viernes, 28 de marzo de 2014

Apple's biggest announcement ever? A dividend

Posted 19 March 2012 15:59pm by Patricio Robles with 0 comments

When it comes to announcements, few companies create as much excitement and command as much attention as Apple. And for good reason: most of the time, Apple's announcement involve new products that consumers can't wait to get their hands on.

But a different kind of announcement today might arguably be the company's biggest ever.

Today, Apple announced that it would use its massive cash pile to repurchase $10bn of its share and, more importantly, issue a dividend of $2.65 per share in the fourth quarter of the company's fiscal 2012, which begins in July.

According to Apple's CFO, Peter Oppenheimer, the company expects to spend some $45bn of its domestic cash over the next three years on share repurchases, dividends and settlements of vested restricted stock units.

That's a lot of money, but Apple has it to spend and Tim Cook is convinced that it won't prevent Apple from doing what it needs to do to maintain its considerable edge over the competition:

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.

Some, obviously, will be disappointed. Steve Jobs was always against a dividend, preferring to build up as significant a war chest as possible, enabling bold bets in the future. Hence the reason the company never issued a dividend following Jobs' return to the company. One might be inclined to point out that most of Apple's cash sits outside of the United States, meaning the dividend will, due to repatriation taxes, probably have to come from domestic cash (which currently stands at about $34bn) and/or future earnings. More importantly, skeptics of the dividend might point to it as a sign that Apple believes it has reached a more mature (read: lower growth) stage of its second life.

That may or may not prove to be the case; right now, Apple is still delivering growth most companies would kill for. But one thing is for sure: the Steve Jobs era is officially over. Tim Cook is running Apple's leader and he's quite comfortable making big decisions that Jobs would likely have disagreed with. Whether that's a good thing or a bad thing only time will tell.

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