Apple to use huge cash hoard for dividend, stock buybacks
Apple Inc. said today it will begin spending part of its nearly $100-billion cash stockpile on a quarterly dividend, as well as a three-year stock buyback program.
The company said it will pay shareholders $2.65 per share each quarter beginning in Apple’s fiscal fourth quarter, which starts July 1. The company said it hopes the dividend will make Apple stock a more attractive investment to wider base of investors, including those looking to make regular income from owning the stock.
The company has faced years of pressure from Wall Street to stop sitting on its huge cash hoard, and to share the wealth with shareholders.
In a conference call with investors this morning, Apple Chief Executive Tim Cook and Chief Financial Officer Peter Oppenheimer said the company would spend $10 billion on a three-year stock repurchase program. Apple is buying back shares largely to be able to award more stock to its employees without diluting the value of existing shares, which happens when a company slices itself into a larger number of smaller shares.
The company said it would spend about $45 billion on the combined initiatives over the next three years.
“A quarterly dividend will provide recurrent income to our shareholders, and we also believe it will broaden Apple’s investor base by attracting new investors who don’t currently own Apple stock,†Cook said. “Innovation is the most important objective at Apple, and we will not lose sight of that. These decisions will not close any doors for us.â€
Apple’s stock rose about 1.59%, or a $9.33, in early trading following the announcement.
Apple, the world’s most valuable company by stock value at nearly $555 billion, also has one the largest cash hoards. It generated about one-third of its $98 billion in cash just last year after record sales of its iPhone and iPad mobile devices. In its first fiscal quarter of 2012, the company collected an additional $16 billion in cash.
Seeing the huge cash balance, many investors have urged Apple to begin issuing a dividend to make itself a more attractive investment, especially to large mutual funds that are focused on stocks that pay regular dividends.
Cook said that Apple’s launch last week of its new iPad tablet computer led to a “record weekend,†but would not comment on the number of units the company sold. Analysts had projected Apple would sell 2 million to 3 million iPads by the end of March.
When asked about the types of products Apple could come out with later this year, Cook said that “the pipeline is full of stuff. I think our customers are going to be incredibly pleased with what they see coming out.â€
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