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Monday, March 19, 2012, 06:02 am PT (09:02 am ET)

Notes of interest from Apple's dividend & stock buyback conference call

Following Apple's announcement on Monday that it will pay a quarterly dividend of $2.65 per share as well as initiate a $10 billion share buyback program, executives from the company participated in a conference call with analysts and investors.
  • Apple Chief Executive Tim Cook noted that even though the company sold 37 million iPhones last quarter, it represented less than 9 percent of all handset sales. "The potential for iPhones is enormous."
  • On the launch of the new iPad: "It just keeps getting better." 55 million iPads sold to date, but no sales figures on the new iPad given.
  • Apple still has less than 6 percent PC market share as the Mac continues to grow.
  • "We are innovating an incredible pace."
  • Apple is also investing in distribution around the world. "We don't see ceilings to our opportunities," Cook said.
  • All of this has led to Apple amassing a "substantial amount of cash." This has led to increased research and development, acquisitions, new retail stores, building out of infrastructure and more. "You will see all of these in the future," Cook said.
  • "We are going to initiate a dividend and share repurchase program. We have thought very deeply and very carefully about our cash balance. We will continue to invest in the business."
  • Innovation remains the most important focus at Apple, and Cook said the new program won't make them lose sight of that.
  • The new program is expected to broaden Apple's investor base by attracting new investors that don't currently own Apple stock.
  • Cook said they plan to review the program periodically.
  • Chief Financial Officer Peter Oppenheimer said Apple has been "very disciplined" with its cash. In fiscal 2011, its cash increased by $31 billion, with $21 billion coming from abroad.
  • Apple wants to maintain the flexibility to take advantage of investment opportunities that present themselves.
  • None of Cook's unvested RSUs will participate in dividends, at the CEO's request.
  • "We remain very confident in the future of our business, are extremely enthusiastic about the opportunities that lie ahead, and look forward to executing our plans to initiate a dividend and share repurchase program," Oppenheimer said.
  • Dividend payouts are expected to be more than $2.5 billion per quarter, or more than $10 billion per year, which would make Apple one of the highest dividend payers in the U.S.
  • "We actually do love to announce new products, we just don't do it during conference calls," Cook said when questioned by one analyst about its future product line.
  • "I am extremely confident in our future. The pipeline is full of stuff. I think customers are going to be incredibly pleased with what they see coming out," Cook said.
  • Apple's dividend and share repurchase program will be done with cash held in the U.S. Bringing its overseas cash to the U.S. would cost Apple a great deal in taxes and Oppenheimer said the company has no plans to do so.
  • On stock splits: "This is something that we have looked at while we were looking at this cash question," Cook said. It's something they "continue to look at."
  • Sales of the new iPad: "We had a record weekend and we're thrilled with it," Cook said.
  • Tens of billions of dollars of Apple's cash remains 'stuck' overseas and repatriating that cash would result in major tax implications. Apple has expressed this concern to Congress, as it believes existing tax laws provide significant disincentives to corporations looking to bring cash back into the country.
  • Apple opted to go to the hybrid (dividend/stock-repurchase) approach after much "analysis and thinking" and listening to the feedback from their investors.
  • The primary objective of the stock repurchase program is to reduce dilution from the ongoing distribution of shares to its employees and executives as part of their future compensation.
  • As for Apple's domestic cash, Cook noted that "There are a wide range of potential investments" that he obviously won't talk about today.
  • There's 'no magic number' in terms of the amount Apple thinks it should retain as a cash balance.
  • The primary use of Apple's cash war chest, above all, remains in the development of products.