Bary writes, “Only in the technology sector do companies hold so much cash, and Apple is the champ, with more than twice as much as No. 2 Microsoft. Tech outfits view cash as a security blanket, and Apple’s struggles in the 1990s have made it especially conservative. The cash could hit $200 a share or more by the end of its fiscal 2014. Investors don’t give Apple full credit for it, however, partly because they doubt they will ever get it.”
“‘There’s a strong belief among investors that a higher return of cash is warranted,’ says Toni Sacconaghi, a technology analyst at Bernstein. He argues that Apple should ‘significantly increase the dividend’ to 3% or more. ‘The real magic number is 4%,’ which would mean an annual dividend of about $18 a share, which could boost the stock by attracting income investors,” Bary writes. “Says David Rolfe, chief investment officer of Wedgewood Partners, a Missouri investment firm that holds the stock: ‘Apple is a broken growth stock, but it’s not a broken growth company.’ Still, broken growth stocks tend to trade at low valuations. When Apple was the world’s biggest growth story, dividends didn’t matter. Now they do.”
Read more in the full article here.
MacDailyNews Take: These calls for increased dividends and/or buybacks are only going to increase until Apple smashes The Street or, better yet, revolutionizes yet another multi-billion dollar industry.
We don’t envy the pressure Tim Cook is going to have to face until then.