Apple today announced that its $100 billion pile of money is to be used, not for buying Twitter, Facebook or even Google, but to initiate a stock buy back and to offer dividends to existing share owners.
If you’ve been wondering what Apple was going to do with its $100 billion war chest, then you certainly wasn’t the only one. Rumors of what Apple may have planned for all that money have been rife for months, and Apple has done little to quash those rumors.
Yesterday we heard that Apple CEO Tim Cook would host a conference call today that, we were told, would unveil the iPhone and iPad maker’s plans for its cash reserves. The rumors started again, but it turns out we don’t need to wait for the conference call at all, as Apple has just sent out a Press Release that fills us all in on the company’s plans.
Apple will initiate a quarterly dividend of $2.65 per share, beginning this July 1st, and a $10 billion share repurchase program has also been authorized by Apples Board, according to the press release.
The purpose of the buyback, says Apple, is to “neutralize the impact of dilution from future employee equity grants and employee stock purchase programs,” and will last for three years.
“Worried that Apple may be leaving itself a little short after all this spending? Well, Apple’s CFO, Peter Oppenheimer is here to put your mind at rest, with less than half of Apple’s $100 billion being used.
Combining dividends, share repurchases, and cash used to net-share-settle vesting RSUs, we anticipate utilizing approximately $45 billion of domestic cash in the first three years of our programs.”
We will no doubt receive more details during this morning’s conference call, but the gist of the matter is that Apple will be offering dividends for existing stock owners as well as buying back further stock over the coming years.
Where this drop in cash leaves Apple going forward will remain to be seen, but one thing is for sure: Tim Cook and his team will have run the numbers and then done it again. We’ve a sneaky suspicion they know exactly what they’re doing.
Now, let’s see what this news does to the share prices.
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