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Apple to spend $45B over 3 years on dividend & share repurchase program

post #1 of 183
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Later this year, Apple will initiate a dividend and share repurchase program, spending $45 billion over the next three years, the company announced on Monday.

Apple's new quarterly dividend will amount to $2.65 per share. Assuming it is approved by the company's board of directors, it will be initiated at some point in the company's fourth quarter of fiscal 2012, which begins on July 1 of this year.

The dividend will be joined by a $10 billion share repurchase program that will start with Apple's fiscal 2013. The share repurchase program has already been authorized by the company's board of directors.

Apple plans to repurchase shares over three years, with the primary objective to neutralize the impact of dilution from future employee equity grants and employe stock purchase programs.

"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," Apple Chief Executive Tim Cook said. "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."

More details on the new initiatives will be discussed during a conference call that Cook and Apple Chief Financial Officer Peter Oppenheimer will participate in at 9 a.m. Eastern, 6 a.m. Pacific Monday morning. The company will not, however, provide any updates on its current quarter, and no topics other than cash will be discussed.

"Combining dividends, share repurchases, and cash used to net-share-settle vesting RSUs, we anticipate utilizing approximately $45 billion of domestic cash in the first three years of our programs," Oppenheimer said. "We are extremely confident in our future and see tremendous opportunities ahead."

[ View article on AppleInsider ]
post #2 of 183
The prophecy is on its way ..
post #3 of 183
By the looks of it, that will barely dent the cash pile, if future profits are taken into consideration!

I guess there is such a thing as an embarrassment of riches!
post #4 of 183
It would be nice if they instituted a DRIP. I would like to buy each of my kids a share and teach them about investing and compounding interest/dividends. It's more fun with a stock than a savings account.
post #5 of 183
I thought the conference doesn't start for another 10 min... why are are already getting the news already?
post #6 of 183
I wish there was a big ass DON'T LIKE button I could click on Tim's head.
post #7 of 183
I've no idea what all this means, so would someone with some economic knowledge kindly explain what this means for someone who has a small holding of 60 shares from ages back? Does Apple just force me to sell them back to them? Sorry for being ignorant...
post #8 of 183
Quote:
Originally Posted by ksec View Post

I thought the conference doesn't start for another 10 min... why are are already getting the news already?

Companies tend to allow journalists to publish the information shortly before the actual event sometimes through a press release. It's a common practice in an attempt to get more coverage for what the company deems good news.
post #9 of 183
Oh well, a little bit of something for both sides of the coin. Attempting to please all investors, I suppose.

I would have preferred a bold buyback move alone. But here we are. Somewhat un-Apple-like to try and compromise like this.

That said, a new era had begun! Let's hope AAPL defines a new category of stock: the "growth income" company.

AAPL is dead. Long live AAPL!!
post #10 of 183
Quote:
Originally Posted by ladybumps View Post

I've no idea what all this means, so would someone with some economic knowledge kindly explain what this means for someone who has a small holding of 60 shares from ages back? Does Apple just force me to sell them back to them? Sorry for being ignorant...


They don't force you to sell. They buy them from willing sellers at market value.
post #11 of 183
Quote:
Originally Posted by ladybumps View Post

I've no idea what all this means, so would someone with some economic knowledge kindly explain what this means for someone who has a small holding of 60 shares from ages back? Does Apple just force me to sell them back to them? Sorry for being ignorant...

You don't have to do anything. It's entirely voluntary. There'll be enough people wanting to sell their holdings for Apple to meet its $10B buyback goal.

You'll get a dividend check for 60*2.65*4 = $636 in 2012. Almost enough for a new iPad, after taxes!
post #12 of 183
Quote:
Originally Posted by I am a Zither Zather Zuzz View Post

They don't force you to sell. They buy them from willing sellers at market value.

Thanks
post #13 of 183
Quote:
Originally Posted by ladybumps View Post

I've no idea what all this means, so would someone with some economic knowledge kindly explain what this means for someone who has a small holding of 60 shares from ages back? Does Apple just force me to sell them back to them? Sorry for being ignorant...

Apple won't force you to sell them back, but they will make a nice offer to all shareholders to entice them to sell back shares. Once they buy back a set amount of shares at a raised price that is it, at least for now.

Depending on how much you bought your shares at, it may make more sense to take that higher value buyback and then also re-invest that money into apple stock for more shares and an increased dividend payout each quarter. But consult with a financial adviser/planner before doing anything.
post #14 of 183
Quote:
Originally Posted by geoffrobinson View Post

It would be nice if they instituted a DRIP. I would like to buy each of my kids a share and teach them about investing and compounding interest/dividends. It's more fun with a stock than a savings account.

One of the reasons I wanted a large split was to setup investment accounts for my grandkids... at $600 a pop there wouldn't be much room for action...

They each have saving accounts -- but that's just a lay-away for future needs (car, insurance, etc.).

My Dad had shares of Southern Cal Edison that offered dividend reinvestment at a fixed grant price for a period of time... He was able to accumulate shares at a fraction of their price in an up market...

That could be a great deal for AAPL investors!
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post #15 of 183
Quote:
Originally Posted by anantksundaram View Post

You don't have to do anything. It's entirely voluntary. There'll be enough people wanting to sell their holdings for Apple to meet its $10B buyback goal.

You'll get a dividend check for 60*2.65*4 = $636 in 2012. Almost enough for a new iPad, after taxes!

Almost? That's more than enough for a 16 gb iPad. They're only 540 after taxes. You could get a 16 gb iPad and a real nice case on Apples dime.
post #16 of 183
Quote:
Originally Posted by anantksundaram View Post

You don't have to do anything. It's entirely voluntary. There'll be enough people wanting to sell their holdings for Apple to meet its $10B buyback goal.

You'll get a dividend check for 60*2.65*4 = $636 in 2012. Almost enough for a new iPad, after taxes!

Not really, because there will only be two quarters paid out once the dividend starts: 60*2.65=$159*2=$318

Close, but no virtual cigar app on a new iPad...
post #17 of 183
One thing I am super happy about: they didn't announce some large acquisition.

That would have been a terrible move.
post #18 of 183
Not being an investor - although I was - I don't really care. I think that stock buybacks just make money disappear - it shouldn't even lead to a stock increase as the drop in cash assets should be exactly counteracted by the reduction in the amount of stock available - leading, in theory - to no stock price gains.

Dividends are for mature companies, sure Apple has been around for a while, but is it not a perennial startup in mentality?

Not overly pleased. I can see Apple - a small company in its core divisions - becoming a huge juggernaught. This and the new Large building might make it suffer the consequences of all huge corporations, static and slow reaction times, fiefdoms, etc.

I suppose the money was becoming embarrassing.
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post #19 of 183
Quote:
Originally Posted by asdasd View Post

.... becoming a huge juggernaught.

Pun intended?

A great oxymoron if I ever heard one!
post #20 of 183
Quote:
Originally Posted by priced4evil View Post

Not really, because there will only be two quarters paid out once the dividend starts: 60*2.65=$159*2=$318

i'm being stupid but what's the 60 from?
post #21 of 183
Quote:
Originally Posted by tania View Post

i'm being stupid but what's the 60 from?

The 60 refers to the question from a stockholder with 60 shares.
post #22 of 183
Quote:
Originally Posted by geoffrobinson View Post

It would be nice if they instituted a DRIP. I would like to buy each of my kids a share and teach them about investing and compounding interest/dividends. It's more fun with a stock than a savings account.

How do stock brokers feel about DRIPs? don't they cut them off from getting commissions?
post #23 of 183
Quote:
Originally Posted by Dick Applebaum View Post

One of the reasons I wanted a large split was to setup investment accounts for my grandkids... at $600 a pop there wouldn't be much room for action...

They each have saving accounts -- but that's just a lay-away for future needs (car, insurance, etc.).

My Dad had shares of Southern Cal Edison that offered dividend reinvestment at a fixed grant price for a period of time... He was able to accumulate shares at a fraction of their price in an up market...

That could be a great deal for AAPL investors!


Assuming you're in the USA, if you are wanting to set something up for your grandkids, I'd suggest creating 529 plans for them instead. You'd probably have to sell some/all the Apple stock, ( as 529 plans have to be funded with cash only ) but you could fund it with the dividends if you wanted or some combination of the two.
Hopefully your state has a good plan where you'll get a tax deduction for it as well.

http://www.savingforcollege.com/intr...a-529-plan.php

Regardless of what you do with the Apple stock, hopefully you'll consider the 529.

Good luck!
post #24 of 183
Quote:
Originally Posted by williamh View Post

The 60 refers to the question from a stockholder with 60 shares.

ah got it. thanks.
post #25 of 183
Quote:
Originally Posted by tania View Post

i'm being stupid but what's the 60 from?

Someone asked about their 60 shares.
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post #26 of 183
i understand why not a stock split

i understand the dividend issue

but how does the buy back help the investor, future investor and the company??
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post #27 of 183
Quote:
Originally Posted by huntercr View Post

Assuming you're in the USA, if you are wanting to set something up for your grandkids, I'd suggest creating 529 plans for them instead. You'd probably have to sell some/all the Apple stock, ( as 529 plans have to be funded with cash only ) but you could fund it with the dividends if you wanted or some combination of the two.
Hopefully your state has a good plan where you'll get a tax deduction for it as well.

http://www.savingforcollege.com/intr...a-529-plan.php

Regardless of what you do with the Apple stock, hopefully you'll consider the 529.

Good luck!

Thanks! I'll look into it!
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post #28 of 183
Quote:
Originally Posted by anantksundaram View Post

One thing I am super happy about: they didn't announce some large acquisition.

That would have been a terrible move.

Why FFS ?

Most Apple shares are held by large banks, investment houses, hedge funds, etc. All those people who caused the worldwide recession. All they are doing is making the rich even richer.

Way to go Apple, Steve is probably spinning in his grave as we speak.
post #29 of 183
A buyback at $600 a share for AAPL would be totally asinine. The buyback, if ever, should have occurred 4-5 years ago. The power of it would have been multiplied. To do it now is pathetic.
post #30 of 183
Oops! Looks like the discussion has moved here. Anyway, to quote my last post In the other thread:

The buyback portion of this isn't as bad as I thought it could be. They ate mostly accounting for share growth due to compensation. So it's not an unneeded attempt to increase equity per share. It's an attempt to maintain equity per share.
post #31 of 183
Here we go!
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post #32 of 183
Quote:
Originally Posted by bwik View Post

A buyback at $600 a share for AAPL would be totally asinine. The buyback, if ever, should have occurred 4-5 years ago. The power of it would have been multiplied. To do it now is pathetic.

If you listened to the call, you would see that they did it simply to account for the share growth over the next few years from employee compensation.
post #33 of 183
So far, not much of a blip... maybe that's what Apple was after?
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post #34 of 183
Opened up about $9.50, but that is dropping.
post #35 of 183
Quote:
Originally Posted by NOFEER View Post

i understand why not a stock split

i understand the dividend issue

but how does the buy back help the investor, future investor and the company??

It's simply supply/demand. Reducing the available shares increases the EPS (earnings per share) and reduces the multiple the stock trades at PE (price to earnings) making the stock a better value. It guarantees nothing though, just look at msft. They have spent a fortune on stock buybacks and the stock has done nothing.
post #36 of 183
Quote:
Originally Posted by melgross View Post

If you listened to the call, you would see that they did it simply to account for the share growth over the next few years from employee compensation.

Yeah, all of this with domestic cash... waiting for a better tax environment to repatriate foreign cash...

I just love the way Peter and Tim parry questions that shouldn't be asked
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post #37 of 183
Very volatile. But it's been volatile for several days.
post #38 of 183
Quote:
Originally Posted by bwik View Post

A buyback at $600 a share for AAPL would be totally asinine. The buyback, if ever, should have occurred 4-5 years ago. The power of it would have been multiplied. To do it now is pathetic.

No it's not. They have to do it with the cash available in the US unless they want to pay taxes on the cash over seas. They have to account for how much the dividend and buyback will cost them along with any US investments.
post #39 of 183
I would rather see Apple stick to their guns despite all the pressure from the investor community. I'd rather see Apple shares go up because of organic growth and not because of dividends. Buybacks are the biggest waste of money - the money will go into thin air when the stock price comes down at some point. I'd rather see Apple end world hunger than pay people who already have a lot of cash to spare. After all they have money to spend on Apple products and Apple shares.
post #40 of 183
Quote:
Originally Posted by Dick Applebaum View Post

Yeah, all of this with domestic cash... waiting for a better tax environment to repatriate foreign cash...

I just love the way Peter and Tim parry questions that shouldn't be asked

They made the point, several times that repatriation would be too expensive, and pointed the finger at the government for that. Everything they're doing is from domestic cash and holdings.
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