Apple CEO hints company will part with some cash

Feb 23, 2012 By MICHAEL LIEDTKE , AP Technology Writer

(AP) -- Apple CEO Tim Cook believes the world's most valuable company has more money than it needs. His next challenge is to figure out whether Apple should break from the cash-hoarding ways of his predecessor, the late Steve Jobs, and dip into its $98 billion bank account to pay shareholders a dividend this year.

During a question-and-answer session Thursday at the company's annual shareholders' meeting, Cook indicated he and the rest of Apple's board are nearing a decision.

The board and management are "thinking about this very deeply," Cook said. "This isn't a case where 100 percent of people are going to agree with what we do."

The question of how to handle Apple's cash stockpile is a touchy one, partly because company co-founder Jobs had steadfastly brushed aside suggestions that the company restore its quarterly dividend. Apple stopped making the shareholder payments in 1995 when it was in such deep trouble that it needed to hold on to every cent.

Things got so bad that Apple turned to rival Microsoft Corp. in 1997 for $150 million infusion to stay afloat. Microsoft came to the rescue at the same time Apple named Jobs as its CEO - a decision that turned out to be one of the smartest business moves ever made.

Haunted by memories of Apple's grim times, Jobs kept accumulating cash even as the company's fortunes soared during the final decade of his life.

Cook, though, appears willing to return some of the cash to shareholders since he succeeded Jobs as Apple's CEO last August. Jobs died Oct. 5 after a long battle with cancer.

During Thursday's meeting, Cook dropped his strongest hint yet that Apple will part with some of the money. "Frankly speaking," Cook said, "it's more than we need to run the company."

One Apple shareholder, Asif Khan of Sugar Land, Texas, urged Cook to resist committing to dividend every three months. He thinks it makes more sense for Apple to pay a one-time dividend later this year before the expiration of a provision that limits the federal tax rate on dividends to 15 percent.

If Apple opts for a regular quarterly dividend, Khan is worried it might be misinterpreted by some investors as a sign that Apple is losing confidence in its ability to keep propelling its stock price higher as the company churns out hit products such as the iPhone and iPad.

During the past year, Apple's stock has surged 50 percent to create about $160 billion in shareholder wealth Apple now has a market value of $480 billion - more than the combined value of Microsoft and prominent rival, Google Inc.

Apple shares gained $3.35 Thursday to close at $516.39. The high price sparked a question Thursday about whether Apple plans to split its stock to make it more affordable to buy. Cook indicated it's unlikely to occur, saying the board has studied the history of other companies that regularly split their stock and concluded "it does nothing" for long-term returns." Apple last split its stock seven years ago. The shares have increased 11-fold since then.

Although most of those gains occurred under Jobs' leadership, Apple's stock and financial results have remained stellar under Cook, Job's hand-picked successor. Cook has worked as a top Apple executive since 1998.

Given how well Apple has been doing, shareholders had little reason to complain at Thursday's hour-long meeting.

While shareholders waited in a 40-minute line to get inside the meeting at Apple's Cupertino, Calif. headquarters, a few protesters carried signs urging the company to ensure that workers building its products in Taiwanese and Chinese factories are paid more and treated humanely. "Stop iSweatshop," one sign implored. Another stated: `iWant an ethical phone." No questions about the conditions in Apple's overseas factories were posed during the meeting.

In other matters, Apple agreed to adopt a proposal from the public pension fund Calpers that will require all of the company's directors to receive a majority of shareholder votes to remain on the board. The proposal was backed by more than 80 percent of the shareholder votes counted in the preliminary results announced by Apple Thursday.

All eight of Apple's current directors were re-elected with at least 81 percent of the shareholder votes in the preliminary results, so the switch to majority-voting rules wouldn't have changed this year's outcome if the new rules had already been in effect.

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Lurker2358
2.3 / 5 (3) Feb 23, 2012
My God...

that's enough money to buy a smartphone or a gaming console for every many, woman, and child in the nation.

They could buy a NAVY for that which would be in like the top 10 in the world...

they could pay 4 years of college tuition for a couple million students.

they could found their own university for high technology education dedicated to hands on training only in needed skill sets, rather than traditional education which wastes so much time in irrelevant courses.

They could create and fund 1,000 to maybe 10,000 nanotechnology R&D labs for a year.

They could colonize the moon.

They could buy a small country, or pay a state's entire debt, or a state's entire budget for a couple years.

They could build 40,000 of 10MW wind turbines...

They could build 10 to 15 copies of James Webb Space telescope.

They could build at least a 4 exaflops super computer using intel 6 core processors. If they used cheaper stuff, like AMD, or video cards, the might get 10 to 100 exaflops.
Callippo
3.6 / 5 (5) Feb 23, 2012
They could invest into their own miniaturized e-Cat version of cold fusion reactors. They could call it i-Cat.
kochevnik
1 / 5 (1) Feb 23, 2012
They WILL blow it all within a decade and become the next myspace. No Jobs.
ccr5Delta32
5 / 5 (4) Feb 23, 2012
They could build an android and put Steve Jobs brain in it .Then I could have my liver back
antialias_physorg
not rated yet Feb 23, 2012
I'll put my money on: "Bonuses for the board of management"
that_guy
not rated yet Feb 23, 2012
If the business is wildly successful without the need to spend the money, then why would you spend it? DUH. That's one of the smartest things that apple/jobs has done.

That said, I don't disagree with the dividend as long as it leaves the lion's share of the cash untouched.

As for kochevnik's comment - it won't be a repeat of the 90s, but there will be a point when apple's business substantially softens. I'd say you have 3 or 4 more years of stock growth.

It would take an act of got to mismanage that much money away within a decade though.
James_Mooney
5 / 5 (1) Feb 23, 2012
God, ain't Chinese slave labor wonderful? What would we do without it? I think we should cut out the middleman and just start importing Chinese slaves. They're not citizens, so I think slavery would be legal. "Fetch my drink and tie my shoes, Chen. And send your sister up to my room." No wonder the South fought the Civil War.

I stand ready to take some of Apple's cash off their hands. I promise to put it to good use by buying Google stock ;')
kochevnik
1 / 5 (1) Feb 24, 2012
Apple flush with cash from it's new Chinese gulags. In a bold new 'think different' approach, they've made wage-slaves pay to live in Foxconn cages. http://www.reuter...20120223
Skepticus
1 / 5 (1) Feb 24, 2012
For 480 billions, Apple can get 29,000 Massive Ordnance Penetrator from Boeing and "donate" them to Iran via Tel Aviv, for the upcoming Iran War...
ckid
not rated yet Feb 26, 2012
Interesting - so Apple also operated with huge amounts of cash reserves.
Two of the most successful companies of our modern computer era - Apple and Microsoft under Jobs and Gates - both operated with huge cash reserves. I recall that the Wall Street severely criticized Gates a few years back because Microsoft kept enough cash reserves to operate with zero income for a full year.

The investment community expects a company to be leveraged to the hilt, and those that are not are being "inefficient". But leveraged companies disappear at the slightest economic bump. Maybe this is part of why these two companies have been so successful.