SAN FRANCISCO (AFP) - (AFP) - Apple announced it will spend part of its
massive cash hoard to pay its first dividend since 1995, and trumpeted that it
had sold three million new iPads on the opening weekend.
Apple also revealed plans to buy back $10 billion in shares while still
adding to the billions it has in its coffers.
"The new iPad is a blockbuster with three million sold -- the strongest iPad
launch yet," said Apple senior vice president of worldwide marketing Philip
Apple stressed that its dividend and stock buy-back plan, which will tap into
cash reserves of $98 billion, will not restrict its ability to invest in
research, develop new products, or pursue valuable acquisitions.
"Innovation is the most important objective at Apple and we will not lose
sight of that," chief executive Tim Cook told analysts in a conference call.
"These decisions will not close any doors for us."
Apple said it would pay a quarterly dividend of $2.65 per share from its cash
balance generated from sales of its hugely successful gadgets like the iPad and
The dividend payment would start with the quarter which begins in July.
Apple said it expected the repurchase program to be carried out over three
years beginning October.
Chief financial officer Peter Oppenheimer described the company as
generating enough cash to easily accommodate the dividend -- amounting to $10
billion a year -- and the stock buyback without biting into Apple's
In the company's 2011 fiscal year, Apple generated $31 billion in surplus
cash. In the first quarter of 2012, it added another $24 billion.
"That's plenty of cash to run the business," said Oppenheimer.
Apple is hauling in cash at such a breathtaking pace that its coffers are
expected to continue swelling despite paying dividends and buying back
Analysts were pleased that Apple finally decided to loosen its purse strings
and pay dividends but were unimpressed with the amount, which was described as
below average for successful technology companies.
Apple shares climbed with the news, hitting $604.62 in trading that followed
the close of the market.
Looking past the mountain of cash, some in Silicon Valley saw the dividend as
the first major move distinguishing Cook's style from that of his predecessor,
legendary Apple co-founder Steve Jobs who died of cancer last year.
Jobs, who rescued Apple from the brink of bankruptcy, was tight-fisted when
it came to Apple holding onto money.
"Tim is a bit more reasonable," said Gartner analyst Van Baker.
"Tim stood up at Jobs's public memorial and said that Steve told him not to
ask what Steve would do but to ask himself what is right, and he thinks this is
the right thing to do."
Cooked said that the potential for iPhones in the booming smartphone market
is "enormous" and that iPads have a prime position as demand for tablet
computers is poised to overtake interest in desktop or laptop computers.
The iPad has had "an amazing start," selling 55 million since it was launched
in early 2010.
"We had a record weekend and we're thrilled with it," he said of the new iPad
Apple's income promised to get another boost on Friday with the release of
the new-generation iPad on Friday in 24 more countries including Spain, Italy,
Poland, Mexico and New Zealand.
Mainland China was noticeably absent from an iPad release schedule that
included Hong Kong and Macau.
Baker suspected that Apple was withholding iPad from China to pressure
authorities there to resolve a nettlesome trademark battle with Chinese computer
firm Proview Technology.
Debt-laden Proview is suing Apple in China for trademark violation for
calling its tablet computer "iPad."
"It wouldn't surprise me if they are trying to use that as leverage," Baker
said of not releasing new iPads on mainland China. "Because people want iPads
and wouldn't be able to get them until the trademark issue is fixed."
Proview is also suing Apple in the United States, but using a different legal
tact by accusing the California-based technology company of fraud and unfair
Proview's Taiwanese affiliate registered "iPad" as a trademark in several
countries including China as early as 2000 -- years before Apple began selling
Apple subsequently bought the rights for global trademark, but Proview claims
the Taiwanese affiliate had no right to sell the Chinese rights.