By Patrick Avenell
Apple has overnight announced it will begin repaying dividends and initiate a share repurchase program. Apple last issued a dividend in 1995.
From “sometime in the fourth quarter of its fiscal 2012”, which runs from 1 July to 30 September 2012, Apple will issue a quarterly dividend of US $2.65 per share. From 30 September 2012, Apple will begin a 3-year share buyback worth US $10 billion.
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Apple CFO Peter Oppenheimer estimated these two programs would “utilise” approximately US $45 billion of Apple’s estimated US $100 billion cash reserves.
“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 Apple CEO Tim Cook
“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.”
-37 million iPhones sold in last quarter, claims Tim Cook.
-55 million iPads sold from launch to end of last quarter, claims Cook.
-Eventually all mobile phones will be smartphones, claims Cook.
-Tablet market will supercede PC market: "it's only a matter of time", claims Cook.
-40 new Apple Retail Stores in this fiscal year.
-"We don't see ceilings to our opportunities," says Cook.
-"Innovation is the most important objective at Apple and we will not lose sight of that," says Cook.
-This plan will encourage those who don't currently own Apple stock to invest, claims Cook.
-"We will review our dividend plan periodically," concludes Cook.
-$64 billion of Apple's cash is outside the US, says Peter Oppenheimer.
-"We want to increase the attractiveness of Apple to a wider investor base," says Oppenheimer.
-"We remain very confident in the future of our business," says Oppenheimer.
"This will make us one of the highest dividend payers in the United States…we do not want to pay the tax to repatriate the overseas cash at this time," says Oppenheimer.
"We do love to announce new products, we just don't like to do it in conference calls," zings Tim Cook.
"The [product] pipeline is full of stuff," says Cook, who then says something along the lines of, 'our customers will be very excited by what we've got coming out'.
Peter Oppenheimer says he has expressed Apple's view to Congress that the US Tax laws pertaining to repatriating cash are a hindrance to business.
On the new iPad's release, Cook says, "We had a record weekend and we're thrilled with it".
Neutralising any problems from the employee share program is the primary reason for the share buyback, says Oppenheimer.
"Our focus is always on creating the most innovative products in the world," says Cook, who has also reiterated the problems being created by so much of Apple's cash being outside the US and subject to a repatriation tax.
"It's great for shareholders and it's great for employees who are also shareholders," says Cook, who doesn't answer the question about how many Apple employees are stockholders.
UPDATE: Apple has revealed in a media release that it has sold 3 million new iPads worldwide since the launch last Friday (16 March 2012)
“The new iPad is a blockbuster with three million sold – the strongest iPad launch yet,” said Apple senior VP of worldwide marketing Philip Schiller. “Customers are loving the incredible new features of iPad, including the stunning Retina display, and we can't wait to get it into the hands of even more customers around the world this Friday.”
The new iPad goes on sale this Friday (23 March 2012) in 24 more countries, including Mexico, Ireland, Italy, Spain and New Zealand.
Australian Focused Comment
It's quite clear from Cook and Oppenheimer's repeated complaints about the US tax repatriation laws that Apple is not intending to bring that $64 billion, which would be subject to a tax rate of around 30 per cent, back to Cupertino. With the US Congress more likely to swing to the Democrats and for President Obama to retain office than the more business-friendly Republicans to triumph, these stockpiles of cash will most likely be held in the foreign subsidiaries for some time.
Apple Australia's biggest capital expenditures have been the establishment of 13 Apple Retail Stores and in its exhaustive marketing program. CEO Tim Cook has continued former CEO Steve Jobs' prolific store rollout plan, with the new boss taking great pride in showcasing the new Amsterdam and New York City stores in his new iPad presentation. Assuming Cook's relish for direct sales is genuine, it is a safe prediction that Apple Australia will continue to invest in more Retail Stores, with currently unserviced areas such as Canberra, Adelaide and all of Queensland outside Robina and Chermside, the most likely locations.