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Business, Economics

Apple > A small bite for shareholders

What would you do if you were in charge of a company with way too much cash?

That was the dilemma Apple was facing. It has a stockpile of US$98billion.

Many have joked, the tech giant could buy some of the struggling economies in the Eurozone with its overflow of cash, but after years of speculation, the company has decided to return a lot of that to shareholders.

For the first time in 17 years, it will pay a dividend. Shareholders will receive US$2.65 per share, per quarter. That will cost the company around US$10billion dollars, easily covered by the US$50billion in free cash flow it is expected to make this financial year.

While US$2.65, on what is now, a US$600 stock, doesn’t sound like much, it is paying more than some other technology stocks.

The dividend represents a yield of 1.8 per cent. It is below that of Intel and Microsoft, but roughly the same as Hewlett-Packard, IBM and Cisco.

The move now leaves Google, Amazon and eBay as tech firms that are not paying divdends.

One of the reasons it’s not paying out more, is to minimise tax.

It’s also seeking to buy back up to US$10billion worth of shares.

This reduces the number of shareholders on the company’s registry, thus give it more control of its own future.

More importantly, its new CEO Tim Cook says Apple will have more than enough cash to play with to develop new technologies and products.

Speaking of products, he didn’t really give the market an update on just how successful its new iPad has been, except to say that he was thrilled with demand.

Apple is though, expected to sell more than one million of the new tablet PCs in Australia according to analysts at Telsyte, holding onto its 75 per cent market share.




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