Apple decided to use the $97.6bn cash on its balance-sheet to pay dividend, for the first time since 1995, and buy back some of its shares.
The company confirmed it will pay a quarterly dividend of $2.65 per share starting from July which is a dividend yield of 1.7 per cent on the current share price. Apple will buy back up to $10bn of its own shares starting in the company's next financial year.
There have been a many speculations as to how the money will be used. The cash had been held for a long time mainly because of Apple’s near-bankruptcy in the mid-1990s. Also, Steve Jobs was not a supporter of dividends. Another reason for Mr Cook’s cautious approach to paying dividends may be the Microsoft’s experience. The firm suffered a slower growth as soon as it began to return cash to shareholders in 2003. Some therefore view the decision to start paying dividends as a signal that company’s glory days are over. Parting with money is therefore a big step for the company to take.
On the other hand the dividend rewards shareholders and opens ownership of Apple shares to a wider range of funds, as most ‘value-oriented’ funds are not allowed to buy stocks which don't pay dividends.
Apple’s share prices continue to rise thanks to this decision. With the new iPad sales boosting company’s wealth is growing at enormous rate. Three million iPads were sold in the first three days at $400 gross profit per unit making up for the $10 billion return to shareholders.
As Tim Cook ensured in his statement: ‘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.’
No comments:
Post a Comment