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Apple, changing to the core, offers dividend
Apple, after amassing nearly $100 billion in cash, bows to shareholder pressure for a dividend. Here, the flagship Apple Store on Manhattan's Fifth Avenue.
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Kai Ryssdal: $601.10. That was the close for Apple this afternoon. Could have been because the new iPad had a record opening weekend -- lots and lots of them sold.
Or it could have been because -- for the first time in 18 years -- the company's going to be giving away money. CEO Tim Cook announced a dividend this morning. Investors will get $2.65 for every share they own.
Our New York bureau chief Heidi Moore explains that with as much money as it had in the bank, Apple didn't really have a choice.
Heidi Moore: When I think of Apple, I think of Donald Duck’s uncle, Scrooge McDuck, doing his daily dive into his giant bin of gold. After all, Apple’s been sitting on nearly $100 billion of cash.
Jason Voss, at the CFA Institute for financial analysts, counted it out for me.
Jason Voss: Apple has 3,200 years that it could spend a dollar a second and not run out of money. Which is the length of written human history, essentially.
Having that much cash is actually not a good thing. You know how you get a pathetic 1 percent to 2 percent interest rate on the money in your savings account? It’s the same for Corporate America.
Here’s Voss again.
Voss: The question as a shareholder is: Why can’t I have some of that cash?
Companies including Apple or Microsoft can soothe its investors by giving them a quarterly dividend. It's a regular payment of cash.
Robert Pozen: Having a dividend’s a sure thing.
That’s Robert Pozen, a lecturer at the Harvard Business School and a former vice chairman of Fidelity Investments.
Steve Jobs, Apple’s late CEO, opposed a dividend. He thought it would be like admitting that Apple is an old-fashioned, slow-growing company that has to pay its shareholders cash to keep them happy. Apple considers itself sleek and fast-growing.
Oliver Pursche is the president of Gary Goldberg Financial Services, which is an Apple shareholder. He says Apple investors want it all: both cash and and growth.
Oliver Pursche: Every quarter, the clock starts anew for them, and they have to sell more iPods, iPads, iPhones and i-whatevers.
One thing that keeps growing is the company’s stock price: A share of Apple in 2009 was worth $90; now it’s close to $600.
In New York, I’m Heidi Moore for Marketplace.
Funny how these two stories on the same day can be combined in this comment: Good ol' Apple (with their billions just sitting around in the bank) needs to pitch in funding to the FAA for testing the operation of phones, ipads, and i-whatevers during takeoff and landing. Then they can come out and say that their devices were the first to be approved by the FAA - potentially an even larger selling point.
Maybe Apple could try thinking differently, like using one billion of their hundred billion to double the salaries of the workers in the factories in China that produce Apple products. Or to upgrade the safety procedures at the factories. Or even to provide clean water for some of the 1.5 million children who die every year from preventable gastrointestinal illnesses.
Here is a more reasoned view: http://www.guardian.co.uk/business/nils-pratley-on-finance/2012/mar/19/a... on Apple's dividend.
Kai - It makes me very angry to hear someone with your platform and professional background to open this story with the term "free money." Shame. It is not cute. It reflects a total lack of distinction between investing and speculating. Apple common stock has been a great speculation in recent years - near certainty that some other fool will pay even more in the future for your shares. It now become an investment, with a return - about 2%. Excuse me but - as owners - why shouldn't share holders get a yield? Your attitude and story are from a context that dividends and a return for taking a risk - is something equity buyers don't have any right to expect. The opposite sir. How about trying the side of the shareholder owners in the future?
