Apple CEO: Cash discussions intensifying

“”Apple Inc is in very active discussions at the board level about what to do with its steadily growing hoard of cash and securities, Chief Executive Tim Cook said on Tuesday, responding to calls for the world’s most valuable electronics company to put its massive cash reserves to work,” Poornima Gupta and Noel Randewich report for Reuters.

“Cook, in one of his rare appearances before investors, also talked about a ‘jaw-dropping’ opportunity in smartphones. He also said the iPad tablet trajectory was ‘off the charts,’ adding that he foresaw tablets surpassing the personal computer market in unit sales eventually – eroding Microsoft Corp’s Windows dominance,” Gupta and Randewich report. “Wall Street’s other concern is the likelihood of Apple returning some of its $98 million [sic. Make that “billion,” with a “B.”] warchest to shareholders through dividends or share buybacks – even if it is only a one-time deal.”

Gupta and Randewich report, “On Tuesday, the CEO urged investors at a Goldman Sachs technology conference to be patient about the cash reserves. ‘I only ask for a little bit of patience, so we do this deliberately and in the best interest of shareholders,’ Cook said.”

Read more in the full article here.

23 Comments

    1. A cool idea, but done before – Iridium – and it was a financial disaster. The technology is a little better now, but not enough to make sense except for very specialized purposes – offshore oil rigs, military units, cruise ships, etc.

      I continue to believe that Apple should buy T-Mobile and use it to create a great wireless network. THAT would be a game changer…

  1. Problem with paying a dividend is, to do so they need to bring the cash home and that would devalue it substantially due to tax. It also reduces the amount of cash an hand that is baked into the stock price so that should bring down the stock price at time of payout. Better to hang on to it.

    1. “devalue it substantially due to tax”? Yes, Apple would have to pay the balance of US corporate taxes, reducing the net amount of cash; however when you use the term “devalue”, you have to realize that about 2/3rds of Apple’s foreign held cash has already had US corporate taxes accounted for.

      As for whether the cash is actually baked into the stock price, it’s quite hard to believe that it is, given how low Apple’s PE would be net of cash.

      1. asymco recently charted stock price vs cash pile. There is a very clear correlation. Whether you believe it or not it appears the cash pile is driving or hugely effecting the stock price.

    1. Keeping this very high level… a dividend is a payment. In this case, a payment to shareholders.

      So, if the dividend was $5 per share and you owned 1000 shares, you’d receive $5000 from Apple.

      You can visit Wikipedia for more info.

    2. Some dividends are recurring, some are “one-time” only. The shareholder as of a certain specified date gets the dividend. Usually, it appears in your brokerage statement. Dividends are taxed like income. Usually when the dividend is issued, the stock opens the same amount down.

      Personally, I would prefer Apple repurchase shares, as Apple is still cheap. Repurchasing shares when the stock is expensive is usually a bad choice, but not when it’s inexpensive.

      1. I’ve been reading that 2-3 percent is what the street is looking for. Now then, are “they” talking 2 percent of earnings or stock price? If earnings, then 2 percent of 100B is only 2B. Apple makes that in ten days. What do you think?

        1. Considering how democrats forced banks to make loans to people who had no business getting loans and fighting Republicans from stopping that from happening. The economy really went south when Demorats took control of congress in 2006. Do your homework fscuttle.

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