Ahead of the company’s scheduled conference call this morning, Apple has announced plans for their $100 billion dollars in cash. The company will pay out a $2.65/share quarterly divined (that’s $10.60/share per year) to stock holders beginning in Q4 this year. In addition, a three-year, $10 billion dollar share buyback is planned for fiscal 2013, which begins September 1st, 2012.
In a press release this morning, Tim Cook said, “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. 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.”
Apple CFO Peter Oppenheimer noted, “we anticipate utilizing approximately $45 billion of domestic cash in the first three years of our programs,” which is a big number – nearly half of Apple’s existing $100 billion in cash reserves – but it should be noted that the company made $13 billion in profit in the last quarter alone.
Apple’s conference call is scheduled for 9AM this morning. We’ll be updating this post with any relevant information that comes out of the call. You can listen in on Apple’s Investor website.
CONFERENCE CALL LIVE UPDATES
9:05 Tim promises we will see Apple make more acquisitions and investments in the future.
9:06 Innovation is important to Apple, and this move will have no impact on that.
9:06 Share buyback will begin “in the December quarter”.
9:07 Dividend and share repurchase plans will be reevaluated periodically.
9:08 Peter: $31b cash increase in fiscal 2011. Another $16b in Q1 2012.
9:08 Apple wants to maintain flexibility to act on investments opportunities.
9:09 Dividend will begin in September quarter.
9:09 Expect to pay out over $10b in dividend payments in first year.
9:10 Expect to spend $45b in domestic cash in first 3 years of program.
9:11 QA is beginning.
9:13 Tim: “We actually love to announce new products, we just don’t do it in conference calls.”
9:13 Tim: “Pipeline full of stuff. Our customers will be incredibly pleased with what they see coming out.”
9:14 Most of what they are discussing is rehash of the earlier press release.
9:16 Tim: New iPad had a record weekend, we’re thrilled with it.
9:17 Peter: We remain confident in what we’re doing, our business, and the products we’ve got in the pipeline. We will continually assess the opportunities we have to invest in the business. We will make changes to the program we’ve announced today that we believe are in the best interest of Apple and of our shareholders.
9:18 Peter: We opted to go with a hybrid approach after a lot of analysis and thinking, and shareholder input. We put a lot of emphasis behind the dividend, majority of cash will go there. $45b in dividend payments will make Apple one of the largest dividend payers in the United States.
9:20 Tim (on “cash cushion”): For this program we focused on domestic cash. First and foremost objective is to make the most innovative products in the world. Decided how much cash we need to do that, covering a wide range of investments. In addition, we looked at prospective future investments, we built our war chest. After all that, we had cash left over, we have plenty of cash to run the business. We concluded it would be best to issue a dividend, great for current shareholders, fantastic for attracting new investors.
9:24 Call is wrapping up.