Apple Nixes Dividend Talk, Holding on to Cash for “Big, Bold Risks”

| Apple Stock Watch

Apple once again nixed the idea of paying out a dividend with its US$40 billion cash hoard during Thursday's annual shareholder meeting in Cupertino, CA. Bloomberg reported that when asked about paying a dividend out with all its cash, a move that can increase share price, Apple CEO Steve Jobs replied that he preferred having cash on hand so that Apple is always ready to take "big, bold risks."

The subject of paying out a dividend has come up at most shareholder meetings, especially since apple returned to health and began accumulating what has become the largest hoard of cash in the tech world. Apple's management has consistently said no to the idea of paying out a dividend to its shareholders, emphasizing the flexibility that having so much money affords the company.

That said, Apple has historically engaged in very few acquisitions, and the biggest one to date was the acquisition of NeXT in 1997 for $400 million, followed by the PA Semi purchase in 2008 for $286 million, and the Quattro Wireless purchase earlier this year for $275 million.

All three purchases could have been handled with less than a third of the $3 billion plus the company seems to add to its holdings every quarter.

On the other hand, Apple has increased the rate of its acquisitions in just the last couple of years, including the PA Semi and Quattro Wireless buys, as well as the purchase of Lala in 2009. Indeed, the company now has an expert in corporate acquisitions on staff in the form of former Goldman Sachs investment banker Adrian Perica.

Mr. Perica was credited by BusinessWeek for the speed of the Lala purchase, which was completed in just a few short weeks, according to various leaks about the purchase.

Apple also effectively dismissed a suggestion/request from a shareholder during Thursday's meeting to begin a stock buyback program.

*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article.  

Sign Up for the Newsletter

Join the TMO Express Daily Newsletter to get the latest Mac headlines in your e-mail every weekday.

7 Comments Leave Your Own

jameskatt

Apple SHOULD NEVER AND WILL NEVER give out dividends.

Its cash hoard is a WEAPON it uses in business.

It keeps Apple stable in hard economic times.  Realize that Apple is the only major tech company to have HUGE SUCCESS during this current recession.  One reason is that it can INVEST on research and development and new retail stores and acquisitions because IT HAS A HUGE CASH HOARD.

The stock has done extremely well because it has a huge cash hoard.

All a dividend would do is to WEAKEN Apple and its stock.  Stock buybacks, as another similar example, do not improve a company’s value.

daemon

There’s a type of corporation that never pays out dividends, it’s called not-for-profit.

dndgirl

A dividend would be nice, but what I’d really like is a shareholder discount on products like the employees get.  Just saying ...

studentx

There?s a type of corporation that never pays out dividends, it?s called not-for-profit.

Apple already pays dividends. Instead of paying greedy stockholders, many of whom are not with Apple for the long haul, they should invest to keep the company growing. Through company growth Apple will pay better dividends to it’s stockholders.

Quick profits is what corrupts the stock-market.

studentx

A dividend would be nice, but what I?d really like is a shareholder discount on products like the employees get.? Just saying ...

How many stocks would that person have to own? Also, the collect cost of those discounted purchases would affect profit and your dividends. Nothing is free.

dndgirl

Apple isn’t hurting. The collective number of individual shareholders wouldn’t put a dent in the profits by allowing a discount; maybe not as much as the employees get. And maybe just once a year.

daemon

Apple already pays dividends.

Apple hasn’t payed out a single dividend since 1996. That’s 14 straight years of not paying dividends.

Instead of paying greedy stockholders, many of whom are not with Apple for the long haul, they should invest to keep the company growing.

Um. Whatever. Stockholders deserve to get paid their share of the company profits.

Through company growth Apple will pay better dividends to it?s stockholders.

Apple doesn’t pay dividends.

Quick profits is what corrupts the stock-market.

Easy money with no consequences is what corrupts the stock-market.

Log-in to comment