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Apple Announces Plans to Initiate Dividend and Share Repurchase Program

MacRumors

macrumors bot
Original poster
Apr 12, 2001
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Apple has issued a press release indicating that it plans to initiate a dividend and share repurchase program commencing later this year.
Subject to declaration by the Board of Directors, the Company plans to initiate a quarterly dividend of $2.65 per share sometime in the fourth quarter of its fiscal 2012, which begins on July 1, 2012.

Additionally, the Company's Board of Directors has authorized a $10 billion share repurchase program commencing in the Company's fiscal 2013, which begins on September 30, 2012. The repurchase program is expected to be executed over three years, with the primary objective of neutralizing the impact of dilution from future employee equity grants and employee stock purchase programs.

"We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure. You'll see more of all of these in the future," said Tim Cook, Apple's CEO. "Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program."

"Combining dividends, share repurchases, and cash used to net-share-settle vesting RSUs, we anticipate utilizing approximately $45 billion of domestic cash in the first three years of our programs," said Peter Oppenheimer, Apple's CFO. "We are extremely confident in our future and see tremendous opportunities ahead."
Apple expects to spend $45 billion over three years with the program..

Apple is providing a live streaming of the conference call to discuss its plans beginning at 6:00 a.m. PDT on Monday, March 19, 2012 at www.apple.com/quicktime/qtv/call31912. We'll provide ongoing updates to this article as the conference call takes place.

Conference Call Updates

- iPhone. Eventually all handsets will be smartphones. Enormous potential
- Amazing start with iPad. With launch of new iPad, things just getting better. We believe the tablet market will exceed the PC market eventually.
- We are innovated at an incredible pace. App ecosystem, iCloud, Siri.
- Also investing in distribution around the world, and direct enterprise sales force.
- Substantial amounts of cash, both domestically and abroad.
- Used some for R&D, acquisitions, strategic pre-payments, retail, and building out of infrastructure. You will see more of these in the future.
- Still have plenty of cash to run our business.
- Initiate a Dividend and Share repurchase. Thought very carefully about our cash balance.
- Innovation is our most important objective.
- This decision will not close any doors for us.
- Details dividend and share repurchase program as described above.
- Continue to assess and review program regularly.

Peter Oppenheimer

- Apple's cash has increased for all the right reasons and we've been very disciplined with the use of our cash.
- $98 billion in cash in the Dec quarter. ~$64 billion outside the U.S.
- In thinking about our cash
- Want to maintain flexibility to take advantage of investment opportunities
- 1. Current income for our longterm shareholders
- 2. Increase attractiveness to a broader investment base
- 3. Preserve value from employee equity dilution.
- Repurchase of shares to offset issuing of employee equity grants.
- $45 billion in domestic cash in the first three years of the program
- Remain confident about the future of our business.

Q&A

Q: Any growth of dividend expected?
A: In consultation with the board, we will review our dividend payments regularly.

Q: Last quarter you talked about many more things to come, can you reiterate more about the confidence of the product pipeline.
A: We actually do love to announce new products, we just don't do it in conference calls. Growth speaks for itself and I am extremely confident in our future pipeline. Our customers will be incredibly pleased with what's coming out.

Q: Did board discuss how to put to use the international cash?
A: We've got plenty of u.s. cash to invest and pay dividend and initiate stock buyback. Big tax burden to repatriate the international cash and we've expressed that disincentive to Congress.

Q: Methodology on stock splits?
A: We have looked at, and the current information that we have would suggest that there is very little support that it helps the stock. However, we are in a unique position and at a unique point in time and this is something that we continue to look at. And if we reach the decision that its in the best interest of Apple and its shareholders, then we would do it.

Q: Press release on how the new iPad did?
A: Record weekend. We are thrilled with it, but not the time during this call.

Call over.

Article Link: Apple Announces Plans to Initiate Dividend and Share Repurchase Program
 

drewyboy

macrumors 65816
Jan 27, 2005
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Wirelessly posted (Mozilla/5.0 (iPhone; CPU iPhone OS 5_1 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Version/5.1 Mobile/9B176 Safari/7534.48.3)

I'm thinking this next years holiday quarter will pay for most of it with that quarters profits.
 

teasphere

macrumors member
May 19, 2008
48
0
My guess was Apple buys Vimeo and either buys or heavily partners with Steam/Valve. Both would be excellent moves.
 

macintologist

macrumors 6502
May 3, 2004
473
573
This is the first big non-Steve move. I feel like Apple is where MSFT was back in 1994ish, on the cusp of its knockout blow move Windows 95, but also on the start of a 20-year downward trajectory.
 

Bonte

macrumors 6502a
Jul 1, 2002
988
199
Bruges, Belgium
Not much at all, Apple could make 4 to 5 times this amount in profit over 3 years. I guess this allows some investment funds to ad Apple to there portfolio,that is good.

As a European i pay almost 50% tax on these dividends (US and national taxes combined), i don't need big dividends, this seems on the spot to please both sides.
 

canyonblue737

macrumors 65816
Jan 10, 2005
1,373
1,146
This is the first big non-Steve move. I feel like Apple is where MSFT was back in 1994ish, on the cusp of its knockout blow move Windows 95, but also on the start of a 20-year downward trajectory.

Apple is poised to shape the future no-doubt, but there is no evidence that Apple is on a downward trajectory yet, none. This decision is the sensible one, it may not have been the choice of Steve but he wasn't always the ultimate source of wisdom in how to manage complex finical realities like this. I don't know what the future is going to bring, and I am not saying Apple couldn't someday slip in the way Microsoft did... but lets not get ahead of ourselves.
 

GenesisST

macrumors 68000
Jan 23, 2006
1,712
682
Where I live
45 Billion over three years? I know that is a lot of money, but with a company making billions each quarter, it really isn't

You never really know what's going to happen, so it is safe (and smart) to keep some money in the bank.

It's not because your on the top of the world today that you will still be in 10 years.
 

iDisk

macrumors 6502a
Jan 2, 2010
825
0
Menlo Park, CA
So Sad

Tim Cook just let Steve Jobs vision down with this bean counter move.

Apple has only one focus, make great products, in turn that leads to happy consumers and the shark leeching share-holders get their money.

Jobs would never consider such a pointless move.
 

BC2009

macrumors 68000
Jul 1, 2009
1,966
318
My guess was Apple buys Vimeo and either buys or heavily partners with Steam/Valve. Both would be excellent moves.

They would not have announced an acquisition this way.

To me though, this move seems strange:

1) The company's stock is doing great for investors. Any investor can sell and take a profit. I know the board has a mandate to provide value for investors but it seems that Apple has done that.

2) $45B is a huge amount of cash over the next three years. It's almost half of their current war chest. However, if Apple makes $15B in profit each year they are essentially devoting those profits to this program.

3) Buying back the stock at the current price seems silly unless you only expect it to go up and thus making it tougher to buy back later. But the dividends and the buy-backs will only push the stock price higher.

Anyway, I can't personally think of a better answer because acquiring suppliers brings in anti-trust scrutiny. Acquiring a major company like Facebook or Vimeo could be fraught with integration issues. Continuing with the small strategic acquisitions and paying a dividend and doing a buy-back seem like the potentially least disruptive things they could do with the cash (as opposed to the acquisition of a major company). Apple is still going to have plenty of cash to ensure its supply chain for years.
 

jgbr

macrumors 6502a
Sep 14, 2007
700
565
Jobs would have never allowed this. It's happened before and will happen again.
 

SBlue1

macrumors 68000
Oct 17, 2008
1,638
1,886
share repurchase? heck they should have done that two or three months ago...
 

cameronjpu

macrumors 65816
Aug 24, 2007
1,304
65
Not much at all, Apple could make 4 to 5 times this amount in profit over 3 years. I guess this allows some investment funds to ad Apple to there portfolio,that is good.

As a European i pay almost 50% tax on these dividends (US and national taxes combined), i don't need big dividends, this seems on the spot to please both sides.

What country do you pay taxes in? Also out of curiousity, what are the capital gains tax rate(s) there?
 

waldobushman

macrumors regular
Mar 3, 2011
110
0
Beginning of the end

This is the first big non-Steve move. I feel like Apple is where MSFT was back in 1994ish, on the cusp of its knockout blow move Windows 95, but also on the start of a 20-year downward trajectory.

Apple's new vision. "Makng money for investors, not product for customers"
 

gibbz

macrumors 68030
May 31, 2007
2,696
100
Tim Cook just let Steve Jobs vision down with this bean counter move.

Apple has only one focus, make great products, in turn that leads to happy consumers and the shark leeching share-holders get their money.

Jobs would never consider such a pointless move.

I wouldn't say sad - just his own touch on Apple. Consider the way The Loop framed Tim Cook's first 208 days as CEO:
More transparency about Apple’s overseas operations.

Corporate philanthropy for the first time in years.

A dividend and stock buyback program.

Oh, and continuing to roll out amazing products one after the other.

Let no one say Tim Cook isn’t putting his own mark on Apple.
 

Ries

macrumors 68020
Apr 21, 2007
2,223
2,643
share repurchase? heck they should have done that two or three months ago...

"with the primary objective of neutralizing the impact of dilution from future employee equity grants and employee stock purchase programs"

You're forgetting who the ones with the most employee stock are .-)
 
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