“It’s been almost a year since Apple announced its quarterly dividend and stock buyback plan, and with the company’s annual shareholder meeting just concluded, one analyst believes Apple may soon reveal more uses for its $137 billion in cash,” Neil Hughes reports for AppleInsider.
“It was March 19 of last year that Apple announced it would spend $45 billion over three years on a quarterly dividend and share repurchase program,” Hughes reports. “On Monday, just over a week before that anniversary, analyst Brian White with Topeka Capital Markets said he thinks Apple is in a good position to announce its next move.”
Hughes reports, “While Apple held $137.1 billion in net cash at the end of the December quarter, White projects that money will grow to $241 billion by the end of Apple’s fiscal year 2015… White believes Apple could increase its cash dividend from its current amount of $2.65 per share to between $3.75 and $5.00 per share on a quarterly basis, representing an annual yield of 3.5 percent to 4.6 percent. Apple could also increase its stock repurchase program to as much as $100 billion as part of a 5-year initiative, the analyst believes.”
Read more in the full article here.
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Gamco’s Ward says Apple is a great buying opportunity right now (with video) – March 11, 2013
Give Wall Street what it wants today and neuter the company’s ability to disrupt big markets forever, or use that money to do something bold like, for instance, buy Comcast and Verizon Wireless ($238B as of today, who knows what their valuation will be when Apple holds $241B in the bank) and continue to improve the lives of people everywhere through innovation that makes our lives simpler (and, yup, makes the copying by Samsung simpler, too).
@Jim,
The problem with such purchases, or with purchasing media content companies like Disney/ABC, is that Apple and their consumers would be hurt more than any gain. For example, purchasing Verizon would bring Apple into competition with ATT, Sprint and other carriers. But, as Apple discovered when it was limited to ATT, they need to be available through ALL of the carriers. Similarly, if Apple were to buy Disney/ABC, they would then be in competition with all of the other content companies–but Apple needs to be able to offer content from ALL of them through iTunes. There’s NO way around this problem since Apple would never be permitted to buy all of the providers in a market (if they were crazy enough to want to). So, it’s just not clear what Apple could sensibly purchase with their hoard. They should keep a lot of it, of course, as insurance in case they have a major problem. But they already have enough for that. The issue is whether they should still be adding tens of billions every year to their cash & equities. The only possible investment I could see making sense is fabrication/manufacturing. No doubt, Tim Cook has considered that and, at least so far, decided it’s not a good idea at this time.
@karen, no disagreement if that was Apple’s reason for making such a purchase, but Apple doesn’t have a history of such surface-level acquisitions. To disrupt industries they’d be doing something completely unthought of by the rest of us. They could be buying Verizon for cellular data and not voice customers. They could be buying Comcast for the wiring, not for the subscriber base. Or if Tim Cook is listening to me today, they’d buy Comcast and force it’s SciFi channel to a) Get rid of wrestling (on a sci-fi channel?!) and b) bring back Eureka! But what do I know, eh? I was really just picking out two somewhat diverse companies that could matter to Apple and who’s market cap was around the projected cash horde the author mentioned. Because I think what Apple faces is the need for lots of cash to pull off the next big industry disruption.
Jim, Karen is correct. Apple screwed up by only allowing AT&T to carry the original iPhone. What people don’t seem to remember is that that is what allowed the Android phone to gain a foothold. They have been off to the races since then. She is also spot on about owning Disney or any other media company. The government won’t allow Apple to control too many things. Buying one of the carriers would be too much for the Apple family to try to control. Too many employees to try to meld into the Apple atmosphere. It’s why Apple buys smaller companies. I’m with Karen, other than more buybacks and increasing the dividend it’s a difficult task for Apple to do something with that huge pile of cash. But they made it and they need to do something with it. Something positive. And if they have to make a huge acquisition so be it. They’ll just have to learn how to make it work inside the Apple family. They have a responsibility to the shareholders to do something with that cash in a positive manner. The shareholders can’t help that Apple has grown so big. They invested and they expect a return on their investment. Something that I never seem to see mentioned here is that the size of Apple is the real problem with Apple. It wasn’t just Steve Jobs a few years back it’s that Apple was a much smaller company. A much more manageable company that had huge growth potential in front of it. Now it has grown so big so fast that it has to keep feeding the beast. That’s not easy to do. It’s the size of Apple as much as the competition that Apple has now. And it didn’t have that competition a few years ago. So now it’s size and competition that Tim Cook has to deal with. Not an easy task. But Jim, there is no conspiracy to ruin Apple. Don’t get caught up in the silly talk by so many here. It makes no sense.
I’m not caught up in any conspiracy theory about Wall Street out to ruin Apple. I believe, as I think many others here do, that what Wall Street wants (more money returned to shareholders) will hurt Apple. As you note, Apple is so big now it’s hard to feed the beast. That’s why Apple needs a lot more cash on hand than other companies have needed. To not have the ability to make huge bold moves relegates Apple to the same ho-hum story that is an ExxonMobil or any other large company stuck in “its” mature market. Again, my choice of example companies in example industries may not meet the litmus test for any reasons, but they were just examples of big bold moves. Tim Cook has said Apple likes to control the technologies that make their products possible, so maybe he wants the cash to buy up LCD panel production or aluminum machining companies or LiquidMetal or… I don’t know and it’s up to them to figure it out because they alone know what will give them the most leverage. I think what you argue is understandable, but not the Apple way of thinking about acquisitions.
Look through this list: http://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Apple and think about what Apple ultimately did with each piece of software technology they bought. You can recognize end-user products, but far more importantly is how Apple took most of those and made them frameworks within Mac OS and iOS to build richer experiences in all apps. In essence, Apple didn’t grow their product line through acquisitions simply to grow their product line (I’m thinking of GE and Westinghouse, for instance). Instead they grew their core and from that lifted the entire Appleverse to new heights. The hardware acquisitions are a little harder to track in some cases, but ultimately that bolsters my argument about the way Apple thinks of acquisitions: The hardware is deep inside, unseen but appreciated; far different from buying a tractor company to add a new line of business (did Westinghouse do that? I can’t remember.)
That’s why Apple really needs to get into the search engine business and go head to head with Google. Hardware-wise, Apple can afford the best. License some algorithms from DuckDuckGo and some support from Wolfram Alpha and they’ll be set. No real conflict there and we can always use another good search engine. A steady revenue stream outside of hardware might lessen Apple’s volatility and increase Apple’s overall profit margins.
Put some damn pressure on Google which Wall Street thinks is some invincible company. It isn’t. Any loss of revenue can hurt Google just like it hurts Apple. Apple can certainly use another revenue stream through ad clicks. Just being one more thorn in Google’s ass will definitely weaken Google’s position in the search engine business. If other companies can keep treading into Apple’s territory, I think Apple should return the favor. I’d prefer Apple to be a more aggressive company and then I really think investors would become interested in Apple. That’s what I’d really like to see done with Apple’s cash. Apple can set up those servers overseas using their overseas cash hoard and it shouldn’t be a problem.
You certainly beat the drum about Duck Duck Go often enough. I just don’t think anyone, even Apple, is going to make a dent in the lead that Google has in the search market. I wish they could because Apple needs to have more revenue from the non-device areas. The problem is that Apple just simply doesn’t do a great job with services. If it were on par with the hardware Apple would be invincible. But other companies have a head start in the services areas so it’s a difficult task for Apple to catch up. But Apple should have done better and perhaps will do better in the future. And that is where Apple’s future lies. Not in hardware but in services. Electronic devices will simply become commodities at some point. Margins will come down and revenues will slow. It’s the steady stream of revenue from services that will make or break Apple. It’s why Google has been valued so high for so long. They are not dependent on a hardware release. A disappointment with one hardware release can be devastating to a company. Whatever Apple is trying to do with the living room won’t be about hardware it will be about services. And you can bet they’re working very hard to bring that to fruition.
successfully more than one year after Ron Johnson left.
How are they going to hire staff to run Verizon or Comcast which they are totally cluessly (compared to the intimate knowledge of their own retail operations) or manage the current staff. If some current Verizon VP says ” it should be done like THIS” who the heck in apple knows to say “No, do it like THIS”?
Jobs the only stellar multi talented cross industry dude they have is gone.
Adding thousands of staff who have no idea of the “apple way” is crazy. Many companies have been ripped apart by internal wars, Verizon bureaucrats (how many off you all here know Verizon management like you know Schiller, Ive, Cook etc?) –
if you say fire all the Verizon guys, then who do you hire to replace them (Like I said apple cant even hire their own retail chief ) ? and if you keep them you have to GIVE THEM POWER.
and if you give them POWER, they — Jobs called them ‘orifices’ (SEE WIRED ARTICLE ON START OF IPHONE) — will be spending all their time in company POLITICS (“why the ##$% should we listen to those stupid stuck up Apple @#$-holes” ) Microsofts politic riven divisons is destroying it (Win 8 was a political move of the Windows desktop divison – the money making power house vs Win Mobile division).
(Go study what happened to other companies who tried this acquisition experiment: HP with Palm — web OS total ZERO, sold off, bonks of talented Palm staff fired, HP CEO fired over the fiasco, Microsoft with its various acquisitions like Skype and Danger which resulted in the wonderful and EXTINCT Kin phone, google with Motorola – how many thousands did they fire? and without ‘imaginative accounting spinning off moto divisions’ Google’s books with Money losing Motor would be much worse – ).
Study Xerox , the people who ran Xerox (tradionalists) had NO CLUE what to do with PARC (their subsidiary division) leaving it to wither and Jobs to pick up the Mouse, GUI etc. Apple current management will have no clue what to do with Verizon or Comcast.
Apple buying anything EXCEPT TINY TECH COMPANIES THAT THEY CAN ASSIMILATE would be a disaster
One more time Apple can’t even Hire Someone to run their Own stores….
I love your passion, and I’m sorry my original post used some examples in a way that have set you, Karen and GM off on those particular companies. I hope my follow up to GM has clarified this more. If you look at the wikipedia list I referred to above, you’ll see that while most acquisitions have been small and knowledge acquisitions, not all have. Notably, the acquisition of NeXT (side note: interesting that no other purchase has exceeded that purchase price. hmm). But just as NeXT was melded into Apple, so too have all the other acquisitions. Unlike HP trying to add an OS product line, Apple was replacing theirs, even though it was a fascinating blending that took place, albeit lopsided on the NeXT OS side.
I wasn’t trying to suggest that Apple would buy Verizon to add cellular subscribers to it’s lines of business, but rather would be buying spectrum and towers and some IP or something along those lines that they would fold into the products we know and love, taking them to the next level. And ultimately my point was that Apple needs to do things in big ways now in order to maintain growth curves. Buying little companies will probably continue where prudent, but I won’t be surprised if there are some biggies soon, or a whole lot of little ones adding up to something big going on. And it’s my contention that holding on to their cash to enable that strategy is far better for its customers and shareholders in the long run than giving bigger dividends.
sorry man for getting all ‘hot up’
I’m all CAPS kind of guy,
although I might disagree with some of your points you have very reasoned arguments.
in the end we all want apple to succeed…
Please Apple. Buy back as much AAPL as you can. Being Wall Street’s bitch is not the way to delivering uncompromising awesomeness!
I’m not convinced that buying a media company is a bad idea. Could be, that other media companies would finally see that what Apple wants to do would be good for their long term future and wouldn’t want to be left at the station when that train pulls out.
More uses… I’ll take a Billion!
I’m not greedy : )
Should pay out dividends only to those who have held the shares long term. Ie, Owners. Not Wall Street short-term “renters”.
I wish Apple could do that but I don’t think that’s legal. In fact, that’s the best way to control those hedge funds. The SEC ought to make some rules about the length of time hedge funds are required to hold any stock and if they don’t hold it for the required length of time they are penalized say 10% to 20% of their gains. Those hedge funds flip-flopping money from company to company every quarter is creating far too much volatility. They’re making it too hard for individual investors to keep up. Those stock “renters” are a pain in the ass, for sure.
Seems like Wall Street would prefer Apple to become a Bank, anything in fact but actually being usefull.
Speaking of banks… If there is a predatory industry out there it’s banking and/or insurance. I wish apple would do to that industry what it did to music and phones. I wouldn’t mind a world free of bankers hours, excessive fees, and slow transactions.
“White believes Apple could increase its cash dividend from its current amount of $2.65 per share to between $3.75 and $5.00 per share on a quarterly basis, representing an annual yield of 3.5 percent to 4.6 percent. Apple could also increase its stock repurchase program to as much as $100 billion as part of a 5-year initiative, the analyst believes.”
He sure has lots of things Apple can do, lol! Screw you, Brian!
Apple could hold onto it’s cash and use that purchasing power to move into new markets that complement Apple’s prowess. How about that one, Brian White? All of these pathetic bottom feeder “analysts” forget about that idea… You know, the thing that would actually benefit Apple. They are just pigs by the Apple trough! Oink! Oink! Oink!
What should they do with that money? What markets should they move into? What areas? What companies should they buy? Should they buy little companies or big companies? So they shouldn’t increase the dividend? Or they should? If so how much? They shouldn’t increase the share buyback? Should they increase the share buyback? If so how much?
It’s for Apple to know and for you to shut up.
I know Apple has made offers to some companies, or had talks ( Dropbox, Waze ) but those are the type of alliances/acquisitions they should go for.
GoBank
Wolfram Alpha
Evernote
Dropbox
Waze
Square
So, those type of companies and get the best talent money can buy to make all their “services” top notch.
Keep people back to continue improving things:
iWork
Maps
iLife
iTunes
Apple can afford to make, and keep all their products top notch.
I would like to see Apple do a revamp of their software packages. iTunes could be more intuitive with easier handling. I really would like to see Pages get better, more compatible with Word.. and then improved in some wonderful ways that makes you not miss the solid program that Word is. Apple would not need to create a new universe.. just concentrate on being the best company ever with the best products that people can not live without. Improve Mountain Lion… make it more intuitive and make it easy to find solutions inside the program.. without living in the dark until someone shows you something that you wish you knew existed much sooner. I would not like to see Apple go the Google way.. I hate the invasiveness of Google, but have always trusted and honored Apple’s friendship model.. helping you to be the best.. not using your confidential interests like a pimp uses women. Google sucks.. and Facebook is right behind them. Apple needs to maintain a uniqueness that people trust. Just be a big company.. increase your dividend… that is a winner for stock investing.. and finish the revolution of TV.. good Lord, I am ready to see the current model of TV/Commercialism change for the better. Tired of guns and murder, tired of 5 minutes of programming followed by 9 minutes of commercials. Yahh.. that is what I would to see.