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9 things Apple could do with its cash — We asked some analysts what, aside from a dividend, would be the most interesting use of Apple’s $98 billion pile of cash.From the washington Post By Cecilia Kang, Updated: Monday, March 19, 7:10 AMThe Washington Post
Apple, one of the world’s richest companies, will reward investors with a dividend- and share-purchase program totaling $45 billion over three years, the company said Monday.
In a departure from the direction of late chief executive Steve Jobs
, Apple will significantly draw from its massive $98 billion cash war chest to initiate a quarterly dividend of $2.65 per share sometime in the fiscal quarter beginning July 1. The plan must be approved by the company’s board of directors.
[url=http://www.washingtonpost.com/business/economy/apple-a-history-of-one-of-the-worlds-most-valuable-companies/2012/02/29/gIQA1VFVmR_gallery.html]A history of one of the world’s most valuable companies: The tech giant unveiled the third generation of its popular tablet computer, the iPad, in March. Here’s a look back some key moments Apple’s evolution.
[url=http://www.washingtonpost.com/business/economy/new-ipad-launch-draws-protesters-lines-of-apple-fans/2012/03/16/gIQAoCCXGS_gallery.html] Apple launched its third-generation iPad in the U.S. and nine other countries March 16. Many customers lined up for hours, some even for days, to get their hands on the new tablet.
In another move that will draw down the company’s cash pile
, Apple’s board has authorized a $10 billion share repurchase program, in which the company will buy shares back from investors, beginning Sept. 30.
The repurchase program will be conducted over three years, the company said in a statement. It will allow the company to offset any dilution of the value of shares it holds itself, due to future stock grants to executives or employee stock purchase programs.
Apple’s plans for its cash hoard have been highly watched. The company’s business decisions in general ripple widely across the technology and entertainment industries.
Apple shares, which were up 1 percent in pre-market trading, remained up 1 percent after the announcement.
Until now, the Silicon Valley giant has frugally used its cash to focus on improving its manufacturing and supply chain operations and other business functions that have resulted in its highly profitable sales of iPads and iPhones.
But investors had been pleading for the company to share its wealth among them. Based on the announcement made by Apple early Monday, CEO Tim Cook appears to be listening.
“Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program,” Cook said in a statement issued early Monday.
In a conference call with analysts, he promised: “Innovation is the most important objective at Apple. These decisions will not close any doors for us.”
Analysts have been speculating for years that Apple might use its cash
to purchase a major rival or forge a partnership. But the company made no mention of such plans on Monday and, in the past, has been reluctant to launch such ventures.
Part of the reason is that much of Apple’s cash is overseas. The company would have to pay a hefty tax if it brought that cash back into the U.S. (officials said cash for the dividend and share repurchase program will come from domestic cash reserves).
There may also be some concern about how another company could fit into Apple’s strong and distinct corporate culture. Under the leadership of Jobs, Apple’s innovations had always come from within the company.
Apple is one of the most widely held stocks in the U.S., and is a favorite in 401K plans and other mutual funds. For the past year, Apple and Exxon Mobile have see-sawed
between first and second place on the list of the world’s most valuable companies, as measured by market capitalization.
At the end of last year, Apple had amassed a cash pile of almost $98 billion, which is more than the gross domestic product of many of the world’s nations and more than double the $45 billion held by Google.
Analysts say the challenges facing Apple include whether it can continue driving consumer demand for its new products. The company is widely expected to release a television-like product called Apple TV, an ambition that until now has eluded it and other companies such as Google and Netflix.
Last week, the company began selling the new version of iPad in retail stores, recording a “record weekend,” according to Cook.
Cook said the company will continue to invest in research and development, new retail store openings, acquisitions and building out the company’s supply chain.
“We are extremely confident in our future and see tremendous opportunities ahead,” said Peter Oppenheimer, Apple’s chief financial officer.
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