Apple has announced what it intends to do with the almost $100 billion of cash it has in reserve. The company will issue a dividend to investors and will also start a share repurchase program to buy back shares.
Subject to declaration by the Board of Directors, the Company plans to initiate a quarterly dividend of $2.65 per share sometime in the fourth quarter of its fiscal 2012, which begins on July 1, 2012.
Additionally, the Company’s Board of Directors has authorized a $10 billion share repurchase program commencing in the Company’s fiscal 2013, which begins on September 30, 2012. The repurchase program is expected to be executed over three years, with the primary objective of neutralizing the impact of dilution from future employee equity grants and employee stock purchase programs.
Details of the Dividend Program
Apple’s decision to initiate a quarterly dividend of $2.65 per share marks a significant move for the company, which has historically been conservative with its cash reserves. This dividend will provide a steady income stream for shareholders, reflecting Apple’s confidence in its ongoing profitability and cash flow. The dividend program is expected to attract a broader range of investors, including those who seek regular income from their investments. By offering a dividend, Apple is also signaling its maturity as a company, transitioning from a high-growth tech startup to a more stable, established entity.
Share Repurchase Program
The $10 billion share repurchase program is another strategic move by Apple. This program, set to commence in fiscal 2013, aims to buy back shares over three years. The primary objective is to neutralize the impact of dilution from future employee equity grants and employee stock purchase programs. By repurchasing shares, Apple can reduce the number of outstanding shares, which can increase the value of remaining shares and provide a boost to earnings per share (EPS). This move is often seen as a sign of a company’s confidence in its own stock and its belief that the shares are undervalued.
Apple has said that they intend to use around $45 billion of their cash in the first three years of the programs. This substantial investment underscores the company’s commitment to returning value to its shareholders. The combination of dividends and share repurchases is a balanced approach that benefits both income-focused investors and those looking for capital appreciation.
The decision to allocate such a significant portion of its cash reserves also reflects Apple’s robust financial health. With a strong balance sheet and consistent revenue growth, Apple is well-positioned to undertake these initiatives without compromising its ability to invest in future growth opportunities. The company continues to innovate and expand its product lineup, ensuring that it remains at the forefront of the technology industry.
There should be more information later during Apple’s conference call, where executives are expected to provide further details on the implementation and expected impact of these programs. Investors and analysts will be keen to hear more about Apple’s long-term strategy and how these initiatives fit into the broader vision for the company’s future.
Source The Next Web
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