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Apple has issued a press release indicating that it plans to initiate a dividend and share repurchase program commencing later this year.
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.
“We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure. You’ll see more of all of these in the future,” said Tim Cook, Apple’s CEO. “Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program.”
“Combining dividends, share repurchases, and cash used to net-share-settle vesting RSUs, we anticipate utilizing approximately $45 billion of domestic cash in the first three years of our programs,” said Peter Oppenheimer, Apple’s CFO. “We are extremely confident in our future and see tremendous opportunities ahead.”
Apple expects to spend $45 billion over three years with the program..
Apple is providing a live streaming of the conference call to discuss its plans beginning at 6:00 a.m. PDT on Monday, March 19, 2012 at www.apple.com/quicktime/qtv/call31912. We'll provide ongoing updates to this article as the conference call takes place.
Conference Call Updates
- iPhone. Eventually all handsets will be smartphones. Enormous potential
- Amazing start with iPad. With launch of new iPad, things just getting better. We believe the tablet market will exceed the PC market eventually.
- We are innovated at an incredible pace. App ecosystem, iCloud, Siri.
- Also investing in distribution around the world, and direct enterprise sales force.
- Substantial amounts of cash, both domestically and abroad.
- Used some for R&D, acquisitions, strategic pre-payments, retail, and building out of infrastructure. You will see more of these in the future.
- Still have plenty of cash to run our business.
- Initiate a Dividend and Share repurchase. Thought very carefully about our cash balance.
- Innovation is our most important objective.
- This decision will not close any doors for us.
- Details dividend and share repurchase program as described above.
- Continue to assess and review program regularly.
Peter Oppenheimer
- Apple's cash has increased for all the right reasons and we've been very disciplined with the use of our cash.
- $98 billion in cash in the Dec quarter. ~$64 billion outside the U.S.
- In thinking about our cash
- Want to maintain flexibility to take advantage of investment opportunities
- 1. Current income for our longterm shareholders
- 2. Increase attractiveness to a broader investment base
- 3. Preserve value from employee equity dilution.
- Repurchase of shares to offset issuing of employee equity grants.
- $45 billion in domestic cash in the first three years of the program
- Remain confident about the future of our business.
Q&A
Q: Any growth of dividend expected?
A: In consultation with the board, we will review our dividend payments regularly.
Q: Last quarter you talked about many more things to come, can you reiterate more about the confidence of the product pipeline.
A: We actually do love to announce new products, we just don't do it in conference calls. Growth speaks for itself and I am extremely confident in our future pipeline. Our customers will be incredibly pleased with what's coming out.
Q: Did board discuss how to put to use the international cash?
A: We've got plenty of u.s. cash to invest and pay dividend and initiate stock buyback. Big tax burden to repatriate the international cash and we've expressed that disincentive to Congress.
Q: Methodology on stock splits?
A: We have looked at, and the current information that we have would suggest that there is very little support that it helps the stock. However, we are in a unique position and at a unique point in time and this is something that we continue to look at. And if we reach the decision that its in the best interest of Apple and its shareholders, then we would do it.
Q: Press release on how the new iPad did?
A: Record weekend. We are thrilled with it, but not the time during this call.
Call over.
Top Rated Comments
This is a worrying move as its so soon after Steve passed away and it goes completely against what he has been saying for the last few years.
Steve always said they should have enough cash on hand to do whatever they want.
Today's announcement shows that Apple is committed to keeping enough cash on hand to do whatever they want.
What's the problem?
Tim Cook just let Steve Jobs vision down with this bean counter move.
I wouldn't say sad - just his own touch on Apple. Consider the way The Loop (http://www.loopinsight.com/2012/03/19/tim-cooks-first-208-days/)framed Tim Cook's first 208 days as CEO:Apple has only one focus, make great products, in turn that leads to happy consumers and the shark leeching share-holders get their money.
Jobs would never consider such a pointless move.
More transparency about Apple’s overseas operations.
Corporate philanthropy for the first time in years.
A dividend and stock buyback program.
Oh, and continuing to roll out amazing products one after the other.
Let no one say Tim Cook isn’t putting his own mark on Apple.
This is the first big non-Steve move. I feel like Apple is where MSFT was back in 1994ish, on the cusp of its knockout blow move Windows 95, but also on the start of a 20-year downward trajectory.
Apple is poised to shape the future no-doubt, but there is no evidence that Apple is on a downward trajectory yet, none. This decision is the sensible one, it may not have been the choice of Steve but he wasn't always the ultimate source of wisdom in how to manage complex finical realities like this. I don't know what the future is going to bring, and I am not saying Apple couldn't someday slip in the way Microsoft did... but lets not get ahead of ourselves.
45 Billion over three years? I know that is a lot of money, but with a company making billions each quarter, it really isn't
You never really know what's going to happen, so it is safe (and smart) to keep some money in the bank.It's not because your on the top of the world today that you will still be in 10 years.