google to start paying a dividend.
