Apple will offer a quarterly dividend and share repurchasing program, according to CEO Tim Cook.
Apple has
finally decided what to do with its $100 billion cash reserve. During a call
with financial analysts, company executives detailed a new stock repurchasing
and dividend program that will reward shareholders.
This plan
kicks off July 1, with a quarterly dividend payment scheduled for the companys
fiscal fourth quarter of 2012. After that, Apple plans to authorize a $10
billion share repurchase program at the beginning of its fiscal 2013 at the end
of September. The dividend will total $2.65 per share. Apple executives did not
say if the company had other plans, such as acquiring other businesses and
their technologies, although Apple has made some small but strategic buys
during the last several years.
Wall Street
pressure for some sort of remuneration has risen along with Apples stock
price. The company sits on an enormous reservoir of cash, thanks in large part
to blockbuster sales of mobile devices such as the iPad and iPhone. Yet despite
growing cash reserves and investment pressure, Apple has traditionally appeared
reluctant to even consider paying out a dividend to stockholders. In February
2010, for example, former CEO Steve Jobs told the audience at the companys
annual investors meeting that, rather than pay out a dividend or buy back
shares, he preferred to leave the powder dry for possible acquisitions.
Who knows
whats around the next corner, he added, according to
Reuters. When we think about big, bold things,
we know that if we needed to acquire something, a piece of the puzzle, to make
something big and bold a reality, we could write a check for it.
Current CEO
Tim Cook spent a good portion of a March 19 conference call assuring analysts
and media that Apples ability to respond to industry shifts would remain
unhindered, dividend or no. We will maintain our disciplined approach, he
said. These decisions will not close any doors for us.
He cited the
chance to broaden Apples investor base, and curb any dilution from company
employees tendering their shares, as reasons behind the decision to initiate
the dividend and buyback.
Analysts
immediately pounced on the announcement. We see this as very positive for the
stock as the large market cap is one of the major hindrances to future upside,
and this announcement will allow dividend investors to get involved, Peter
Misek, an analyst with Jefferies & Co., wrote in a co-authored research
note March 19. We expect dividend increases in the future.
Others
commented on Apple executives reluctance to discuss possible dividend
expansion. While some investors may have wanted some more visibility into
future increases in the dividend, Gene Munster, an analyst with Piper Jaffray,
wrote in a research note released soon after Apples conference call, we
believe the dividend achieves the main goal of expanding [Apples] shareholder
base.
Cook declined
to discuss any other matters during the call, including any sales numbers for
the new iPad, which went on sale March 16.
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