Apple chief coy on bigger divvy slice

Investors refrain from asking Cook about how iPhone X is faring

Apple’s next big thing will likely be a large dividend increase financed by a tax cut on its overseas profits, but the famously secretive company isn’t giving any clues about how big it might be.

CEO Tim Cook had an opportunity to address the issue yesterday at Apple’s annual meeting, when a shareholder asked if the iPhone maker might double its current quarterly dividend of 63c per share.

Not surprisingly, Cook dodged the question, rising from his seat because he said it suddenly felt “a little hot”. He all but guaranteed that Apple’s board will raise the dividend in April, as it has done each year since the company reinstated the shareholder payments in 2012. But didn’t giving any other specifics.

Apple’s annual dividend increases have ranged from 8 to 15 per cent since the payment was reinstated at a split-adjusted 38c per share nearly six years ago.

Cook dismissed the possibility of a one-time payment known as a special dividend, saying he didn’t think that form of distribution “really helps the company or shareholders”.

Before fielding eight shareholder questions during the 75-minute meeting, Cook also disclosed that Apple’s music streaming service now has 36 million subscribers as it nears the third anniversary of its debut. Spotify, the music streaming pioneer that Apple is trying to upstage, has more than 70 million subscribers.

Apple is hoping to gain more ground on Spotify with an internetconnected speaker called the HomePod. The device is being touted as a high-fidelity speaker that can also serve as a digital disc jockey that learns listeners’ tastes so it can automatically play songs that they will like from Apple’s vast musicstreaming library.

Investors have been anticipating a substantial increase in Apple’s dividend since the company announced plans to take advantage of a temporary tax break championed by Presi- dent Donald Trump to bring an estimated US$245 billion ($335b) in overseas cash back to the US. That represents most of the US$285b in cash that Apple held at the end of last year.

The hopes for a large dividend increase and a coinciding commitment to buy back large amounts of Apple stock has helped buoy the company’s shares. That despite a disappointing revenue forecast for the current quarter ending in March that stoked concerns about waning demand for the company’s marquee product, the iPhone X.

None of the shareholders at the meeting pressed Cook about how the iPhone X is faring or about Apple’s handling of software updates that secretly slowed down older iPhones, triggering customer complaints and government inquiries inside and outside the US.

The sweeping tax reforms passed by Congress in late December included a provision lowering the rate on companies’ overseas cash to 15.5 per cent, below the 21 per cent paid on profits made in the US. Before those changes, corporate profits held outside the US were taxed at a 35 per cent rate when brought back into the country — a levy that prompted Apple and other major tech companies such as Microsoft and Google’s corporate parent, Alphabet, to amass huge sums of money in overseas accounts.

Cook defended Apple when queried by a shareholder who wondered why a company that generated a US$48b profit in its last fiscal year should benefit from reforms that some have derided as corporate welfare. He said the previous system was unfair because it imposed unreasonably high tax rates on overseas profits after Apple had already paid taxes on the money to foreign governments.

Apple will pay $38b tax on its repatriated cash and use some of the money to hire 20,000 more US workers and build a second corporate campus in the country to supplement its sprawling headquarters in Cupertino, California. “We are saying we would like to pay (the tax) and we would like to use the residual profits to invest in this country,” Cook said.