This story has been updated with quotes from the analyst call following Apple's announcement. You can find those updates at the end.
Apple has announced that it plans to initiate a quarterly dividend and share repurchase program with its $100 billion cash hoard. The news went public via a press release Monday morning ahead of a scheduled conference call wherein Apple CEO Tim Cook and CFO Peter Oppenheimer plan to discuss the decision with investors and the press. The dividend is subject to approval by the Board of Directors. If it goes through, it will be the first one paid out by Apple since 1995. The dividend will begin at $2.65 per share "sometime in the fourth quarter of its fiscal 2012," which Apple points out begins in July of 2012
"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,” Cook said in an issued statement. “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."
The repurchase program is possibly more interesting than the dividend itself. Under the program, the company expects to spend $10 billion starting in fiscal year 2013 and continuing for three years, "with the primary objective of neutralizing the impact of dilution from future employee equity grants and employee stock purchase programs." Buybacks tend to help maintain a stock's price, and are another way of using excess cash for the benefit of investors.
Apple-watchers and investors have been stepping up their queries about whether Apple planned to begin paying dividends or make any serious investments with its money. Although many readers had hoped that Apple might make an ambitious purchase like Google or T-Mobile, the most likely option was always that the company would choose to pay a dividend.
"We expect to use about $45 billion over the next three years to pay dividends, repurchase shares, and pay taxes" associated with the payments, Oppenheimer told investors on the conference call about the company's plans. "We decided to go for a hybrid approach after doing some analysis and thinking, and taking input from shareholders."
Cook did briefly discuss why the company chose not to do a stock split by saying there's little evidence to support splits helping the stock. "However, this is something we continue to look at and if we've reached a decision that we think is in the best interest of Apple and shareholders," the company would be up for it, he said.
Cook made clear during the call, however, that Apple still takes the cash pile seriously and wants to maintain a reserve in order for the company to continue to take advantage of future investment opportunities. "These decisions will not close any doors for us," Cook said. "Our objective will always be to make the most innovative products in the world."
Listing image by Photograph by Images Money
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