Why Apple won’t pay a dividend or buyback shares

“Once investors calm down after Apple Inc.’s earnings disappointment, the bullish ones will point again to its ever-growing cash pile, which climbed even higher in the last quarter,” Therese Poletti reports for SmartMoney. “Apple had a rare fiscal fourth-quarter earnings miss on Tuesday, hurt in part by customers delaying iPhone purchases until the current quarter. More than four million units of the new iPhone 4S were scooped up in its opening weekend earlier this month.”

Poletti reports, “Apple’s earnings also highlighted its ever-expanding cash hoard which now totals about $81.6 billion including short and long term marketable securities. With that whopping treasure chest, investors may start pressuring for moves like share buybacks or a dividend… Fat chance.”

“For one, the company hardly needs to employ special payoff efforts to woo investors. Even with Wednesday’s sell-off, Apple’s shares are up more than 25% for the year, and have surged an astounding five-fold over the last five years prior to the introduction of the first iPhone. The broader market, as measured by the S&P 500 index [SPX] , has shed about 14% over that same time,” Poletti reports. “For technology companies, dividends are often the first sign that the big-growth era is over, or that they have matured… Continued strong growth in both earnings and the stock price will likely keep the pressure off Apple. Cook doesn’t need to offer up a dividend or buyback right now. And if he ever does, investors may find themselves worrying about more than simply the large pile of cash.

Read more in the full article here.

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