Print 31 comment(s) - last by BifurcatedBoat.. on Mar 20 at 5:30 PM

Some shareholders want cash returned as a dividend to investors

Apple continues to be incredibly successful in the technology market and one of the most valuable companies in the world. So far this year Apple is sitting on a cash stockpile that amounts to $137 billion. Some Apple shareholders are upset that the company is sitting on that much cash and isn't paying out dividends to shareholders.

Moody's Investors Services issued a report this week predicting that Apple’s cash stockpile could grow to as large as $170 billion by the end of 2013. That assumes that Apple doesn't change its philosophy towards dividends and stock buybacks. Apple has been under pressure from a hedge fund manager named David Einhorn and other major investors to return some of that cash to shareholders.

Apple has noted that it is in "active discussions" on returning some of that money to investors but no details were offered. Einhorn is currently involved in the suit against Apple that CEO Tim Cook has dubbed "a sideshow."

Moody's wrote, "Unless Apple changes its philosophy towards liquidity/shareholder returns by increasing its $10 billion annual common dividend, or if Apple increases it stock buyback program, we estimate Apple’s cash balances could increase by another $35 billion in 2013 and exceed $170 billion."

When it comes to cash reserves, Apple has roughly twice as much as its closest competitor. Microsoft was sitting on total cash reserves of $68.3 billion as of December 31, 2012. Google is slightly behind with $48.1 billion.
The only non-technology company in the top five biggest cash-rich companies in the United States was pharmaceutical giant Pfizer with $46.9 billion in cash taking the number four spot. Rounding out the top five is Cisco Systems with $46.4 billion in cash.

Source: Market Watch

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The investors are looking for short term gains
By aliasfox on 3/19/2013 12:37:43 PM , Rating: 2
In my opinion, any well run tech company shouldn't be worried about giving dividends to shareholders, even one with as much cash as Apple.

A tech company's only reason to exist is to create new technology, which requires R&D and infrastructure. Any and all excess cash should be pushed in that direction.

I think Apple should kill their dividend and put 10x that amount into additional R&D and a fraction more into marketing.

It's only companies that have run out of ideas that need to put out a dividend. Have you run out of ideas, Apple?

RE: The investors are looking for short term gains
By aliasfox on 3/19/2013 1:43:53 PM , Rating: 3
If you're growing the business by selling new products that come from new ideas, your stock price will naturally go up - investors will then invest because each share should go up in value over time.

If you have a mature business with few growth prospects but lots of revenue, your stock price should be fairly stable - putting out a dividend is the only way for an investor to get a return on their money.

I want ARM, Tesla, and nVidia to put their revenues back into R&D. I want my local utility to pay out a dividend.

By Cheesew1z69 on 3/19/2013 3:37:12 PM , Rating: 1
I was replying to the ridiculous comment of : It's only companies that have run out of ideas that need to put out a dividend.

It's ridiculous and untrue.

RE: The investors are looking for short term gains
By Asetha on 3/19/2013 3:26:55 PM , Rating: 2
People buy shares in tech because it's a capital growth industry. The idea is over time new products come out and generate share growth.

Coca-cola, power generation, these are mature and people buy their shares for stable income.

The reason Apple is paying dividends is because they don't know what to spend the money on.

RE: The investors are looking for short term gains
By aliasfox on 3/19/2013 3:44:22 PM , Rating: 2
Exactly. What scares me isn't that Apple doesn't have something new right now. After all, it was three years between the first iMac and the iPod, over five years between the iPod and the iPhone, and over two years between iPhone and iPad.

What scares me is that by entertaining all of these thoughts on dividends and share buy back, Apple has tacitly admitted that the well has run dry.

Making money the Willy Wonka way is a heckuva lot more interesting for the public (and pundits) than the Wall Street way.

By Asetha on 3/19/2013 4:29:06 PM , Rating: 2
Right. I know there's a lot of money to be made trading options, however I don't engage in it because it adds no value to the economy.

And the dividend is precisely that - Apple has more money than innovation, which is a problem I'm sure many companies would love to have.

RE: The investors are looking for short term gains
By Tony Swash on 3/19/13, Rating: -1
By GulWestfale on 3/19/2013 3:05:26 PM , Rating: 1
wow that sounds totally interesting and exciting!
and if i didn't have a job, girlfriend, hobbies -a life, really- i'd totally put that on an endless repeating loop!
well i would, if i had an "i-device". thankfully, i have a galaxy, like most other sane people.

RE: The investors are looking for short term gains
By Tony Swash on 3/19/13, Rating: -1
By GulWestfale on 3/19/2013 6:28:33 PM , Rating: 1
is he as good at data analysis as your iOS spell-checker is at catching your myriad typos?

By StormyKnight on 3/19/2013 10:23:18 PM , Rating: 2

Pot, meet Kettle. Kettle, Pot...

By Pirks on 3/19/2013 3:26:41 PM , Rating: 2
People, ignore it, it could only be watched on iPhone. Tony failed hard again :)))

By retrospooty on 3/19/2013 5:44:55 PM , Rating: 1
Tehy do care about tech... They dont care about finance and certainly not about Horace Dediu. He is much like you, spends all of his time thinking about Apple and has zero insight or understanding into anything else. As Applecentric as it gets... But still its finance. Might I suggest you take that type of thing here?

By Skywalker123 on 3/19/2013 1:39:36 PM , Rating: 2
the only reason for a business to exist is to make a profit.

By aliasfox on 3/19/2013 1:46:28 PM , Rating: 2
A business exists to create a profit.

A tech business exists to sell technology at a profit.

New technology requires investment in R&D and infrastructure.

By Bateluer on 3/19/2013 11:28:00 PM , Rating: 2
Thats not really how investing works. Shareholders invest and expect results in return. Apple sitting on 100Bn+ in cash, while clearly not actually spending any in R&D or design while bleeding it in the court room, is offensive.

By TSS on 3/20/2013 2:47:26 AM , Rating: 2
I think the investors are looking for any gains. Apple shares where higher then google shares not too long ago, past $700. Now? $450. Some investors lost some serious money there, but they can't sell those losses so they're looking for returns in the mean time.

Atleast that's what i figure.

"Can anyone tell me what MobileMe is supposed to do?... So why the f*** doesn't it do that?" -- Steve Jobs
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