Apple Announces Dividend, Stock Buyback

iPad maker will offer investors $2.65 per share beginning in July, as it looks to put $98 billion cash stock pile to work.

Paul McDougall, Editor At Large, InformationWeek

March 19, 2012

3 Min Read

New iPad Teardown: Inside Apple's New Tablet

New iPad Teardown: Inside Apple's New Tabletr

New iPad Teardown: Inside Apple's New Tablet (click image for larger view and for slideshow)

With its coffers flush from sales of the iPad and other gadgets, Apple on Monday said it plans to issue a dividend starting this summer and begin a share buyback program.

The dividend will pay Apple investors $2.65 per share, beginning July 1, and the buyback will commence Sept. 30 and will occur over three years. Apple plans to buy back $10 billion in shares. The company is currently sitting on $97.6 billion in cash and investments, and had been under pressure to use its reserves more aggressively.

Apple shares were up 1.12%, to $592.13, on the news. The company last paid a dividend in 1995.

"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'll see more of all these in the future," said Apple CEO Tim Cook.

"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," Cook said.

[ The reviews are in. See New iPad: 6 Observations. ]

Former Apple CEO Steve Jobs, who died in October, was opposed to paying dividends, preferring instead to build Apple's cash reserves for investments and other business purposes.

Apple CFO Peter Oppenheimer said the company would use about $45 billion in domestic cash in the first three years of the programs. "We are extremely confident in our future and see tremendous opportunities ahead," said Oppenheimer.

With hits like the iPad, iPhone, and iPod, Apple has been a favorite of tech investors for the past several years. The company's share price has increased from about $95 five years ago, to the current price of almost $600. By contrast, rival Microsoft, which has fallen behind in mobile computing, has seen its share price stagnate over the same period--moving from about $28 to about $32.

Apple's latest cash cow is the new iPad, which features the high-resolution Retina Display, improved camera, a faster chipset, and support for Verizon and AT&T 4G networks. Apple launched the new iPad last week, and set sales records over the weekend, said Cook.

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About the Author(s)

Paul McDougall

Editor At Large, InformationWeek

Paul McDougall is a former editor for InformationWeek.

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