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Apple To Use Nearly Half Its $100B Cash For Stock Buyback, Dividend
The long-awaited day of the Apple dividend is here. As Apple’s cash reserves have grown over the past few years — they now stand at a whopping $100 billion — financial analysts and investors have repeatedly and passionately asked: “Where’s the dividend?”
While Steve Jobs seemed to be opposed to a dividend, wanting to hoard the company’s cash for a rainy day, acquisitions, retail store investments and supply chain domination, new CEO Tim Cook has decided the time is ripe to issue one.
This morning Apple put out a press release and is holding a conference call (at 9:00 am Eastern) to discuss the dividend and a share repurchase program. According to the release Apple will begin to pay a quarterly dividend of $2.65 per share starting in Q4:
Subject to declaration by the Board of Directors, the Company plans to initiate a quarterly dividend of $2.65 per share sometime in the fourth quarter of its fiscal 2012, which begins on July 1, 2012.
Additionally, the Company’s Board of Directors has authorized a $10 billion share repurchase program commencing in the Company’s fiscal 2013, which begins on September 30, 2012. The repurchase program is expected to be executed over three years, with the primary objective of neutralizing the impact of dilution from future employee equity grants and employee stock purchase programs.
Cook seems to be saying we can do everything we want and still give over nearly half our cash (over three years) to repurchase shares ($10 billion worth) and pay out billions to shareholders. This news should cheer investors give a further bump to Apple stock this morning.
Notes from the conference call:
CEO Tim Cook says that Apple will continue to invest in the business: “These decisions will not close any doors for us.”
CFO Peter Oppenheimer said that a majority of Apple’s cash had been collected over the past two fiscal years. Roughly $64 billion of Apple’s cash is outside the US. He added on objectives for the program: We want to attract a wider investor base and limit dilution from future employee stock programs. Repurchase of shares will match employee equity grants. The $45 billion dollars over three year will come from “domestic cash.”
Oppenheimer added that he didn’t want to bring the overseas cash back into the US for tax reasons. We will be “one of the largest dividend payors in the United States.” He added, “We want to maintain sufficient US cash to take advantage of strategic opportunities.”
The first question from analysts was “What about dividend growth?” Oppenheimer said that Apple would review the policy from quarter to quarter but that its dividend payment would amount to more than $2 billion per quarter.
Cook said (in response to a question about future products): “The pipeline is full of stuff and our customers will be incredibly pleased” with what’s coming.
Cook on iPad performance: “We had a record weekend and we’re thrilled with it.” He declined to discuss it further.