A year after Apple announced its dividend, 'timing could be right' for another cash deployment
Neil Hughes
It's been almost a year since Apple announced its quarterly dividend and stock buyback plan, and with the company's annual shareholder meeting just concluded, one analyst believes Apple may soon reveal more uses for its $137 billion in cash.
It was March 19 of last year that Apple announced it would spend $45 billion over three years on a quarterly dividend and share repurchase program. On Monday, just over a week before that anniversary, analyst Brian White with Topeka Capital Markets said he thinks Apple is in a good position to announce its next move.
Apple added $38 billion in cash in fiscal 2011, but $16 billion in just the last quarter. Chart by Asymco.
"Given that Apple's recent shareholder meeting is out of the way and David Einhorn has completed his cash distribution campaign, the timing could be right for a bigger deployment of cash," he said.
While Apple held $137.1 billion in net cash at the end of the December quarter, White projects that money will grow to $241 billion by the end of Apple's fiscal year 2015. As the company's cash and investments continue to grow, some investors have heightened their calls for Apple to find a use for the money.
White believes Apple could increase its cash dividend from its current amount of $2.65 per share to between $3.75 and $5.00 per share on a quarterly basis, representing an annual yield of 3.5 percent to 4.6 percent.
Apple could also increase its stock repurchase program to as much as $100 billion as part of a 5-year initiative, the analyst believes.
Apple's annual shareholder meeting was held late last month, where Chief Executive Tim Cook admitted he is not happy with his company's stock performance over the last six months. But he also encouraged investors to think long term about Apple rather than concentrating on short-term trends.
The meeting went by without any movement toward a proposal from Einhorn, a hedge fund manager who made waves in suing Apple and attempting to persuade the company into providing preferred shares as a way to encourage investment and provide more of its cash to shareholders. For its part, Apple referred to the attention as a "sideshow."
Last week another prominent investor, Warren Buffett of Berkshire Hathaway, said he believes Apple should buy back more of its stock while it's at a depressed value. Beyond that, he said Apple's best strategy is to simply run its business well.
Malcolm Owen
Amber Neely
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Wesley Hilliard
Mike Wuerthele and Malcolm Owen
47 Comments
If Tim Cook believes in the long-term value of Apple as he told shareholders to think long-term, he would be buying the stock at these levels. The inaction while sitting on mountains of cash can certainly be read to believe they think the stock goes even lower.
Given Apple is the 5th cheapest stock on the S&P 500, trading at a discount to the likes of HPQ, DELL, AMD, INTC, etc. it is quite scary that the Board and management don't see value in buying their own stock.
Apple is only a very short way from relinquishing the lead as the most valuable tech company in the world, with IBM about to pass it (enterprise value not market cap) and Google only slightly further behind. With a more pronounced drop in Apple and a move up in Samsung, even they could soon surpass Apple in value.
The disdain the market has for Tim Cook and his strategic moves (really lack thereof) is a reflection of a number of really, really bad decisions since taking over (maps, no traction with China Mobile, half-baked siri, no lower-cost phone, no large screen phone). It is time to put up or shut up. Anyone who bought the stock over the last year-plus has lost at least 20%. Apple's biggest competitors (Google and Samsung) are at their all-time highs. This is a Apple/Tim Cook problem. Silence and secrecy worked for Steve Jobs, but when the market has no faith in the leader of the company that will not work. A strategy needs to be articulated otherwise the market will believe their is none. Unfortunately even if articulated, Apple has to execute and despite Cook's supply chain prowess, even execution seems to be a major problem for the company under him.
The asymco chart is nice enough, except that it shows no data from 2012 which is the most important data as far as what's being decided now. Doesn't AI have access to more current data?
[quote name="AppleInsider" url="/t/156401/a-year-after-apple-announced-its-dividend-timing-could-be-right-for-another-cash-deployment#post_2291195"]It's been almost a year since Apple announced its quarterly dividend and stock buyback plan, and with the company's annual shareholder meeting just concluded, one analyst believes Apple may soon reveal more uses for its $137 billion in cash.[/quote] Serious share buybacks would be the most logical thing since the stock is so severely undervalued.
Cash is a source of strength, flexibility and can power future innovations for a company. I never understood the concept of just giving it away to shareholders.
Agreed. Screw the dividend, it's practically meaningless to me, and nor does it particularly help Apple as a company.