Apple's cash plans: Pay dividend, $10 billion share buyback

Apple's cash plans: Pay dividend, $10 billion share buyback

Summary: Apple announced its plans to spend $45 billion of its cash reserve over the next three years, including a cash dividend and a $10 billion share repurchasing program.

TOPICS: Banking, Apple

Apple, the world's richest technology company, announced its plans to spend $45 billion of its cash reserve over three years.

It sounds like a lot, but compared to it raking in over $13 billion in profit in the last quarter alone, it barely scrapes the surface of Apple's value as a company.

The company will issue a quarterly divided of $2.65 a share. In doing so, it bows down to investor pressure, but keeps potential investors interested. Apple doesn't need to give back to those who invest, however, as it continues to show considerable growth.

The board has also authorised a $10 billion share buyback program to start in fiscal 2013, after September 1, and to be carried through over three years. This gives Apple the option to buy more stock if it wishes.

In a press release, the reason for its share repurchasing plan is to: "neutralize the impact of dilution from future employee equity grants and employee stock purchase programs."

The dividend starts in the fiscal fourth-quarter, after July 1. It is the first dividend Apple has issued in 17 years, ZDNet's Jason D. O'Grady reports.

"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,” chief executive Tim Cook said.

"You’ll see more of all of these in the future."

Shares of Apple were up 2.4 percent in premarket trading. Earlier this month, the company scraped the $600 a share mark, but fell slightly over the following days.

Apple is holding a conference call at 6:00 am PDT (9:00 am EDT; 2:00 pm GMT).

Image credit: Sarah Tew/CBS Interactive.


Topics: Banking, Apple

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  • "Sounds like a lot" -- fair mention

    They will spread their $45 billion program into three years, which still ensures that the cashpile will grow like crazy and will end up with like $200 billion in two-three years.

    So this whole dividend/buyback thing is just to calm the whining voices down, and nothing more. We can expect another small program after those three years.
    • Given today's interest rates...

      ..a 2% dividend is pretty good.

      Of course, if the price continues to rise, the % drops, but it's still a win-win.
  • It is about time!

    John Zern
  • Getting ready

    Apple is getting ready for the end of the stock rise.
    • Just the opposite

      Actually by paying a dividend Apple opens the stock up to many funds and trusts that can't purchase stocks that don't pay a dividend. More buyers means more stock rise, not less.
      • I was just reading this, on the anouncement

        [i]Apple admits business has matured
        For starters, the simple move to deliver cash back to shareholders is an admission that Apple has reached a certain level of maturity in its business and that growth is going to be increasingly harder to come by[/i]

        The finished with:
        [i]So don't be surprised if five or 10 years from now Apple has a lot more in common with Microsoft and other mature tech stocks than it does with innovative, high-growth startups[/i]

        They are also doing a buy back, remember.
        William Farrel
      • Not necessarily...

        There's two ways to own: long and short.
      • Buyback?

        $320 for the highest-end iPad2 model ($699+ originally), assuming there are no scratches or signs of use on it.

        Yeah, that's not just philanthropy, or showing how environmentally conscious they are, but proof that Apple's products hold their value even after just one year...
      • Buyback?

        @HypnoToad72 So your saying being able to buy an IPad 2 at less then half the cost you had to buy it a year ago is proof that it can hold it's value? This seems like an odd statement. So Android tablet prices haven't dropped or haven't dropped by much. Can I assume Android tablets hold their value better then Apple or is this just a revelation that Apple tablets were over priced to begin with?
      • Try to keep up with the class


        Stock buyback. Look it up.
      • Who is buying?

        @optikool@... He is talking about what Apple is willing to pay to buy back the iPad, not what you can get on the open market. If you want to compare pricing like that how about you point out the Android tablet manufacturers that are willing to buy back 1 year old units and what they were willing to pay versus the original cost.
  • Hard work should be rewarded

    And not driven to suicide.

    Who is the real leech, the person working for a wage or somebody who hands out some money and demands more money in return, even if it means stomping down on workers' wages to do it? ;)
  • Beginning of the End

    This is how all companies start their demise...
    They think that they make so much money that they can buy back all their investors.
    It's only a matter of time now... Maybe 5 years...

    Bye Bye iPod, iPhone & iPad..... :P
    • Hilarious, if you're trying to be funny, and...

      hilarious, if you're not.
  • math

    How Apple has $45b in cash reserve?.

    Remember that Apple's profit does not add directly money for their "piggy bank". Profit is shared amongst (ahem) shareholders and a part is accumulated for reserve. $45b in cash reserve sound fishy.
    • @magallanes Have you read anything recently about Apple's cash reserves?

      They have over $100B in overseas cash reserves and $30B in US cash reserves. The $10B buy-back is spread over 3 years, starting September 1 2012. They had $13B in profit last quarter and can possibly equal that in the current quarter. What's fishy about $45B in cash reserves given the facts as stated in the blog?
  • Too bad they can't create jobs.

    Would be nice to see an American company hiring people.
    • RE:Too bad they can't Create jobs

      I understood that there will be 2,000 jobs added with their Texas customer service expansion. That's in addition to new store openings and the new hires in Cupertino.
  • Slowly but surely Cook is screwing Jobs heritage

    Slowly but surely Cook is abandoning the success formula that Jobs created. The sole reason that Apple is doing this well is that there are still some Jobs product ideas being brought to the market. Shareholders have totally different interests than customers and employees. Shareholders, especially Americans have only the short term interest in mind. Jobs knew how high a company can ride and how deep it can fall. In order to prevent a fall and in order to defend yourself against threats you ned money lots of it. Shareholders are rewarding themselves by irresponsibly driving up stock prices. But what goes up must go down. Now they get 11 dollar a share a year, be sure that they demand 30 dollar when the stock price has reached it's top or when the growth slows down. That will be coincide with the moment that the profits will be falling. It is like with the banks. When the shit hit the fan, the shareholders had all filled up their pockets and left the rescue to the man in the street. Within three years from now it is the shareholders who are taking the top spot and a new enterprise from the East will come in to fill the gap because it has the customer and employees on number one and two.
  • Nice Written

    But its far reach from us(Indian) .That really good stand for investor.