Apple's 2011 Annual Report: More Hiring, More Sales, No Dividends Coming

Apple today filed its 2011 annual report with the U.S. Securities and Exchange Commission, and the document reveals a few interesting tidbits of information:

- Apple now has 60,400 full time equivalent employees, up from 46,600 last year. The company also went from employing 2,800 full-time equivalent temporary employees and contractors to 2,900. 36,000 employees are in the retail division, up from 26,500 last year.

- Apple went from 317 stores at the end of fiscal 2010 to 357 stores at the end of fiscal 2011, an addition of 40 stores. The average number of employees per store also grew from 83.6 to 100.8.

- Ad spending grew from $691 million to $933 million, while dropping as a percentage of revenues to 0.8% from 1.0%. Research and development expenses were up 36% to $2.4 billion -- however, as a percentage of revenues R&D fell from 3% to 2.2%.

- As this document is designed mainly for prospective and current investors in the company, Apple also lists a number of risk factors that could affect investments in the company. These include "if [Apple] is found to have infringed on intellectual property rights", "support from third-party software developers", "the Company’s ability to obtain components in sufficient quantities", and numerous more.

- "As of September 24, 2011, the Company owned or leased approximately 13.2 million square feet of building space, primarily in the U.S., and to a lesser extent, in Europe, Japan, Canada, and the Asia-Pacific regions. Of that amount approximately 7.0 million square feet was leased building space, which includes approximately 3.0 million square feet related to retail store space. Of the Company’s owned building space, approximately 2.6 million square feet that is located in Cupertino, California will be demolished to build a second corporate campus. Additionally, the Company owns a total of 584 acres of land in various locations."

- Finally, "the Company anticipates that for the foreseeable future it will retain any earnings for use in the operation of its business" rather than paying any dividends or stock buybacks.

Top Rated Comments

(View all)
Avatar
115 months ago

Paying dividends = less cash.
Not paying dividends = more cash.

For every dollar of dividend per share that Apple pays out, the share price will drop by one dollar.


This is just laughably incorrect, and written with such confidence too. wow.
Score: 4 Votes (Like | Disagree)
Avatar
115 months ago
dividends?

Wall Street to Apple, "I thought you would pay dividends!"

Apple to Wall Street, "Think differently."
Score: 4 Votes (Like | Disagree)
Avatar
115 months ago
Come on Apple, do something cool with all that capital. OS XI with content-awareness and an AI assistant an stuff. Build cylons. Just... do something...
Score: 4 Votes (Like | Disagree)
Avatar
115 months ago
Genius Bar tech for Apple; the dream job for a computer-nerd Apple fan like myself. It's too bad that the journey to Mordor would be an easier one than the journey to my nearest Apple Store.
Score: 4 Votes (Like | Disagree)
Avatar
115 months ago

Paying dividend reduces the capital value of the company.

Shares are now so divorced from the idea of owning part of the company now that it does not really make much sense to pay dividend to the "current" owner of the shares as they are bought and sold on a daily basis. They have become commodities in of themselves.

The only companies that pay dividends are those with a dropping or stagnant share price. MSFT is one such company.

I tend to look at this another way, based on Warren Buffett's view of dividends.

Assume that Company A and Company B are both good at generating operating cash flow from quarter to quarter.

However, Company A has a transient management and doesn't necessarily do better than the S&P in terms of growing the book value of the business.

Company B has fairly solid management and consistently outperforms the S&P in terms of the real growth of the business in terms of book and/or enterprise value.

In Company A's case, I want the dividends, because I can turn around and generate a better return from the cash from those dividends than the company is generating for the value of my shares... and ultimately the market price. It may seem like value and price are divorced from one another, but institutional buyers use the same methods I do to triangulate the actual carrying value of the company, and so they tend to set a baseline of fair market value that influences the overall market capitalization because no M&A guy in his right mind is going to recommend paying more than their estimate of intrinsic value to buy such a company outright.

In Company B's case, I want them to manage that money for me because they're long term thinkers who know how and where to invest that money in the growth of their business which in turn influences the company's ability to generate continued operating cash flow. And this IS important to the prospect of getting a return at a later date in terms of market price growth because few people are going to keep bidding up a total dog of a company that doesn't keep generating operating cash. Think of the working capital (inventory) and book value (assets minus liabilities and intangibles) as the cash generating engine, and operating cash flows as the cash generated by that engine (as opposed to financing or investing activities).

But all this also requires coming to a realistic triangulation of the intrinsic value of the company. Given all the above factors, and that I know Tim Cook has incentives to stay for ten years, taking into account the expected shrinkage of the growth rate of Apple's operating cash flows, and that Apple has about four more years of Jobs'-influenced products in the pipeline, after which they'll reach some kind of terminal growth rate in the single digits, a moderate estimate puts them at about $386 per share... or less than their current trading price.

For this reason, I'm not buying Apple stock at this time... even more liberal estimates, which put intrinsic value around $450 per share, don't give me the margin of safety I look for in long term investments. I'd much rather find something grossly underpriced by the market relative to its actual strength as a business.

With Apple already one of the two most expensive companies in terms of market capitalization, they've got a lot more downside than upside.... and I don't count on the market to tell me what price I *should* pay for a piece of a company.
Score: 3 Votes (Like | Disagree)
Avatar
115 months ago

No it won't. Those same idiots have been calling for a dividend for years. Growth companies don't pay dividends.


Define growth company. Because Walmart has always paid dividends. Perhaps they don't fit your growth company "now" - but they've paid dividends since pretty much day 1.
Score: 3 Votes (Like | Disagree)

Top Stories

iPhone Maker Foxconn Says China's 'Days as the World's Factory Are Done'

Wednesday August 12, 2020 7:55 am PDT by
China will no longer be the world's manufacturing epicenter going forward, according to Apple's largest supply chain partner Foxconn, which has been gradually expanding its operations in other countries amid the U.S.-China trade war. "No matter if it's India, Southeast Asia or the Americas, there will be a manufacturing ecosystem in each," said Foxconn chairman Young Liu, according to Bloombe...

Leaker Jon Prosser: Apple Watch and iPad Launching in September, iPhone 12 Event to Take Place in October

Wednesday August 12, 2020 4:31 pm PDT by
Apple last month confirmed that this year's iPhone 12 models will launch outside of their normal September timeframe and will be "available a few weeks later," which has led to speculation about when an event might be held. Leaker Jon Prosser, who sometimes shares accurate knowledge of Apple's plans, today said that Apple will hold its iPhone 12 event during the week of October 12, with...

Apple Takes Legal Action Against Small Company With Pear Logo

Saturday August 8, 2020 11:09 am PDT by
Apple is taking legal action against the developers of the app "Prepear" due to its logo, according to iPhone in Canada. Prepear is an app that helps users discover recipes, plan meals, make lists, and arrange grocery deliveries. The app is a spinoff of "Super Healthy Kids," and the founders claim that they are facing litigation from Apple. Apple reportedly takes issue with Prepear's logo, ...

Apple to Launch Bundled Subscription Services Called 'Apple One'

Thursday August 13, 2020 3:41 am PDT by
Apple will launch a new range of subscription service bundles called "Apple One" as soon as October, according to a new report by Bloomberg's Mark Gurman. The series of bundles would allow customers to subscribe to several Apple digital services together. This is expected to result in a lower monthly price than when the services are subscribed to individually. Bloomberg reports that the...

Apple Releases iOS and iPadOS 13.6.1 With Fix for Storage Issue and Green Tinted Displays

Wednesday August 12, 2020 1:31 pm PDT by
Apple today released iOS and iPadOS 13.6.1, minor updates that come a month after the release of the iOS 13.6 update with Car Keys and Audio Apple News+ stories. The iOS and ‌iPadOS‌ 13.6.1 updates are available on all eligible devices over-the-air in the Settings app. To access the updates, go to Settings > General > Software Update. iOS 13.6.1 addresses an issue that could cause...

Apple May Release 4G-Only iPhone 12 in Early 2021

Tuesday August 11, 2020 5:28 am PDT by
In a research note shared by Business Insider, Wedbush Securities analysts said that Apple may release a cheaper iPhone 12 in early 2021 with no 5G connectivity. Wedbush initially believed Apple would launch a mix of 4G and 5G iPhone 12 models this fall. Following re-examination of Asian supply chains, analysts Daniel Ives, Strecker Backe, and Ahmad Khalil revised the predictions,...

Apple Removes Fortnite From App Store [Update: Epic Files Lawsuit Against Apple]

Thursday August 13, 2020 11:58 am PDT by
Just hours after Epic Games introduced a new direct payment option for Fortnite that skirts Apple's in-app purchase rules, Apple has pulled the Fortnite app from the App Store. Fortnite is no longer available for download on the iPhone or the iPad, and Apple provided a statement to MacRumors on Fortnite's removal:Today, Epic Games took the unfortunate step of violating the App Store...

iPad Pro Keyboard Comparison: Logitech's $160 Folio Touch vs. Apple's $300 Magic Keyboard

Tuesday August 11, 2020 2:11 pm PDT by
Logitech recently debuted the Folio Touch, a keyboard and trackpad case designed for the 11-inch iPad Pro that serves as an alternative to the Magic Keyboard. In our latest YouTube video, we compare the $160 Folio Touch to Apple's $300 Magic Keyboard to see which is better. Subscribe to the MacRumors YouTube channel for more videos. Logitech is selling the Folio Touch for $160, while Apple's...

Apple Releases macOS Catalina 10.15.6 Supplemental Update With Virtualization Bug Fix

Wednesday August 12, 2020 1:20 pm PDT by
Apple today released a supplemental update for macOS Catalina 10.15.6, with the update coming a month after the original launch of macOS Catalina 10.15.6. The ‌‌macOS Catalina‌‌ 10.15.6 Supplemental Update can be downloaded from the Mac App Store using the Update feature in the System Preferences app. According to Apple's release notes, the update fixes a problem that could cause...

Kuo: Global iPhone Shipments Could Decline Up to 30% If Apple Forced to Remove WeChat From App Store [Updated x2]

Sunday August 9, 2020 10:17 pm PDT by
In a worst-case scenario, Apple's annual global iPhone shipments could decline by 25–30% if it is forced to remove WeChat from its App Stores around the world, according to a new research note from analyst Ming-Chi Kuo viewed by MacRumors. The removal could occur due to a recent executive order aiming to ban U.S. transactions with WeChat and its parent company Tencent. Kuo lays out...