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.
Both of these are using the domestic cash only at this time (since there is the tax issue with repatriating foreign cash).
Tim Cook stressed that Apple has room for growth (to offset the usual mindset that dividend bearing companies tend to usually be at the tail end of their growth life cycle). As expected, no numbers were offered as to how the new iPad did this weekend (all he answered when asked by analyst Gene Munster is they were thrilled with a record launch of the new iPad). He stressed the iPhone (while it sold a record 37 million for Apple) represented less than 9 percent of all handset sales (meaning huge room for growth). Mac marketshare is still less than 6 percent of the total PC market; units sold continue to grow at a record pace. Stressed that Apple is innovating at a rapid pace.
Dividend payouts will amount to around $2.5 billion per quarter. Management will periodically review the program (and make changes as needed). Cook elected not to take any dividend payouts on his RSU (restricted stock units).
On the issue of stock splits, Cook said this is something they looked at during the discussion regarding their cash. He said it is something they are continuing to look at (as what I mentioned previously, this is something they likely won’t do until the share price reaches a certain amount). The company went with the hybrid dividend/repurchase after much analysis, AND listening to feedback from investors. Some of these investors were likely funds which as mentioned before, was one of the drivers for why the stock has been on its 40+% appreciation since the start of 2012. That’s how the smart money works.
