Apple Board Has Been "Considering" Dividends and Buybacks Since 2005
Much has been made of the recent comment by Apple CEO Tim Cook that the Apple board of directors has been "actively discussing" what to do with its enormous cash pile. Some see it as a sign that Apple will soon pay a dividend or initiate a share buyback program -- except Apple's board has been discussing what to do with its cash for nearly 7 years.
MacRumors went through Seeking Alpha's entire Apple earnings call transcript history to find out what Apple has been saying about the likelihood of a dividend. Between July of 2005 and October of 2010, Apple execs had very little to say about what Apple was going to do with its burgeoning cash pile -- a pile that grew from $7.5 billion to $51 billion over that time.
July 2005 was the earliest transcript, and the first time an Apple exec said that the board "from time to time" considered its options for the use of Apple's cash. CFO Peter Oppenheimer on July 13, 2005:
I don’t have a change in our philosophy that I can share with you today. We are maintaining our cash for flexibility to invest in the business and share buyback are considered with the Board from time to time.
Then-COO Tim Cook used the same phrasing on April 20, 2006:
Regarding our use of cash, we are continuing to be conservative with the cash, despite some of the investments we made this quarter. We’re wanting to retain it for flexibility to invest in the business. We do discuss with the board from time to time share buyback, but don't have a change in philosophy to discuss with you today.
Finally, after twelve conference calls during which Apple's cash pile was discussed and the phrase "from time to time" used on six separate occasions, CEO Steve Jobs appeared on October 18, 2010 and laid out a more detailed vision for Apple's investment strategy:
We strongly believe that one or more very strategic opportunities may come along that we're in a unique position to take advantage of because of our strong cash position. And I think we've demonstrated a really strong track record of being very disciplined with the use of our cash. We don't let it burn a hole in our pocket, we don't allow it to motivate us to do stupid acquisitions.
And so I think that we'd like to continue to keep our powder dry because we do feel that there are one or more strategic opportunities in the future. That's the biggest reason. And there are other reasons as well that we could go into. But that's the biggest one.
Newly appointed Apple CEO Tim Cook expanded on Jobs' thoughts a year later, perhaps indicating a more flexible approach to disclosure and Apple's use of cash. October 18, 2011:
I believe what we're doing with cash, the way we're -- this cash that we do spend we're doing an extremely good job of it and we're very frugal about using it and using it in the right places. That said, I'm not religious about holding cash or not holding it. I'm religious about a lot of things but not that one. And so we will continually ask ourselves what's in Apple's best interest and always do what we believe is in Apple's best interest. And so it's a topic for the board on an ongoing basis, and we'll continue to discuss it.
With Apple nearing $100 billion in cash, COO Peter Oppenheimer addressed the issue again on January 24 of this year, during the introductory remarks and the Q&A session when he answered four separate questions about cash:
We have always discussed, internally as a management team and with our board, our cash. We recognize that the cash is growing for all the right reasons and I would characterize our discussions today as active about what makes the most sense to do with the cash balance, but we don't have anything to announce specifically today.
We're examining all uses of our cash balance, what we might do in the supply chain, what we can do from an acquisition perspective and otherwise. Since I don't have any perspective to share with you today, specifically on dividends or buybacks, other than again, we are actively discussing the cash balance. And in the meantime, we're not letting it burn a hole in our pockets.
Analysts have inquired about Apple's cash plans for more than half a decade, and Apple, as it is wont to do, has said very little of substance. Apple execs have consistently said that they have "nothing to share" and that "it's a topic for the board on an ongoing basis".
This may be changing, however -- a UBS research report noted that the Apple board's ongoing discussions may be progressing slightly. UBS's Bob Faulkner writes "We ... understand that management has been soliciting the opinions of large shareholders on the subject [of paying a dividend]." If this is true, it is a significant shift in direction for the company.
That said, Apple has been growing its sales and profits like no other company in the world. Some may feel that, as the adage goes, if it ain't broke, don't fix it. Perhaps the board's ongoing discussions will finally come to some sort of a conclusion, but no one should be surprised if they don't.