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Print 25 comment(s) - last by TakinYourPoint.. on Mar 20 at 5:32 PM

Apple plans to use $45 billion of its cash reserves over the next three years

It's no secret that Apple is a cash machine. The company rakes in billions of dollars thanks to a legion of loyal fans that lineup hours in advance to purchase its latest and greatest phones and tablets. The company has also seen a surge in its traditional PC business thanks to strong sales of its MacBook Pro/MacBook Air lineup of notebooks and iMac all-in-one desktop computers.
 
In late January, Apple reported profit of $13 billion on revenues of $46 billion for fiscal Q1 2012. The company saw its stock price cross the $500/share threshold in early February, making it worth more than Microsoft and Google combined. More recently, AAPL has danced with the $600/share mark. In addition, Apple has roughly $100 billion in cash/securities on hand – a figure that CEO Tim Cook said is “more than we need to run the company.”
 

Apple CEO Tim Cook [Source: David Paul Morris/Bloomberg]

This morning, the company announced a $10 billion stock buyback program that will start in fiscal 2013. The buyback will take place over the course of three years with the primary goal being to "[neutralize] the impact of dilution from future employee equity grants and employee stock purchase programs."
 
A more immediate action being taking place is a quarterly dividend starting in fiscal Q4 2012. The quarterly dividend will equal $2.65/share.
 
“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," said Cook.
 
According to CFO Peter Oppenheimer, these programs will burn through $45 billion of Apple's cash reserves over the next three years.

Updated @ 5:12pm
AAPL just closed above $600/share for the first time in its history. 

Source: Apple



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RE: Investors win!
By zlandar on 3/19/2012 9:52:03 AM , Rating: 2
Yes his "mental illness" that took a company on the verge of bankruptcy to the most valuable US company in less than 15 years.

Yeah Jobs was no saint or angel. But give him some credit.


RE: Investors win!
By Iaiken on 3/19/2012 10:07:33 AM , Rating: 3
I actually agree with mcnabney about the mental hording that Jobs embarked upon. During that time, Apple missed the boat on acquiring companies like Facebook, Twitter and Amazon. Instead, they missed the boat because the all powerful Steve wanted to roll around on a pile of dollar bills.

Personally, I would have actually preferred to see Apple get into digital banking and finance. It makes perfect sense that the company should be the one extending credit to it's own customers instead of the credit card companies. Wan't a $700 iPAd? Finance it through the website. Hell, APPLE should be the company that is financing the billion dollar loans to carriers like Bell, Rogers, AT&T, Verizon, Sprint, O2, Vodafone etc.

This dividend is a stupid move.


RE: Investors win!
By zlandar on 3/19/2012 10:25:42 AM , Rating: 4
20/20 hindsight. Good luck trying to pick the next Google/Facebook without doing it after the fact.

The man brought a company on its knees to #1 in market cap and your complaining?

Maybe we need to hire more mentally unstable CEOs.


RE: Investors win!
By Samus on 3/19/2012 12:52:30 PM , Rating: 3
Steve Jobs is one of the most selfish billionairs in US history. He left virtually none of his wealth to non-profit or research/educational foundations, saturated Apple stock by not offering dividends and keeping the price out of reach of average investors, and with this in mind should be fittingly forgotten.

Tim Cook is a better CEO than Jobs could have ever been, and I think their finer years are ahead of them.

Did Steve Jobs save Apple? That is highly debatable. I feel he held back technology, and after the patent trolling began in 2007, that isn't debatable at all.


RE: Investors win!
By name99 on 3/19/2012 4:25:48 PM , Rating: 1
OMG so much...

(1) How do you know that Jobs left no money to education or foundations? The contents of his will (and what he did with his money beforehand) have been kept secret --- he was a private man who did not want his name in the news, even in the context of things like the name of a hospital wing.

(2) What is "saturating a stock"? And why is it a bad thing?

(3) So you think that the nominal price of a share is important? The stock is cheap if it goes through a split and costs $70 a share, but is expensive if it does not split and costs $700 a share? Good luck with that investment strategy --- there are a whole lot of penny stocks available outside NASDAQ, through pink sheets that will, I'm sure, make you rich.
And if this is something that upsets you, by all means don't go look at the price of Berkshire Hathaway.

quote:
Did Steve Jobs save Apple? That is highly debatable.

Right. And did Al Qaeda attack the US? Highly debatable. Does Intel make faster chips than ARM? Highly debatable. Was Obama born in the US? Highly debatable.


RE: Investors win!
By someguy123 on 3/19/2012 4:11:15 PM , Rating: 2
I agree that picking the next big website is a crapshoot, but to be fair Jobs isn't the one that brought apple back. Tony Fadell and Apple's massive marketing team are what brought Apple back. The only thing Jobs had done was introduce the NeXT UI into OSX (which was also an Apple decision, hence the buyout), and pushing the all-in-one mac. I don't understand why people give Jobs credit for the creativity and efforts of hundreds of employees. For some reason this only applies to Apple's endeavors, even though he also partially financed the rise of Pixar, though he, rightfully, doesn't get credit for things like Toy Story.


RE: Investors win!
By Solandri on 3/19/2012 7:10:37 PM , Rating: 2
quote:
The man brought a company on its knees to #1 in market cap and your complaining?

Maybe we need to hire more mentally unstable CEOs.

Just because someone is successful doesn't mean they're perfect. It's possible to respect and even like what a person has accomplished, while still offering fair and legitimate criticism of some of the things he did wrong.

I'd agree calling him mentally ill was an ad hominem. But not paying dividends is immoral IMHO. The first shareholders originally invested capital into the company - capital which was critical to its early growth. In exchange for that investment, they were given partial ownership and hence a share of the profits - dividends. Current shareholders have bought that right from the original shareholders. IMHO refusing to pay dividends would be like me declaring to the bank that I'm not going to pay interest on my mortgage anymore.

If you don't want to pay dividends, do the right thing and buy back all your stock. That's essentially paying back all the original investors (or people who bought rights to it) for their original "loan".


RE: Investors win!
By Tony Swash on 3/19/12, Rating: -1
"And boy have we patented it!" -- Steve Jobs, Macworld 2007














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