Apple loosens purse strings after 17 years
Apple will pay its first dividend since 1995 later this year and also plans to buy back $10 billion (Dh36.7 billion) of its stock, the company’s CEO said yesterday.
Investors will receive a regular quarterly dividend of $2.65 a share with the first payment coming sometime in the fiscal fourth quarter, which begins on July 1, Tim Cook said during a conference call in New York. Apple will also return some of its $97.6 billion in cash and investments to shareholders.
“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. You will see more of all of these in the future,” Cook said.
Shares rocketed at the news, sending Apple to a new record high of $600.23 in pre-market trading before trading on the stock was briefly halted. The buybacks will begin in the fiscal year starting September 30 and will take place over three years. Apple said it anticipates using around $45 billion of domestic cash in the first three years of its buyback and dividend programmes.
Buybacks are a popular alternative to dividends, since they reduce the number of shares outstanding. Cook said the main point of Apple’s buyback is to offset equity grants and shares issued to reward the California-based company’s employees.
Apple’s last dividend payout came in 1995 before Steve Jobs, who died last year, returned as CEO and led the introduction of top-selling products, including the iPod, iPhone and iPad.
The final dividend, of 12 cents a share, was suspended amid leadership upheaval and dwindling computer-market share. According to a company filing, Apple’s cash, equivalents and short-term investments dropped by about half, to $491 million, in the year through September 29, 1995.
“Apple’s cash position has increased for all the right reasons,” Peter Oppenheimer, Apple’s Chief Financial Officer, said. “We are very confident in what we are doing and continue to assess opportunities for investment in the business.
“Combining dividends, share repurchases, and cash used to net-share-settle vesting RSUs (restricted stock units), we anticipate utilising approximately $45 billion of domestic cash in the first three years of our programmes,” he added.
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