Apple announces dividends, share buy-back
'We concluded that we had plenty of cash to run the business'
Apple has announced that it will begin issuing a per-share dividend of $2.65 per quarter, and will also initiate a share buy-back program. Together, these efforts will reduce Cupertino's cash hoard by about $45bn in the next three years.
Speaking of Apple's cash, CEO Tim Cook said in a conference call on Monday morning that "Our first and foremost objective, as it will always be, will be to make the most innovative products in the world. And so we decided how much cash that we needed to do that."
Apparently not $97.6bn, which was the size of Apple's cash holdngs as revealed in its most recent SEC filing.
"In addition to that," Cook continued, "we looked at other things that we might invest money in that would come out of domestic cash, and after we had done all of that, and allowed for a war chest to do things that today we can't predict – opportunities that might come along in the future – we had extra cash left over."
The $2.65-per-share dividend will begin in Apple's September fiscal quarter, CFO Peter Oppenheimer said during the call. The dividend is still subject, he noted, to a "board declaration" – but if you're an Apple shareholder, it's safe to say that you can bank on it.
The dividend payout has been widely expected. When Apple's soaring stock hit $500 per share at the end of last month, for example, Bloomberg predicted that before the end of 2012, Apple would distribute $7bn in dividends – a quarterly dividend of about $2 a share.
They were close, but not spot on – at $2.65 per quarter, the dividend program will run about $10bn per year, give or take. The share buy-back will cost Cupertino up to $10bn over the next three years.
Last Thursday, those shares briefly poked their heads over six-hundred bucks per – $600.01, to be exact, undoubtedly triggering an avalanche of computer-based sell orders – before closing at $585.57 on Friday, then sailing back up to just under $600 before Monday's opening bell.
At Apple's annual shareholder meeting on February 23, Cook reportedly told holders of those swelling shares, "We've been thinking about cash very deeply. Frankly speaking, it's more than we need to run the company."
In January, when announcing Apple strong financial results for its first fiscal quarter of 2012, both Cook and Oppenheimer practically tripped over one another while dodging repeated questions about what Apple would do with that cash saying repeatedly that the company was working really hard to figure out how to deal with that cash. Really, really hard. Really, really, really hard.
On Monday morning, Cook was more direct. "We concluded that we had plenty of cash to run the business," he said. "And given that, we felt that it would be the right action to initiate a dividend and expand Apple's shareholder base in the process. And so it's great for current shareholders, and it's fantastic for attracting new investors."
As is traditional in such conference calls, one analyst attempted to get Cook to drop a hint about upcoming Apple products, beginning his question by saying, "I know you guys don't like to announce new products, but..." Cook's response: "We actually do love to announce new products, we just don't do it in conference calls."