SAN FRANCISCO — Apple announced Monday it will spend part of its massive cash hoard to pay its first dividend since 1995, and trumpeted that it had sold three million new iPads on the opening weekend.
Apple also revealed plans to buy back $10 billion in shares while still adding to the billions it has in its coffers.
“The new iPad is a blockbuster with three million sold—the strongest iPad launch yet,” said Apple senior vice president of worldwide marketing Philip Schiller.
“We can’t wait to get it into the hands of even more customers around the world this Friday,” he continued, noting the new-generation of Apple’s coveted tablet computer will be released in two dozen more countries on March 23.
Apple stressed that its dividend and stock buy-back plan, which will tap into cash reserves of $98 billion, will not restrict its ability to invest in research, develop new products, or pursue valuable acquisitions.
“Innovation is the most important objective at Apple and we will not lose sight of that,” chief executive Tim Cook told analysts in a conference call. “These decisions will not close any doors for us.”
Apple said it would pay a quarterly dividend of $2.65 per share from its cash balance generated from sales of its hugely successful gadgets like the iPad and iPhone.
The dividend payment would start with the quarter which begins in July.
Apple said it expected the repurchase program to be carried out over three years beginning October in an effort to neutralize the impact of dilution from future employee equity grants and employee stock purchase programs.
Chief financial officer Peter Oppenheimer described the company as generating enough cash to easily accommodate the dividend—amounting to $10 billion a year—and the stock buyback without deeply impacting Apple’s resources.
In the company’s 2011 fiscal year, Apple generated $31 billion in surplus cash. In the first quarter of 2012, it added another $24 billion.
“That’s plenty of cash to run the business,” said Oppenheimer.
“We want to maintain the flexibility to take advantage of investment opportunities that present themselves.”
In total, including its employee stock options, Apple will spend $45 billion over the next three years on these programs, Oppenheimer said.
Apple shares climbed with the news, hitting $603.37 in trading that followed the close of the market.
Cook painted a strong picture for the company, especially in sales of its iPhone smart phones and iPads.
Analysts were pleased that Apple finally decided to loosen its purse strings and pay dividends but were unimpressed with the amount, which was described as below average for successful technology companies.
Apple is hauling in cash at such a breathtaking pace that its coffers are expected to continue swelling despite paying dividends and buying back stock.
Looking past the mountain of cash, some in Silicon Valley saw the dividend as the first major move distinguishing Cook’s style from that of his predecessor, legendary Apple co-founder Steve Jobs who died of cancer last year.
Jobs, who rescued Apple from the brink of bankruptcy, was tight-fisted when it came to Apple holding onto money.
In the company’s first quarter of this fiscal year—ended Dec 31—they sold 37 million iPhones, less that 9 percent of all handsets sold during the quarter.
The handset market will continue to grow, to about two billion units in 2015, and increasingly will favor smartphones, Cook said.
“It’s our belief that eventually nearly all handsets will be smartphones. So the potential for iPhones is enormous.”
Meanwhile, he predicted tablet computers will soon overtake personal computers, and said the iPad is well-positioned in that market.
The iPad has had “an amazing start,” selling 55 million since it was launched in early 2010.
“We had a record weekend and we’re thrilled with it,” he said of the new iPad launch.
source: japantoday.com
