Apple announces dividend and stock buyback
Monday, March 19, 2012
Apple on Monday announced plans for much of the $97.1 billion in cash it has accumulated from massive iPod, iPhone, iPad and Macintosh sales.
The company said it would begin giving shareholders a quarterly dividend of $2.65 per share sometime its fiscal fourth quarter, which begins in July. Apple last offered a dividend in 1995.
Apple (AAPL, Fortune 500) will also buy back $10 billion of its own shares over three years, beginning in October.
"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," said Tim Cook, Apple's CEO in a statement.
"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," he added
Stock repurchases generally help companies artificially inflate their earnings per share because it reduces the number of shares outstanding. But profit growth has rarely been a problem for Apple, which routinely blows past Wall Street analysts' quarterly earnings forecasts.
Yet Apple said the share buybacks will help stave off earnings-per-share dilution from future employee stock grants and purchase programs.
The company said it expects to utilize $45 billion of domestic cash in the first three years of its dividend and repurchase programs.
Shares of Apple were up 2.4% in pre-market trading before the dividend and buyback announcement but were halted following the news. When Apple shares resumed trading, the stock fell more than 1%.