Why Steve Jobs doesn’t pay dividends

HOT Apple Computers + FREE ShippingPhilip Elmer-DeWitt writes for Fortune that Apple, and specifically Apple CEO Steve Jobs, will ignore Bernstein Research analyst Toni Sacconaghi’s open letter calling on Apple to distribute its profits to its shareholders instead of holding and growing its cash for strategic reasons.

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Elmer-DeWitt writes, “Jobs, you will recall, was ousted from Apple and had to sell NeXT in part because as a young entrepreneur he paid insufficient attention to the bottom line. When he returned to Apple in 1997 the company was, according his recollection, three months away from bankruptcy. Since then he has treated Apple’s growing cash hoard like a starvation survivor treats food in the larder — something that could disappear at any time. ‘We know if we need to acquire something — a piece of the puzzle to make something big and bold — we can write a check for it and not borrow a lot of money and put our whole company at risk,’ Jobs said in February, the last time a shareholder asked him publicly why Apple didn’t pay dividends.” ‘The cash in the bank gives us tremendous security and flexibility.'”

Elmer-DeWitt writes, “And he’s going to keep it that way, no matter how loudly the shareholders — or Toni Sacconaghi — complain.”

Full article here.

MacDailyNews Take: Go back to looking for your “missing” iPhones, Toni. And, while you’re at it, you might want to start making better estimates on Apple Inc. than the “amateur bloggers” do. Leave the running of Apple to Steve Jobs.


  1. I have worked with Apple before and been to their offices several times and have always came away that their primary motivation was making cool products that blow away their customers.

    They don’t give one wit about share holder value and that is the one reason they have been so succesful.

  2. If Mr. Sacconaghi does not like how Apple manages its cash, he should either buy a place on the board, by acquiring enough stock to do so, or not buy any Apple stock. I admire Apple’s position on this and feel it is being properly monetarily conservative. There is absolutely no reason they need to or should pay a dividend – None!

  3. As an investor with a lot more then 10 Thousand shares of AAPL stock I will stand and say that Apple needs to hold on to the cash and use it as it see’s fit. Investors gain nothing from token or sporadic dividend payments. As a Medium sized shareholder in Apple I much rather Apple continue to grow and invest the cash into that slow but, steady growth. One time and token Dividend payments and announce stock buy backs like what Microsoft does are designed to appease Analysts and not shareholder. Apple has no real history of Dividend payments and no history of Stock buy backs so, it would be foolish think that just because they have a little bit of cabbage in the bank that they should give it to the shareholders in the form of a dividend payment. By keeping the cabbage in the bank. The Stock price is then built with that foundation of cash Apple has in the bank. If Apple had cash of $2000 per share in investments and was doing todays business the APPL price would be $2500.00/share. So as an investor I want Apple to keep every shekel they can while continuing to invest in the growth of the company, because that is better for my bottom line then Apple doing something to play to the analysis and media types like Microsoft does. Microsoft needs their help so they’ll continue to recommend Microsoft Stock as a good sound investment even though the company is no longer relevant and should be put into maintenance mode and let it ride out it’s days selling PC’s to Idiot departments, paying it’s shareholders most of the company’s profits each year as a dividend until the wheels fall off.

  4. @ Jim

    Thanks for that insightful analysis.

    @ iPhoneeiac

    I think they DO care about shareholder value, but they realize that you can’t win a game if your GOAL is to WIN. The goal needs to be to play the game well (great products) and winning is a by-product of that.

    They are so laser focused on great products that it might just seem that everything else doesn’t matter, but it does. Their way works so no one questions it.

  5. Apple are in a new realm in using innovation and creative muscle to create a company of immense size. They’ve done this by focusing on what matters, their customers, and remain true to that vision. We all wish we had that kind of money (relatively) in the bank and can imagine the kind of freedom that would afford us. It would allow us to stay focused on what matters. It’s a solid approach to corporate governance that doesn’t cater to short term greed which drives so much of the market. All Apple investors and customers will be better off for it long term. Apple has learned it’s lessons well and is now teaching the industry.

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