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Apple Announces Plans to Initiate Dividend and Share Repurchase Program
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Individuals are actually excluded up to about 95k from income earned overseas.
It's also similar to how my work done in another state is taxed in my home state. It would be unfair if I had to pay two states worth of taxes. If no US recourses were used earning that income - why should the US be entitled to it?
To think that suddenly corporations would move all operations overseas would be ludicrous. How do you suppose that would happen? Corporations still have to sell services in the US.
You seem to contradict yourself. You say they can't think of anything better to do with the money, but they should do it anyway. So are you saying they should invest in worse things to do with the money?
Or are you saying they should invest in things they can't think of? The first seems to be a bad idea on the face of it, they second just weird.
Probably not. $10B in dividend disbursements will not result in $10B in disposable income to consumers, nor $10B additional revenue from product sales.
There are 28,500 shareholders of record, of which approximately 1,750 are institutions. In a lot of financial accounts (like mutual funds sitting in a 401k), the dividends are reinvested in the issue, so Joe Investor with shares of Fidelity Contrafund isn't going to get a cash dividend payment; they would get additional shares of FCNTX instead of return of capital.
Of the remaining 26,750 individual investors, probably a couple thousand are Apple employees via ESPP, and they already get a discount on products (plus Apple gives away a lot of freebies to employees).
Thus, we are talking about maybe 25,000 individual investors. Some of their AAPL shares are probably being held in retirement accounts, so even a cash dividend payment isn't disposable income.
Remember about 71% of outstanding shares are being held by institutions so roughly $3B will be paid out to individuals holding direct shares.
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That's a fine thing to do. And it's because you now have that individual option that this dividend was such a good thing to do. Investors now have the individual option to buy more Apple stock, invest in Facebook, or buy a yacht, as they see fit.
Or to diversify and rebalance ones investments and savings, which portfolio theory indicates is the proper way to lower outlying risks when one investment greatly outperforms the others. An AAPL shareholder now has a greater choice, depending on their personal risk aversion, wild gambling addiction, or anything in-between.
I'm not a corporate accountant so I won't claim to know a lot about such things, but most corporations have very smart people who can figure out many ways to launder their profits overseas via shell corporations and the like. Hell, GE didn't pay ANY taxes last year.
They're not giving it away. They're paying the people who own the company.
Manufacturing in the U.S. just doesn't make sense from a cost perspective by a long shot. Look to Washington DC to try to make it a little more affordable to produce here.
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Check their cash flow statements. What you find might surprise you.
You're in Belgium, Double Taxation Treaties apply... you should not be paying that much.
Steve never had a $100 billion in the bank. If you have faith in Steve, know that he appointed Tim and told him to NOT go down the "What would Steve do" track
You're starting to scare me.
I'm worried about an impending tinfoil shortage. Seriously.
Who do you think is going to make all your iToys? A commune?
Where are they going to get the financing to do it?
Investors. Oops.
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Apple is up $13 this afternoon.
Any other investing insights, Bernie?
Someone said it best....
Steve ends up doing a lot of things that he earlier said that he will never do.
Who knows if this is one of those?
True, since it essentially is a payout and thus incorporates itself into the price and then resumes movement based on expectations.
You literally have not comprehended anything people have said in response to your posts. Unbelievable. And just so no one can fault me for just calling you out without any substance, here it goes:
It's not losing $45 billion! It's returning return to the shareholders. That's the point of companies: conferring economic benefit on the owners. Implicit in every company's valuation is a return of cash. Apple is merely giving the owners some cash back that they aren't using.
I see we're forgetting the fact that Apple is generating about $10 billion (I could be a little off here) per quarter of free cash flow.
Please. Apple with $65 billion (and that assumed NO cash generation, which is ludicrous) is more than enough to do anything they want.
So Microsoft has no growth because it pays a dividend? C'mon. Apple has more than enough money to pay a dividend and grow. It has been growing all this time WITHOUT using that money.
It's not weakening Apple. Apple has become this strong without using that $100 billion. And what good is a trillion dollar company if $400 billion of it is in cash earning 1%. People need to understand that had Apple been returning money to shareholders, they could not only have invested just as much as they have, but their return on equity would be higher because a quarter of your investment isn't sitting in a cash account.
Absolutely ridiculous.
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Under his watch they didn't have $100 billion in the bank, rapidly growing at that. The company is entering a new era. They are not the underdog anymore. They're the biggest, toughest kid on the block. It's hard to justify being the most valuable company in the world and not paying a dividend.
Apple is going to make more than $45billion over the next three years. They will still maintain a massive war chest. Steve Jobs was brilliant, and in his brilliance he chose Tim Cook to run the company. His financial expertise is one of the reasons he made that choice.
Jobs knew these days were coming. Moves like this are necessary to keep Apple on top. A big acquisition or development would've been more exciting, but this was a necessary move.
They still pay taxes on all income that is generated within each of those countries, the only difference is that they can move it to another with the EU without being tax again.
Edit: Someone is an idiot that does not understand how it all works eh? must be an American.
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Am I the only one getting sick and tired of all this "Steve wouldn't have done this" crap.
Face it, Steve is dead, he is no longer in charge of the company. Another person is now holding the reins, he has the right to helm it whichever way he deems fit without having to live in the shadow of his predecessor.
It is okay to discuss the merits or drawbacks of such a move, but please, can we just leave poor Steve out of this.
Face it, Steve is dead, he is no longer in charge of the company. Another person is now holding the reins, he has the right to helm it whichever way he deems fit without having to live in the shadow of his predecessor.
It is okay to discuss the merits or drawbacks of such a move, but please, can we just leave poor Steve out of this.
Well the Republican Party wouldn't mind it if dividends were tax free. The double taxation argument is one that Presidential Candidate Mitt Romney makes. But they are not, they are taxed as capital gains, which is currently taxed at 15%. Incidentally, since most income for the wealthy in the U.S. is capital gains, this is why you hear complaints that the wealthy's tax rate is only about 15% overall. If capital gains weren't taxed (based on the double taxation argument), the wealthy would have their tax rate reduced to near zero. Mitt Romney released his tax records for last year and the $40 or so million he made was taxed at a rate just above 15% because it was mainly capital gains (technically, a form of income called Carried Interest").
Also, I believe your broker will sell you a fractional share of a stock. You are right that it will be hard to take dividends of this size and buy $600 shares if they didn't (unless you already have 300 shares or so). I'm pretty sure the brokers don't want to lose a sale and have figured out a way to keep records of fractional shares. And I know that I currently have a fractional share position in Microsoft because I've been reinvesting its dividends.
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I think it's obvious you're fetishizing a dead guy.
Am I the only one getting sick and tired of all this "Steve wouldn't have done this" crap.
Face it, Steve is dead, he is no longer in charge of the company. Another person is now holding the reins, he has the right to helm it whichever way he deems fit without having to live in the shadow of his predecessor.
It is okay to discuss the merits or drawbacks of such a move, but please, can we just leave poor Steve out of this.
QFT.
It's difficult for any company to justify an unmitigated accumulation of cash, to no obvious purpose. It's dead capital.
As a stockholder, you're always going to prefer a dividend to a big acquisition. Mega-mergers and acquisitions rarely work out. Even the ones that ultimately do are huge distractions for management and drags on earnings for years (take Oracle's purchase of PeopleSoft for example). No stockholder wishes that on the company or themselves. Apple has wisely refrained from such desperate measures. I hope they will remain prudent in their acquisitions and keep them small and complementary to existing businesses.
As for Steve, I think it's pretty clear that if he were still with us, that the dividend would not have happened. By all accounts, he was unalterably opposed to the entire idea. For him, investors were only to be marginally tolerated. I suspect investor relations under Tim Cook will be much better.