[Macworld]

Post your comments for Apple announces dividend, share buyback here

[nwatts88]

Can someone tell me why was done? As in, what are the benefits in paying dividends?

[SHRIKEE]

and with this apple starts the takeover of the financial market and reinventing stock trading

[romzburg]

nwatts88, on 19 March 2012 - 04:57 AM, said:

Can someone tell me why was done? As in, what are the benefits in paying dividends?

Certain investment funds are not allowed to own stocks that don't pay dividends, so now they'll be able to buy AAPL.

romzburg

[nwatts88]

romzburg, on 19 March 2012 - 05:09 AM, said:

nwatts88, on 19 March 2012 - 04:57 AM, said:

Can someone tell me why was done? As in, what are the benefits in paying dividends?

Certain investment funds are not allowed to own stocks that don't pay dividends, so now they'll be able to buy AAPL.

romzburg

Ok, then what happens when they attract more investors? Their stock prices continue rising? Is this just spending money to make money?

[JGetzen]

[/quote]
Ok, then what happens when they attract more investors? Their stock prices continue rising? Is this just spending money to make money?
[/quote]

The primary purpose of a business is to make money for the owners. The shareholders are the owners. As owners, they expect to receive the profits (cash) of the business. However, when a business is new or growing, it's in the best interest of the business and the owners that the business hold on to its cash for strategic purposes. Once a business is stable and has accumulated more cash than it needs, it distributes that cash as dividends to the business owners (shareholders), who have every right to expect the business to do so.

[Snakeman]

Quote

Ok, then what happens when they attract more investors? Their stock prices continue rising? Is this just spending money to make money?

No they are releasing cash to increase the pool of potential investors as stated and the spending of cash is aimed to increase the stock value not the money reserves (which will go down). The buy back is to maintain the value of the stocks as the employee options vest (ie the company increases the number of shares to give to the employees as a bonus) and would potentially dilute shareholding.

Now the issues are ....will Apple split their stock or let it continue to rise? and will they make a major acquisition with their war chest (like Kodak patents they aren't contesting or a large entity like Twitter)?

Interesting times......

Cheers Snakeman

This post has been edited by Snakeman: 19 March 2012 - 05:47 AM

[tfmeehan]

And buying back shares will help to defend themselves in the event Sony tries to buy them...oh, wait, that was 20 years ago, I guess they could buy Sony now...never mind.

[bastion]

"In the same statement, Apple CFO Peter Oppenheimer said that '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.'"

Uh. Apple's net was $32B in CY 2011. If they're going to spend $45B over the next 3 years that's not likely to reduce their cash holdings for any meaningful amount of time at all.

[Roedael]

nwatts88, on 19 March 2012 - 04:57 AM, said:

Can someone tell me why was done? As in, what are the benefits in paying dividends?

Because it keeps shareholders on board; everybody likes a goody now and again

[bondtrails]

I think Apple should return the "favor" MS did for them in '96 and buy some MS shares.

This way, Apple gets to say "Hey, we rescued MS" or "Hey, we own MS" or "Hey, a little charity to our cousins in Redmond was in order" LOL...

[Moeskido]

I doubt Apple would have done this if there wasn't some sort of tax advantage to be gained. But the dividend should quiet some of the more foolish analysts for awhile.

[tfmeehan]

bondtrails, on 19 March 2012 - 07:30 AM, said:

I think Apple should return the "favor" MS did for them in '96 and buy some MS shares.

This way, Apple gets to say "Hey, we rescued MS" or "Hey, we own MS" or "Hey, a little charity to our cousins in Redmond was in order" LOL...

That would be good or perhaps Michael Dell might have some brilliant advice for MS...

[MorrisTheCat]

bondtrails, on 19 March 2012 - 07:30 AM, said:

I think Apple should return the "favor" MS did for them in '96 and buy some MS shares.

This way, Apple gets to say "Hey, we rescued MS" or "Hey, we own MS" or "Hey, a little charity to our cousins in Redmond was in order" LOL...

Now wouldn't that be an interesting turn of events! Would be funny to laud that Apple "owns" part of Microsoft to the Microsoft lovers. We had to live through the "MS owns Apple" crap for years, so it would be sweet justice. Probably won't ever happen, but who knows?