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Apple Announces Dividend; $10B Stock Buyback

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Apple today announced 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."

Listen to the rebroadcast of Apple's March 19, 2012 conference at www.apple.com/quicktime/qtv/call31912. Or call (888) 203-1112 (toll-free) or (719) 457-0820 with confirmation code 6274937. Both are available until Monday, April 2, 2012 12:00pm EDT.

Editorial
After listening to the conference call, it was interesting to learn that just last year (2011), Apple generated $31 billion in cash, with $24 billion of that abroad. That's over 75% of cash from last year sitting outside the U.S., which avoids U.S. tax. Apple's total cash over-seas currently sits at $64 billion and is likely to surpass $100 billion by the end of this year (2012), even after the dividends and stock buyback.

With so much cash in Apple's coffers, its easy understand why Apple would do whatever is legally possible to avoid paying 35% of profits to the U.S. Government and another 8.84% to the State of California. One has to wonder if there is a tax savings rationale in Apple's dividend and repurchase program?

by Brian Mitchell, Founder & CEO, eCoustics.com

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