Apple to pay dividend
It also plans to buy back shares to return more cash
SAN FRANCISCO: Apple Inc plans to pay a dividend and buy back us $10bil of its stock, returning some of its Us$97.6bil in cash and investments to shareholders.
Investors will receive a quarterly dividend of US$2.65 a share starting in the period beginning July 1, Cupertino, California-based Apple said yesterday in a statement. The buybacks would begin in the fiscal year starting Sept 30 and would take place over three years, the company said.
Apple’s cash pile has swelled amid surging demand for its products, such as the iphone and ipad. Investors had urged Apple to return some of the balance in the form of a dividend. Chief executive officer Tim Cook fuelled speculation that an announcement might be coming when he said this year that Apple had “more than we need to run a company,” and that the board was considering its options.
“We are extremely confident in our future and see tremendous opportunities ahead,” Apple chief financial officer Peter Oppenheimer said in the release. He said the company planned to pay out about Us$45bil over three years.
The company generated Us$16bil in cash in the first quarter of fiscal 2012, which ended in December. Shaw Wu, an analyst at Sterne Agee & Leach Inc, predicts that Apple will generate about Us$75bil in cash this year. Analysts at Morgan Stanley, Jpmorgan Chase & Co and Mizuho Securities USA Inc also had predicted that Apple would institute a dividend.
“This is something that large shareholders have been asking for,” said Wu, who had predicted that Apple would announce an annual dividend of 2% to 2.5% of its share price.
The growing amount of money on Apple’s balance sheet followed the introduction of the iphone, the bestselling smartphone, and the ipad, the leading tablet computer. The company last week began selling a third-generation ipad, which comes with a high-definition screen and faster processor.
A dividend would be an added boon to investors who have already seen the company’s stock rise 45% this year. Apple co-founder Steve Jobs, who died in October, long resisted calls to return some of the money to investors.
Apple last paid a dividend in 1995, before Jobs returned as CEO and led the introduction of top-selling products including the ipod, iphone and ipad. The final dividend, of 12 cents a share, was suspended amid leadership upheaval and dwindling computer-market share. According to a company filing, Apple’s cash, equivalents and short-term investments dropped by about half to Us$491mil in the year through Sept 29, 1995.