Apple Announces Plans For $100 Billion Cash Hoard

Apple announced Monday that it plans to spend nearly half of its $100 billion cash hoard to pay a dividend to investors and buy back shares of the company.

The company's quarterly dividend, its first since 1995, will be $2.65 per share and begin "sometime in the fourth quarter of its fiscal 2012, which begins on July 1, 2012," according to Apple's press release. Apple has also allocated $10 billion to spend on repurchasing shares of the company, which will begin later this fall.

"We will continue to invest in the business and will maintain our disciplined, focused approach in the future," Apple CEO Tim Cook said during a conference call Monday morning. "Innovation is the most important objective at Apple, and we will not lose sight of that. These decisions will not affect that."

The dividend and share repurchase program will together cost Apple $45 billion that will be spent over the next three years.

That money will be pulled from Apple's U.S. cash holdings, though over $60 billion of its cash balance is being held overseas. During a conference call with analysts addressing Apple's plans for its cash balance, Apple CFO Peter Oppenheimer criticized U.S. tax law, noting that repatriating the cash would, due to United States corporate lax law, come at a huge cost to the company.

"Repatriating cash from overseas would result in significant tax consequences under U.S. law," Oppenheimer said. "We have expressed our views to Congress and the administration. We think current tax laws provide significant disincentive to U.S. companies that would otherwise repatriate the significant cash they have on hand."

The Wall Street Journal points out that, according to Bernstein Research, Apple's international tax rate is less than 3 percent, while repatriating its cash would send Apple's international tax rate soaring to between 13 and 25 percent.

Oppenheimer outlined Apple's four objectives for the dividend and stock buyback program: to maintain enough cash to invest in new business opportunities; to provide income to Apple shareholders; to open up Apple stock to a wider investor base (some mutual funds steer clear of stocks that offer no dividends); and to neutralize the offset dilution from equity grants to Apple employees.

"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," Apple stated in its press release.

Few analysts anticipated Apple would use its cash for large acquisitions. As Bloomberg Businessweek's Arik Hesseldahl observed, "When Apple makes acquisitions, they tend to be focused on small companies that can be integrated into projects that are already developing internally."

As Apple's market cap hovers around $550 billion, the company has become worth more than most of the world's nations. Here are a few more astonishing things Apple is valued higher than.

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Comments

[sgreco]

02:56 AM on 03/21/2012

"That money will be pulled from Apple's U.S. cash holdings, though over $60 billion of its cash balance is being held overseas"

yeah lets lower megacorporate taxes because they dont make enough money. Oh wait, they hold the lion's share of it overseas anyway. Well then they made their own tax breaks, eh?

[RGT333]

01:20 PM on 03/20/2012

I got an idea. How about the US government instilling some trade tarrifs and taxes on offshore corporations or corporations that employ most of thier workforce outside the US. Add some laws to protect against cheap foriegn labor and goods undercutting US markets - ie. serious tarriffs matching some of those being used against US croporations. Then, give a tax break for those corporations who hire in the US. THEN, it sould make "good business sense" to hire in the US. Corporations are always going to justify greed by saying they have a duty to shareholders. SO, change the playing field.

Pure capitalism is not a sustainable model as it is a "dog eat dog" system, which, if not checked will result in one megacorporation, which will then be a monopoly and capitalism no longer exists. Right now the corporations are systematically moving in that direction. The Pres faces a moment much like FDR. He just needs to have the guts to protect the US and not cave to the lobbyists. we shall see...

[Samuel Bun]

07:03 AM on 03/20/2012

Why do feel like Timmy is going to bring down Apple.

[Sickofrepukes]

04:50 AM on 03/20/2012

I am so glad I do not own anything made by Apple....

[trusgold]

01:23 AM on 03/20/2012

WILL WORK FOR PRESSINGBECOME A FAN BUTTON!!!!..I will get a turkey dinner!

[trusgold]

11:47 PM on 03/19/2012

Who is John Gault?

[Thusalways Togenius]

09:47 PM on 03/19/2012

Recession? Depression? Regression?... Obsession induced manipulation !
The times are i-Changing...
-thusalwaystogenius

[RKTesq]

09:15 PM on 03/19/2012

Why do I sense the ghost of John Scully?

[TommoB]

08:57 PM on 03/19/2012

So, who wanted the buyback part of this plan?

Answer: A) Those who bought AAPL at $550 (i.e. speculators) and B) those holding piles of AAPL buy options at less than $600 (i.e. Apple executives).

[michaelwg]

07:36 PM on 03/19/2012

Dear Liberals, you cannot change a corporation, your issue should be with lax tax laws as set forth by the government and the de-regulation policies as pushed by the Right. That's what allows corporations to have overseas accounts in the 1st place. Cure the disease, don't treat the symptom.

Sincerely, Bleeding Heart Liberal

[trusgold]

11:49 PM on 03/19/2012

There is $1.5 trillion out there waiting to come home.

[HamburgerTime]

07:28 PM on 03/19/2012

No chance of manufacturing in America, eh? Gonna stick with the Chinese labor camps? Suppose it's cheaper to put up suicide nets than to pay anything close to a fair wage.

[abmabardy]

07:27 PM on 03/19/2012

For a brief moment, I thought ... they're going to create thousands of new jobs here in the US, or ... they're going to set up a newtork of hospitals in Africa, or ...

Dividends. Speaks volumes, doesn't it.

[forty8r]

06:54 PM on 03/19/2012

Pay your fair share of taxes you worthless b******s

[Capn Scott]

06:46 PM on 03/19/2012

""Repatriating cash from overseas would result in significant tax consequences under U.S. law," Oppenheimer said. "We have expressed our views to Congress and the administration. We think current tax laws provide significant disincentive to U.S. companies that would otherwise repatriate the significant cash they have on hand."

The Wall Street Journal points out that, according to Bernstein Research, Apple's international tax rate is less than 3 percent, while repatriating its cash would send Apple's international tax rate soaring to between 13 and 25 percent."

Here's another example of Apple's (and multinational corporations in general) unfettered greed. They pay 3% in taxes, instead of between 13%-25%.

In other words, the cleaning crew that cleans Apple's Cupertino, CA offices pays more in income taxes than Apple does on their overseas earnings. And their CFO complains that between 13% and 25% is too much.
To recap, Apple pays chump change to its Chinese workers, then pays 3% taxes on its overseas earnings. No wonder they're sitting on $100 Billion dollars. You would be too if you had those kinds of scams working for you.

[Cichawoda]

07:20 PM on 03/19/2012

He is not complaining that between 13%-25% is too much but that it would be irresponsible of them not to take advantage of the totally legal 3%. If you owned Apple stock don't you want them to be frugal with your money?

[RGT333]

01:12 PM on 03/20/2012

That is exactly what is wrong with our corporate system. The purpose of the corporation is profit. The duty of the officers is to be profitable for the shareholders. AND that is the "golden excuse" corporate officers regularly use when doing unpopular things. And our legal remedies are limited.

All these corporations take advantage of the world's greatest consumer market and benefit from our stable judicial system and government.

The US could change some of this by simply enacting some tariffs and chaging the US tax law. I would increase the tax rate, but offer breaks for hiring in the US or hiring US citizens. I would massively increase the tax rate for offshore corporattions and/or corporations which change headquarters from the US to other countries, especially countries which are tax havens. I would also consider raising massive tariffs on any country which does not tax business or taxes business very lightly - these countries are sucking in capital from companies avoiding US taxes. If those companies want to do business in the US, then make them paay tarrifs. I am not an economist, but I think with a little creativity, the government could bring business back to the US. I dont think that teh government has to kiss the posterior of big business - the US is still the largest consumer market and it is not unreasonable to make business bring something to the table to help the government, rather than always whining about taxes.

[fdeltz]

08:31 PM on 03/19/2012

Most corporation pay approx. 13 % overseas. I could not find any where the Bernstein reference, please point to it. However looking at this info:  http://www.guardian.co.uk/news/datablog/2011/feb/21/corporation-tax-rates-world  you will find that Japan and the US have the highest corporate tax rates in the entire world. And Japan is about to lower theirs next quarter. What do you think is the result of this?
Any guesses?  As for companies paying any taxes - it is redundant. The workers pay tax the shareholders pay tax - the company is merely the builder of wealth in-between. We are feeling the results of not investing in our manufacturing base (companies) for decades currently. Are you enjoying yourself yet?

[mscellanus]

06:16 PM on 03/19/2012

It's immoral for Apple to make so much money. Why don't they just reduce the overpriced cost of their I-Pads and spread the wealth with people that can't afford to buy them?

[TMS3100]

06:24 PM on 03/19/2012

Immoral? Really?

[Cichawoda]

07:22 PM on 03/19/2012

Do you believe that the Citizens United decision suddenly endowed corporations with morals?