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Apple to decide on its $98 billion cash pile
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By Poornima Gupta
SAN FRANCISCO |
Mon Mar 19, 2012 2:18am EDT
SAN FRANCISCO (Reuters) - Apple Inc, the world's most valuable company, will discuss on Monday what it plans to do with its $98 billion cash hoard, raising expectations it may meet demands to pay a dividend for the first time since 1995.
Just days after its stock touched $600 per share, Apple issued a short press advisory saying it would hold a conference call on Monday to discuss the outcome of discussions about its cash balances.
The maker of the iPhone, iPad and iPod has $98 billion in cash and securities, equal to about $104 a share according to ISI Group analyst Brian Marshall.
Wall Street has increasingly bet that Apple will this year return cash to shareholders, taking a cue from Chief Executive Tim Cook's comments about "active discussions" at the top levels about the matter.
Cook recently said he had been "thinking very deeply" about investors' demands that Apple return some of the cash to shareholders via a dividend.
"Frankly speaking, it's more than we need to run the company," Cook said at the annual shareholders meeting in February.
Apple last paid a dividend in 1995, Thomson Reuters data shows. In 1996, Apple posted a net loss of $816 million.
Analysts have said the return of cash to shareholders could take the form of a one-time dividend or even an annual payout, potentially opening the stock up to a new class of investors who seek a dividend yield. Alternatively, the return could be carried out through a share buyback.
"A dividend makes sense," said Shaw Wu, analyst with Sterne Agee. The decision "is probably going to be pretty binary. It's going to be either 'yes' or 'no'. Many are hoping the answer is going to be 'yes'.
"It's more likely they are considering it. I am not sure they are going to necessarily say it's to be effective immediately."
Wu said the value to shareholders of a stock buyback would be more questionable: "The issue with (a) buyback is that the payback for investors is not as tangible. With a dividend, you get a check in the mail."
Wu doubted there would be a stock split, saying it would be more difficult for Apple to beat consensus earnings forecasts.
Mounting anticipation over a buyback, along with hopes that the newest iPad will keep sales momentum strong, helped propel the stock to a record high this month above $600 a share.
At Friday's closing price of $585.57, Apple has a market value of about $546 billion.
ISI's Marshall said a dividend would drive additional stock purchases from top-20 dividend mutual funds and other investors as they make Apple a top holding. Apple could pay an annual dividend of as much as $14.65 per share, he added.
The Apple call, to be held at 9 a.m. EDT (1300 GMT) on Monday, will not provide an update on the current quarter nor will it touch upon any topics other than cash, the company said in a statement on Sunday. Apple declined to comment further.
(Reporting by Poornima Gupta in San Francisc and Jessica Hall in Philadelphia; Editing by Dale Hudson, Leslie Adler and Mark Bendeich)
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