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Apple to host conference call Monday to discuss its $100B cash balance

post #1 of 197
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Apple will host a conference call on Monday at 9 a.m. Eastern, 6 a.m. Pacific to discuss what it plans to do with its $100 billion cash balance.

The company issued a press release at 6 p.m. Eastern on Sunday evening to announce the conference call less than 24 hours in advance. The call will feature Apple Chief Executive Tim Cook and Chief Financial Officer Peter Oppenheimer.

On the call, the company "will announce the outcome of (its) discussions concerning its cash balance." The press release also said that Apple would not provide an update on its current quarter, nor would it discuss any topics other than cash.

Last quarter, Apple's cash hoard grew to nearly $100 billion, prompting a great deal of discussion among investors and analysts. Executives at Apple simply said that they were "actively discussing" what to do with the money.

Last month, at Apple's annual shareholder meeting, investors again questioned Cook about what Apple planned to do with its cash hoard, with some of them pushing for a cash dividend. But Cook wouldn't commit to any such plans and instead repeated his comments that Apple executives were thinking "very deeply" about what to do with its money.


The growth trajectory of Apple's cash hoard, via Asymco.


With its cash, Apple has continued to make strategic investments to bolster its supply chain and also enhance its current product offerings, as it did with the $50 million purchase of App Store search engine Chomp revealed last month.

AppleInsider will have full live coverage of Apple's conference call when it takes place on Monday morning.

[ View article on AppleInsider ]
post #2 of 197
I'll keep it safe in my Piggy Bank whilst they decide on what they are going to do...

post #3 of 197
It would be nice if at least some of that money went to some sort of scholarship fund. Especially for kids wanting to study engineering or some other similar feild of study.
post #4 of 197
Lickable iPads!
post #5 of 197
I hope it's not a dividend.

I hope it's education pricing for iPads and automatic AppleCare
post #6 of 197
I'd like a stock buy back and for Apple to announce plans to split the stock. I'm expecting a dividend and an announcement of how successful this weekend's iPads were.

edit: I withdraw my buyback comment for a time when the stock market is suffering.

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post #7 of 197
Quote:
Originally Posted by SolipsismX View Post

I'd like a stock buy back and for Apple to announce plans to split the stock. I'm expecting a dividend and an announcement of how successful this weekend's iPads were.

apparently they're not going to discuss the quarter so my guess is we won't get any iPad numbers.
post #8 of 197
This should be very interesting, on a couple of different levels. I'm interested to see both what they've decided, and how those decisions effect the market.

It could end up being a whale of day. I'm going to refrain from trying to predict anything, though. Every time I do that, I'm wrong.
post #9 of 197
I hope it's all for PRO development! (Truth / Sarcasm)
post #10 of 197
Grrr...

They do this on a Monday morning before the market opens... after a weekend where I moved most of my short term options to cash in case Greece blew up or something.

:-/

It's obviously either buyback... or more likely a dividend.

Whatever Oppenheimer... whatever...
post #11 of 197
Quote:
Originally Posted by CGJ View Post

I hope it's not a dividend.

I hope it's education pricing for iPads and automatic AppleCare

Education pricing would be great, the biggest reason I'll be getting one is to benefit my son's education.
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post #12 of 197
Sad. I wanted to invest in AAPL stock way back in 2003, but I couldn't spare the cash at the time (I was a university student living on 2 minute noodles).
post #13 of 197
I'm guessing they will announce plans for a special dividend sometime in 2012. Right now, qualifying dividends are taxed at 15% rather than at normal income rates (i.e. the same as long term capital gains). That special tax treatment is set to expire at the end of the year.

I also think they will announce plans to invest a portion of their stockpile in an "incubator" for research and development (i.e. making private equity-type investments in startups). That would be productive use of the money, and potentially give Apple some leverage in the coming years in terms of intellectual property.

Apple has a big enough stockpile of cash and investments that today, it really looks like an investment manager and technology company rolled into one.
post #14 of 197
Quote:
Originally Posted by Rogifan View Post

apparently they're not going to discuss the quarter so my guess is we won't get any iPad numbers.

Not on the 9AM (Eastern) call, but I would not be surprised if later on in the day or Tuesday they issue a separate press release announcing weekend sales. Whatever they decided to do with cash will have a significant impact on their stock trading activity tomorrow, and so might speculation about iPad sales. I'm guessing the board met this weekend to approve whatever Tim Cook and Peter Oppenheimer will announce, though I find it a bid odd they decided to do it the same weekend the new iPad launched.
post #15 of 197
Quote:
Originally Posted by SolipsismX View Post

I'd like a stock buy back and for Apple to announce plans to split the stock. I'm expecting a dividend and an announcement of how successful this weekend's iPads were.

Realistically the only two options are buy back or dividend at this point, right? They wouldn't hold a press conference if they were just going to let the cash pile keep growing.

Good thing I bought a few more shares in my Roth IRA and my sons college fund on Friday.
post #16 of 197
My guess: A one-time dividend. Something like $20 per share. I don't think Apple will commit to a regular dividend. They may announce a share buyback, but are they going to buy at these levels? They may just say that they will decide when it is appropriate to buy shares.

Perhaps, a one-time bonus for all workers including those at Foxconn? It will be interesting to see how they approach this.
post #17 of 197
Quote:
Originally Posted by dasanman69 View Post

Education pricing would be great, the biggest reason I'll be getting one is to benefit my son's education.

This is a business, forget this education nonsense.
post #18 of 197
Quote:
Originally Posted by GregInPrague View Post

Realistically the only two options are buy back or dividend at this point, right? They wouldn't hold a press conference if they were just going to let the cash pile keep growing.

Good thing I bought a few more shares in my Roth IRA and my sons college fund on Friday.

I own shares in my Roth as well, but what they do with the cash will not change Apple's value near term although trading may be volatile on Monday. My intention is to keep the shares until something fundamental changes.
post #19 of 197
Quote:
Originally Posted by GregInPrague View Post

Realistically the only two options are buy back or dividend at this point, right? They wouldn't hold a press conference if they were just going to let the cash pile keep growing.

Good thing I bought a few more shares in my Roth IRA and my sons college fund on Friday.

Those are the only two realistic ways of reducing the cash/investment balance (only a quarter of it is actually cash and 2/3 of it is in long-term investments). For 2012, at least as far as American shareholders are concerned, a special dividend would be taxed at 15% (the same as a long term capital gain), so that is one way of doing it. A stock buyback doesn't make a whole lot of sense when the stock is trading at a record high, so I'm leaning toward a special dividend.

However, they might announce plans to change how they invest whatever amount they decide to keep (hence my speculation that they might announce the creation of a private equity-type fund).

Quote:
Originally Posted by AppleGreen View Post

I own shares in my Roth as well, but what they do with the cash will not change Apple's value near term although trading may be volatile on Monday. My intention is to keep the shares until something fundamental changes.

Same here. A Roth has been the best place for it given how much it has increased over the past few months. That said, announcing a small regular dividend would make it an eligible investment for some pension plans and mutual funds whose charters don't allow them to invest in stocks that don't pay dividends. So if they announce a $20/share special dividend (which would reduce cash by about $19 billion), that might not preclude them from announcing a nominal regular dividend, such as $1/share to keep cash at manageable levels. It would be a yield of less than 0.2% so it won't exactly become a utility.
post #20 of 197
Quote:
Originally Posted by SolipsismX View Post

I'd like a stock buy back and for Apple to announce plans to split the stock. I'm expecting a dividend and an announcement of how successful this weekend's iPads were.

If you wanted that you should have bought Microsoft during it's rise. They've overly split the stock to a point now that it will never go up for squat.
post #21 of 197
Quote:
Originally Posted by AppleGreen View Post

My guess: A one-time dividend. Something like $20 per share.

Of course that would be awesome. We'll see. But it would be a timely distribution in 2012 given that dividends will be taxed more heavily starting in 2013.
post #22 of 197
Quote:
Originally Posted by Rogifan View Post

apparently they're not going to discuss the quarter so my guess is we won't get any iPad numbers.

I should have read the whole thing. I foolishly assumed that coming off the first weekend iPad sales would also include some news on the results. Seems odd this would have been decided this weekend and announced first thing before the market opens. Is this typical?

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post #23 of 197
Very interesting. They want to be able to have a dramatic impact on the market it would seem.

Problems I see with a huge dividend are the percentage of the money outside the US, and the major capital investments in their campus(es). They can do it from LT investment money, but that seems odd.

Don't really want the $100B to become $75B after paying taxes on offshore money to the US.
post #24 of 197
Quote:
Originally Posted by SolipsismX View Post

I should have read the whole thing. I foolishly assumed that coming off the first weekend iPad sales would also include some news on the results. Seems odd this would have been decided this weekend and announced first thing before the market opens. Is this typical?

Seems odd to me too. But I'm guessing a special dividend. I can't see them announcing some major acquisition.
post #25 of 197
Quote:
Originally Posted by KPOM View Post

For 2012, at least as far as American shareholders are concerned, a special dividend would be taxed at 15% (the same as a long term capital gain), so that is one way of doing it.

My understanding was that long term capitol gains tax for the lowest two income tax brackets remains at 0% in 2012 as it has been since 2008. While that may not mean much for most investors, there are some people with limited income who are smart enough to still put some aside for investing.
post #26 of 197
Quote:
Originally Posted by Rogifan View Post

Seems odd to me too. But I'm guessing a special dividend. I can't see them announcing some major acquisition.

How about buying a big ass laser and rights to the moon's surface to carve out an Apple logo on it? I think $100 billion could achieve that.

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post #27 of 197
Acquisition(s) is the only right answer.

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post #28 of 197
Quote:
Originally Posted by GregInPrague View Post

My understanding was that long term capitol gains tax for the lowest two income tax brackets remains at 0% in 2012 as it has been since 2008. While that may not mean much for most investors, there are some people with limited income who are smart enough to still put some aside for investing.

I doubt there are many Apple investors in the bottom two brackets. Plus, it is more likely that no matter who gets elected in November, their taxes won't be going up much, if at all. On the other hand, if the highest tax rate on dividends goes from 15% this year to 42.5% next year (39.6% pre-Bush rate plus the Medicare surcharge that goes into effect next year), that would have a HUGE impact on how a dividend is received by the Street.
post #29 of 197
Quote:
Originally Posted by SolipsismX View Post

I'd like a stock buy back and for Apple to announce plans to split the stock. I'm expecting a dividend and an announcement of how successful this weekend's iPads were.

There's not going to be a stock buyback at $580. Maybe if the stock dropped below $500. And I have a feeling there's not even going to be a dividend even though a dividend would probably raise the share price. I bet we're going to get the "we want to hold the cash for a large acquisition" line. Maybe we'll get a split, but that's actually pretty meaningless for most situations.
post #30 of 197
Quote:
Originally Posted by Aizmov View Post

Acquisition(s) is the only right answer.

But if that were the case, they would just announce a deal tomorrow morning rather than pre-announce it today. Acquisitions are usually negotiated right up until the time the deal is announced, and it is not unusual for the terms to be discussed late into the night just before the press release is prepared.
post #31 of 197
Quote:
Originally Posted by zoetmb View Post

There's not going to be a stock buyback at $580. Maybe if the stock dropped below $500. And I have a feeling there's not even going to be a dividend even though a dividend would probably raise the share price. I bet we're going to get the "we want to hold the cash for a large acquisition" line. Maybe we'll get a split, but that's actually pretty meaningless for most situations.

Until you have a deal, it makes no sense to say "we're going to set aside up to $X for an acquisition" because you would lose leverage. Plus there would be lots of speculation on who the target is, which creates tricky legal issues. Acquisitions aren't announced until the deal is signed.
post #32 of 197
Quote:
Originally Posted by dasanman69 View Post

Education pricing would be great, the biggest reason I'll be getting one is to benefit my son's education.

Don't know how young your son is, but if he's still in elementary school (or less), you'd be benefitting his education more by keeping him off of computer devices for a while. Kids need to put pen to paper and learn to have the patience to read linear, non-interactive material. Give them highly interactive audio/video at too young an age and they'll have lots of problems acquiring reading skills.

And if Apple did have education pricing (don't they already have education pricing?) it would be for educational institutions, such as schools who want to buy in large numbers. In ages past, they made deals where if the college bookstore stocked Apple, a college ID got you a small discount.

Apple is not of the mind to put an iPad in the hands of every kid, unless those kids' parents are willing to foot the bill. Some will say that's the only legit stand for a public, profit-making company to take and others will say that Apple has become just like any other large selfish company, but it's a moot point because Apple is never going to be giving away anything.
post #33 of 197
Quote:
Originally Posted by tyler82 View Post

Lickable iPads!

Been done already!
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post #34 of 197
I think the short version of the call will be:
They've passed the 100 Billion mark, and they're going to start issuing dividends.

Stock buy back doesn't make sense with the stock so high.

A stock split may happen, but doesn't affect what Apple does with the cash.

A major acquisition wouldn't be announced like this, and I don't think the executive team at Apple is in anyway interested in taking on a major acquisition.

Really, the only thing that I think could be a surprise here is whether or not Apple will take on some debt to finance dividends while leaving foreign money abroad until more favorable tax conditions occur.

Additionally, I could see Apple bringing in some people and forming a VC fund, but I think this would be a minor amount of their money.
post #35 of 197
Quote:
Originally Posted by SolipsismX View Post

How about buying a big ass laser and rights to the moon's surface to carve out an Apple logo on it? I think $100 billion could achieve that.

Made my day!!!
post #36 of 197
Quote:
Originally Posted by KPOM View Post

I doubt there are many Apple investors in the bottom two brackets. Plus, it is more likely that no matter who gets elected in November, their taxes won't be going up much, if at all. On the other hand, if the highest tax rate on dividends goes from 15% this year to 42.5% next year (39.6% pre-Bush rate plus the Medicare surcharge that goes into effect next year), that would have a HUGE impact on how a dividend is received by the Street.

I would imagine that there are at least a few people who have Apple shares from before the economic crisis. Maybe they were laid off and found much lower paying work (or no work) that puts them in the lower brackets now. Great for them to be able to sell their shares and avoid taxes.

Also there are millions of Americans working outside of America (most for American companies) and the first $97,000 of foreign earned income is nontaxable by the IRS. Sure many of them are making way more than that, but for those of us that make way less but still enough to invest we get that benefit of falling in the bottom of the US tax brackets and at least through this year are able to sell profitable stock and avoiding long term capital gains.

I only mention it in case someone on here is in the same situation. I didn't learn about the 0% tax on lowest tax brackets until 2010 when it was originally going to expire. I sold our shares and rebought the same day, effectively raising our cost basis from $110 to $315 per share without having to pay any tax on the profits and I'm planning to do the same thing in December of this year.
post #37 of 197
Buy half of Detroit, build factories, leave China.

Apple, Made in America.

Rule.
post #38 of 197
Quote:
Originally Posted by CGJ View Post

I hope it's education pricing for iPads and automatic AppleCare

Good suggestions. Apple products are generally pretty reliable, I doubt they'd lose much money throwing a 3 year warranty on everything and a $299 iPad 2 for schools couldn't go far wrong.

I'd like to see them invest more in software and pay games studios to develop/port games to iOS and Mac systems. A single game generally costs under $30m to develop from scratch. $3b buys them 100 top quality franchise games and keeps a dying industry breathing. It wouldn't even cost anywhere near that much either as they make money on the sales of the apps for years and it keeps many talented people in jobs. They might even end up back in profit.

More spending on R&D in energy research. Better batteries - faster charging, higher capacity.

Invest more in content distribution. Get the rights to shows on iTunes like Seinfeld. Turn ATV into the place to watch old favourites and movies as soon as they are out on DVD/Blu-Ray.

Work with hardware companies to make Mac peripherals. Be the driving force behind Thunderbolt instead of sticking a port on and waiting for everyone else to catch up.

Start selling SSD upgrades at affordable prices.
post #39 of 197
Is there any chance they were already buying back stock before this announcement? That would explain some of this runup.
post #40 of 197
Quote:
Originally Posted by gowhitestripes View Post

Is there any chance they were already buying back stock before this announcement? That would explain some of this runup.

I don't think that would fly at the SEC. You have to file public paperwork for that kind of thing.
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