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Apple Using $98 Billion Stockpile for Dividend and Share Repurchase Program

Image via International Business Times

Last Monday, Apple’s CEO Tim Cook revealed that the company will use its $98 billion stockpile to pay dividends to shareholders. In addition, $10 billion in shares will be used for buyback program. But he pointed out that the plan will not restrict them to invest in research, new product development and valuable acquisition.

Dividend and Share Repurchase Program

The Cupertino-based company will pay a quarterly dividend of $2.65 per share from its stockpile. It will start on the fourth quarter of the company’s current fiscal year, which is July 1. On the other hand, the $10 billion repurchase program will begin on the next fiscal year, which is September 30. It is deemed that Apple’s buyback program will carry on for the next three years, and will balance the effect of the upcoming employee equity grants and stock purchase program.

Apple’s Chief Financial Officer Peter Oppenheimer said that the company is generating enough money to accommodate the dividend and repurchase program without deeply affecting its resources. Simply put, the company will spend over $45 billion over the next three years for their programs, including its employee stock option.

Coffers Continue to Swell

While analysts were pleased that Apple will finally shell out some money to pay dividend, the amount is not impressive. They find the $2.65 quarterly dividend to be below average for a successful technology company.

Apple, Inc. was able to generate sales in such a short time. Since the beginning of the year, their shares increased to almost 47% following the record-high sales of the new iPad. Thus, its treasury will continue to swell even if they pay for dividend and stocks. Regardless, this move distinguishes Cook from his predecessor Steve Jobs, who was tight when it comes to the company’s finances.

What Lies Ahead for Apple

According to Cook, the handset market will continue to grow to about two million units by 2015, an opportunity that they would like to seize for their iPhone. On the other hand, tablets will replace personal computers soon, and the iPad already made a firm position in the market.

In fact, US telecom AT&T reported that they were able to set a single-day record sales and activation for the new iPad after it was launched last Friday. However, neither Apple nor the telecom disclosed exact sales figure for the latest tablet.

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