“Apple’s dividend will undoubtedly be a hot topic at the company’s annual shareholders’ meeting on Wednesday,” Daniel Sparks writes for The Motley Fool. “Though Apple’s prospects as a growth stock are under the microscope, there is no question that company is a cash cow.”
“Though Apple’s $137 billion cash hoard receives all the attention, Apple’s earning power is really driving the company’s need to increase its dividend,” Sparks writes. “But even if Apple doubles its dividend tomorrow, the company still runs into a fortunate cash problem.”
Sparks writes, “Less than a year ago, Apple announced a plan to return $45 billion to shareholders in the form of dividends and a share repurchase program. Already, the company has returned $10 billion. But with $23 billion in cash flow from operations in Apple’s first quarter alone, investors are eager for a larger payout. In fact, a Feb. 7 statement by Apple asserted that ‘Apple’s management team and Board of Directors have been in active discussions about returning additional cash to shareholders.’ …Apple’s ‘active discussions’ will lead to action. But whether or not this action will occur on Wednesday or not is still up in the air. Even so, the all-important questions regarding the details still remain: What exactly will Apple do? In what way will it return cash to shareholders? How much? We’ll likely know more tomorrow.”
Read more in the full article here.
So Tim Cook, Mr. Nice guy started taking about issuing dividend after Jobs pass away and now this happens! If its not broken why fix it!
No.
Whatever Apple does, it needs to avoid borrowing money to pay out these benefits. With 2/3s of its cash tied up overseas, there’s only so much it can do with its available U.S. cash portion. It seems all the financial markets want Apple to do is liquidate its cash hoard, then borrow to conduct routine investments, and turn into another ordinary company controlled by money interests. That thought terrifies me, and would truly lead to Apple’s demise as quarterly returns then drive the business’ direction, just like every other company. Why use the latest/greatest/coolest tech, when a cheap plastic case with an Apple sticker stuck on might dupe people into buying it, return a quick short term profit for the next quarterly report?
Apple needs to retain its financial independence to have the flexibility to create the next great thing. Short term thinking will kill it, as it almost did in the 90s.
What a simplistic and ill-informed view. Borrowing money is neither good nor bad in itself. If it makes financial sense, then it should be done. Apple cannot repatriate its profits sitting offshore without a huge tax hit, so borrowing at present give-away interest rates makes a lot of sense, and has no downside. Shareholders win, the company wins.
Thanks for giving me a chance to clarify. As a shareholder who grew up in the 50s, I don’t ascribe to the have-my-cake-and-eat-it-too crowd. I want Apple to thrive, focused on creating great products. Apple has ~$100b of its cash overseas, and the residual ~$40b here in the U.S. It has committed to handing out ~$45b over the next several years in buy-backs and dividend payouts. In short, it has already committed to handing out more than its U.S. portion currently on hand. I consider that betting on itself, which is fine. The problem I have with your financial approach, is that it assumes that companies have an obligation to pay out dividends, weighing the cost of paying interest to obtain funds vs. paying taxes to repatriate funds, all just for the purpose of giving hard earned profits back to the shareholders. I would argue I already have a mechanism to get my cash back, I can sell my shares. So, in effect Apple has two piles of cash, one to use overseas, and one to use in the U.S. By forcing Apple to deplete its U.S. cash balance, your approach simply forces Apple to take its development expenses overseas, with all the jobs that entails. I want more U.S. jobs, I want great Apple products, I don’t want big money interests dictating my product development behavior by pushing for short term gains. So, yes my view is simplistic, I want Apple to continue to be Apple. And, no, there is a downside, paying interest to get funds to pay out dividends is not free, either in the interest paid, or in transferring your future over to the financial interests who just want to bleed you dry.
I am going to say that they will announce an 8 for 1 split.
I sure hope so too.
There is already too much outstanding stock.
Anyone can make a prediction and someone is bound to get it right. I have about as much of a chance as the ‘professional’ analysts.
I thought Apple was gonna buy back some of the shares? They should and then not to issue dividend to the new stick buyers if apple can legally do that! Never a wise idea to begin with
And come out with a new product that blows everyone’s mind! There is just no good news recently!
is English your first language? I sincerely hope not.
And, you know that you look stupid when you end a sentence that isn’t a question with a question mark, don’t you? Please tell me you know this..
Good point, putting a question mark at the end of a sentence is almost as bad as people who put two periods at the end of a sentence.
Unless of course there is a poetic license for the question mark to mean “what the heck is going on here?” or it is a woman on her period putting the extra period after the first period to indicate that she is on her period and is probably going to be a real bitch pointing out some mundane criticism.
Are you going to start crying now? Do you want your blankie that your mommy gave you?
Forget the dividend Apple. Focus on improving the business not the stock price. If you focus on improving the stock price the business will decline and so will the stock price.
Apple needs to focus on:
Improving iLIfe
The iPad edition of iLife is superior in many ways to the Mac edition. The Mac is a much more expensive investment, therefore, the products should be much more capable and powerful.
Apple reportedly has been moving software engineers from the iLife for Mac team to the iPad team. Why not use some of that extra cash to fund two development groups?
iMovie still cannot import 1080p 60 frames per second video. Even low end digital cameras support the format. Cheap windows video editors have been supporting this format now for at least two years. Where is Apple? Are they giving this market to Microsoft?
iMovie unfortunately is still lacking some of the features found in the 06 edition of iMovie.
Also how about fixing the bugs in Final Cut Pro. The reviews in the App store are terrible!
Apple was close to a good web page editor with iWeb. iBooks editor could be the foundation for a great new iWeb. Not everyone wants to post everything to Facebook, particularly small businesses. iWeb could be linked to iWork and Bento to make a very compelling small business package.
iWorks needs numerous improvements which have been discussed here in the past.
Purchase, build or promote a Quicken competitor.
iBooks on the Mac. Kindle is available where is iBooks?
If Apple really wants to spend some money how about purchasing Corel? Apple could invest in improving CorelDraw, Painter, CorelCad, Paintshop Pro etc and reduce their reliance on Adobe products.
I agree that Apple has been slow to update its software products, which is surprising, considering its cash balance. It should be able to afford to do everything on its plate, and need only to assure it does so smartly, not simply throwing cash at the issue. There would appear to be some internal management issues that need attention to get things moving again.
I think Cook will announce nothing tomorrow. No split no dividend increase.