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Apple Announces $10 Billion Share Repurchase Program, $2.65 Quarterly Dividend, Plans To Spend $45 Billion Over 3 Years

Tyler Durden's picture




 

And so Steve Jobs legacy is now gone as Apple goes Jamie Dimon. At least Apple was not part of the stress test. And as announced yesterday, we for one, can't wait to find out if it was JPM that advised Apple, to pull a JPM. Finally, we hope that AAPL's cash creation rate remains the same, as $45 billion in 3 years may put quite a large dent on the company's onshore cash, which according to reports is one-third of total.

Full PR:

Apple Announces Plans to Initiate Dividend and Share Repurchase Program

Expects to Spend $45 Billion Over Three Years

Business Wire

CUPERTINO, Calif. -- March 19, 2012

Apple today announced plans to initiate a dividend and share repurchase program commencing later this year.

Subject to declaration by the Board of Directors, the Company plans to initiate a quarterly dividend of $2.65 per share sometime in the fourth quarter of its fiscal 2012, which begins on July 1, 2012.

Additionally, the Company’s Board of Directors has authorized a $10 billion share repurchase program commencing in the Company’s fiscal 2013, which begins on September 30, 2012. The repurchase program is expected to be executed over three years, with the primary objective of neutralizing the impact of dilution from future employee equity grants and employee stock purchase programs.

“We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure. You’ll see more of all of these in the future,” said Tim Cook, Apple’s CEO. “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.”

“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,” said Peter Oppenheimer, Apple’s CFO. “We are extremely confident in our future and see tremendous opportunities ahead.”

Apple will provide live streaming of a conference call to discuss its plans beginning at 6:00 a.m. PDT on Monday, March 19, 2012 at www.apple.com/quicktime/qtv/call31912. The Company will not be providing an update on the current quarter nor will any topics be discussed other than cash. This webcast will also be available for replay for approximately two weeks thereafter.

 

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Mon, 03/19/2012 - 08:34 | 2269027 infiniti
infiniti's picture

That's some underwhelming shit

Mon, 03/19/2012 - 08:38 | 2269040 HoofHearted
HoofHearted's picture

Extremely confident that we can't invest our money well with the passing of our wunderkind, we have decided to hand the money out to shareholders...in hopes that they will buy more iStuff and keep us floating for a while longer. Dude, we're completely screwed without Jobs.

I'm shorting the Apple.

Mon, 03/19/2012 - 09:10 | 2269195 Stanwick
Stanwick's picture

Priced in Apple, gold is on FIRE!

Mon, 03/19/2012 - 09:26 | 2269248 GetZeeGold
GetZeeGold's picture

 

 

Yeah.....no need to repurchase gold.

 

Mon, 03/19/2012 - 10:42 | 2269538 SilverRhino
SilverRhino's picture

Why in the hell would the board decide to buyback shares of the stock at its PEAK?? 

Unless some huge stockholders are planning on cashing out soon.

Mon, 03/19/2012 - 11:05 | 2269667 redpill
redpill's picture

The shark has been jumped

Mon, 03/19/2012 - 11:34 | 2269760 Stanwick
Stanwick's picture

The stock is obviously CHEAP

Mon, 03/19/2012 - 11:43 | 2269803 Nobody special
Nobody special's picture

So. What will happen to the markets if Apple tanks? How will this affect pensions and other holdings? Might as well be ready, the upswing has ended and APPL is oversold.

Short APPL.

Mon, 03/19/2012 - 13:40 | 2270254 Matt
Matt's picture

Perhaps the Plunge Protection Team has simplified its job and simply watches one stock now. Since the Fed creates new money when it spends, AAPL shareholders could be the first line to benefit from new money at its undiluted value.

Mon, 03/19/2012 - 19:57 | 2271364 Rynak
Rynak's picture

Why in the hell would the board decide to buyback shares of the stock at its PEAK?? 

Apple may simply have decided to play safe. Yes their stock from strategic POV is near peak, but their cash reserves also are near-peak.

According to this (yes, pulled out of my ass) interpretation, it is a highly pessimistic decision.

Mon, 03/19/2012 - 09:20 | 2269230 TWSceptic
TWSceptic's picture

I hate Apple bashers.

Mon, 03/19/2012 - 09:27 | 2269251 GetZeeGold
GetZeeGold's picture

 

 

Dude.....I love apples. Who's bashing apples?

 

Mon, 03/19/2012 - 10:06 | 2269389 Stanwick
Stanwick's picture

Bash Blackberrys

Mon, 03/19/2012 - 08:39 | 2269048 Oh regional Indian
Oh regional Indian's picture

Damn straight. And all of the planning is off in the distance, while the announcement now will move whatever it's meant to move. 

The most dangerous stock. It will bite a huge portion of it's investors int he ass.

The IPad three is already over-heating, literally. 

An apple a day is pure poison for the system, literally and figuratively (seeds are heavy with Arsenic, check it out).

ori

/if-i-ever-saw-a-sign/

 

Mon, 03/19/2012 - 09:50 | 2269315 Z Beeblebrox
Z Beeblebrox's picture

I believe you mean cyanide, not arsenic. There appears to be evidence that the cyanide-containing compound in apple and some other seeds is an effective cancer treatment (laetrile/B17/amygdalin). The medical establishment strongly disputes this, which makes me think there might be something to it. Establishment has such a fear of this food that it has banned trees of the bitter almond, one of the richest sources of laetrile (previously) available.

Mon, 03/19/2012 - 10:53 | 2269602 Oh regional Indian
Oh regional Indian's picture

Right you are, I meant Cyanide. But I'll stick witht he premise, an apple a day makes sure you get to see the doctor, for many other reasons than miniscule cyanide in seeds. 

And yes, which is why bitter almonds were made illegal for sale in the US. Best natural source for laetrile. What a shame.

Thanks for the check.

ori

Mon, 03/19/2012 - 08:42 | 2269059 Azannoth
Azannoth's picture

They should have gone for a Leveraged buyout of MSFT

Mon, 03/19/2012 - 09:56 | 2269349 GetZeeGold
GetZeeGold's picture

 

 

I stand in the presence of brilliance.

 

Mon, 03/19/2012 - 13:43 | 2270272 Matt
Matt's picture

Or rather, purchase Intel and make Intel chips exclusive for AAPL products on the retail side (don't touch the corporate / server side). Then, finally, Mac's will be faster than PCs once PCs can only source slower AMD chips.

Mon, 03/19/2012 - 09:04 | 2269141 DormRoom
DormRoom's picture

Apple is waiting for the white space auction, so it can win it over google, costing tens of billions.  Then it will no longer depend on carriers, and own its own backbone & can compete with Google.  Both are trying to control all the layers of the OSI model stack.

 

Hologram keyboards & displays are the future

http://youtu.be/lzsBwnv_dAg

 

But apple is probably waiting for the cost to go down & the technology to advance.  Jobs biggest mistake was not buying kinect (and its patents), since kinect provides an excellent framework for a hologram interface.  If microsoft can pivot to kinect + hologram, it can own that space, before apple.  If it can execute the kinect+hologram platform well on its xbox ecosystem with millions of user, it could re-position itself as the 'think different' company.

 

Mon, 03/19/2012 - 09:47 | 2269307 ihedgemyhedges
ihedgemyhedges's picture

It'll be even more underwhelming when the Bush tax cuts expire......

Something doesn't smell right here.  Preferential div rates thru Dec 2012 then ordinary income if tax cuts sunset.  Large special div plus big buyback makes a lot more sense.  Why the annual div and why now?  Why not wait until Jan 2013?  I don't like it........

Mon, 03/19/2012 - 08:36 | 2269034 Cursive
Cursive's picture

Genius.  Buy back $10 billion worth of your own stock at all-time highs.  Pulling a page from the Dell playbook by selling i-Pads at Wal-Mart and then doing the MSFT dividend death march...the party is over....

Mon, 03/19/2012 - 08:42 | 2269057 SilverTree
SilverTree's picture

Buy high, sell low.

 

Wait...what?

Mon, 03/19/2012 - 08:59 | 2269145 resurger
resurger's picture

I still think AAPL at 2000000000000000000000 is cheap

 

+1

Mon, 03/19/2012 - 09:36 | 2269262 GetZeeGold
GetZeeGold's picture

 

 

Genius. Buy back $10 billion worth of your own stock at all-time highs.

 

It makes sense if you're management and you need time to get out.

 

Mon, 03/19/2012 - 16:20 | 2270858 malek
malek's picture

Exactly, this is a pure stock price stimulation program.

Especially love the line

[...] the primary objective of neutralizing the impact of dilution from future employee equity grants and employee stock purchase programs.

So why don't directly pay their employees cash bonuses, after the same lockup periods?

Mon, 03/19/2012 - 08:55 | 2269074 AccreditedEYE
AccreditedEYE's picture

Exactly right... where have we seen this before and what was the result? LMAO! I will be buying LEAP puts on the move higher post announcement.

However, let's also keep in mind that they will be spreading out the buys over 3 years and probably using a derivative strategy to execute it. (Tax free income to the company) Who knows, the contracts I'm buying could be the same being sold by the company.

Mon, 03/19/2012 - 08:37 | 2269038 Irish66
Irish66's picture

Let us guess what happens next...not

Mon, 03/19/2012 - 08:38 | 2269041 lizzy36
lizzy36's picture

Wonder what brilliant i-bank got paid for selling them that innovative strategy.

Stock up 45% in 4 months, NOW is the time to buy back stock?

Israeli CB patting themselves on the back. Timing matters.

Mon, 03/19/2012 - 08:43 | 2269063 Irish66
Irish66's picture

wasn't it jpm announcing buyback  last week?

Mon, 03/19/2012 - 09:12 | 2269203 SheepDog-One
SheepDog-One's picture

Yea Lizzy, well now theyve got to sell a $600 stock, to someone. Maybe .gov will allow Apple stock purchases with EBT food cards?

Mon, 03/19/2012 - 08:39 | 2269044 Squishi
Squishi's picture

low self esteem bitches!

Mon, 03/19/2012 - 08:39 | 2269047 Racer
Racer's picture

And what better use for the money to make sure they can get more customers... Duh.........

Mon, 03/19/2012 - 08:40 | 2269051 SokPOTUS
SokPOTUS's picture

Boo-yah, Jim!  Here's my question:  Since AAPL is something like 87% of the Q's at this point, should I expect a pull back, or remain fully invested?

Mon, 03/19/2012 - 08:44 | 2269070 SilverTree
SilverTree's picture

Expect only unexpected expectedness. 

Mon, 03/19/2012 - 08:44 | 2269054 Catullus
Catullus's picture

Adding "All subject to the Yuan/Dollar peg remaining in place."

So... you have 100 billion dollars in cash (equivilent) and you can only think to buy back your own shares at $600/share?  at what share price does that not make sense, management?

Mon, 03/19/2012 - 13:48 | 2270287 Matt
Matt's picture

It sounds like they are only purchasing their own stocks at the rate that new ones are created, to prevent dilution. As it is happening over 3 years, it will happen at whatever the share price is at the moment new shares are created, rather than at any fixed target price.

Mon, 03/19/2012 - 08:43 | 2269055 Everybodys All ...
Everybodys All American's picture

sure ... apple is going to buy there stock at $600.00. right. please. Are they that stupid?

This is a self admission that there is nothing left in the pipeline imo.

Mon, 03/19/2012 - 08:42 | 2269061 SokPOTUS
SokPOTUS's picture

Steve Jobs wasn't that stupid, bet he's rolling over now....

Mon, 03/19/2012 - 08:46 | 2269067 dwdollar
dwdollar's picture

Exactly.

i[whatever_they_already_have + 1]

Mon, 03/19/2012 - 08:53 | 2269106 Flatchestynerdette
Flatchestynerdette's picture

they have their patents which must surely be able to be monetized.???

Mon, 03/19/2012 - 08:56 | 2269130 resurger
resurger's picture

The party is over !!

Mon, 03/19/2012 - 08:43 | 2269060 savagegoose
savagegoose's picture

hey its a stimulus plan

Mon, 03/19/2012 - 08:44 | 2269066 cbaba
cbaba's picture

This decision will bring the End of Apple empire..

Mon, 03/19/2012 - 08:44 | 2269069 J 457
J 457's picture

IFail.  Mid 500's. 

Mon, 03/19/2012 - 08:45 | 2269076 Dr. Engali
Dr. Engali's picture

Apple is admitting growth is done. Time for the mo mo's to bail.

Mon, 03/19/2012 - 08:46 | 2269079 lizzy36
lizzy36's picture

Upset that part of this announcement didn't include the natural Santorum - Apple pairing to regulate porn on the internet.

For those that don't follow the absurd, yesterday as part of his winning strategy Santorum has decided to take on internet porn. Clearly Santo really gets the "american people".

Mon, 03/19/2012 - 08:48 | 2269083 Sean7k
Sean7k's picture

Probably should pair that with a new prohibition amendment and laws against gay sex...

Mon, 03/19/2012 - 08:53 | 2269104 Beam Me Up Scotty
Beam Me Up Scotty's picture

Conservatives are all hopped up on this guy because he is "conservative"?? Let's not talk about the shitty economy let's talk about porn? The economy should be the ONLY topic Rick!

Mon, 03/19/2012 - 10:20 | 2269161 Mercury
Mercury's picture

He'll be taking that on with his other hand I'm sure....

Mon, 03/19/2012 - 08:46 | 2269080 Sean7k
Sean7k's picture

Wealth transfer via gadgets. Thars gold in dem pockets and we're gonna get some. 

Some people place so little value on their labor.

Mon, 03/19/2012 - 08:52 | 2269095 Chappy
Chappy's picture

Stock not happy, 20$ off high.

Mon, 03/19/2012 - 08:52 | 2269096 Flatchestynerdette
Flatchestynerdette's picture

So, from what I heard on Bloomingdales earlier was that a share dividend would goose the share price because alot of mutual funds couldn't hold aapl w/out it. Now they have to buy aapl stock at a premium price and it goes higher? ok. got that.

So when it goes to the top the employees sell out and aapl buys the shares at that time to mitigate the outflow? Kinda keeping a floor underneath all the mutual funds price points then? But that's on $45 billion worth over 3 years. If the stock zooms to $1000 - anyone know how many employee options there are out there waiting to be executed? Because at that point $45 billion won't buy much and the selling will start a landslide down.

 

Won't happen until someone can tell us when those options can be exercised and how many shares are tied to them. How many employees STILL have those options? And as for dividends? That will only benefit those that don't reinvest and take the cash out to go buy stuff. Lots of people are on automatic reinvestment so they'll be rich on paper until they cash out. What's the tax rate again for this?

Mon, 03/19/2012 - 09:28 | 2269097 Mercury
Mercury's picture

Ouch. Just a vague wimper about acquisitions.... 1.75% div and a plan to buyback stock at (well, maybe not for long!) sky high levels.

The rainmaker-is-gone news is already baked into the stock - right?

Hope they move up that  buyback date for AAPL shareholders' sake.

Mon, 03/19/2012 - 08:53 | 2269099 Seasmoke
Seasmoke's picture

Bill Gates is smiling today

Mon, 03/19/2012 - 08:53 | 2269101 mayhem_korner
mayhem_korner's picture

 

 

No debt/long cash AAPL buys up long end of curve through stock repurchase...all debt/no cash US Govt buys up short end of curve through refinancing/twist.  Both are evidence that the little engine that could has stalled out before the crest.

Places to hide are shrinking...

Mon, 03/19/2012 - 08:53 | 2269105 gitta4437
gitta4437's picture

Is it me, or are these numbers not a very big deal?  10 bill buyback is a pittance compared to the mkt cap.........and no special div....cnbc trying hard to talk it up...........

 

Mon, 03/19/2012 - 08:54 | 2269119 mayhem_korner
mayhem_korner's picture

 

 

On the margin it's a big deal because of the direction.  The camel's nose, mon ami.

Mon, 03/19/2012 - 08:56 | 2269126 Flatchestynerdette
Flatchestynerdette's picture

cnbc - they can be bought like a cheerleader at a bad football game.

Mon, 03/19/2012 - 08:57 | 2269110 LawsofPhysics
LawsofPhysics's picture

Oh for the love of Mike, we all know damn well that JPM has set the stage for capital-rich companies.  The question I have is hong long will this last?   Assuming  sales stay strong what is the capital burn rate here (10 billion seems does NOT seem like a lot relative to market capital - are they simply trying to goes stock price?).  i am seeing a lot of other tablets getting used by engineers in the tech sector.  Apple may be a favorite amoung soccer moms and people who use a tablet for the social aspect, but hard core engineers still remain loyal to "open source" platforms.

Paging Reggie Middleton...

Mon, 03/19/2012 - 08:54 | 2269115 RoadKill
RoadKill's picture

OHH MY GOD!!!!!!!!!!!!

Apple will have a 1.7% dividend yeild!!!

Other then that they announced that they plan to give out $10bbn of stock to their employees over the next 3 years.

This is retarded.  Whether or not you like Apple, MSFT etc... no management team that hoards cash the way these guys do can be called shareholder friendly.  Your shareholders have to go out and short treasuries just to own your stock!

They should have done a dutch auction 1 time buyback with 100% of their cash, opened up a revolver to run day to day operations and announced a 80% dividend payout ratio on cash flow before financing.

Mon, 03/19/2012 - 08:57 | 2269134 mayhem_korner
mayhem_korner's picture

no management team that hoards cash the way these guys do can be called shareholder friendly.

 

Let's first count the number of entities that actually generate that much cash before we jump to dividend policy...

Mon, 03/19/2012 - 08:56 | 2269124 resurger
resurger's picture

AAPL is going down or what?!

Mon, 03/19/2012 - 08:56 | 2269129 hangemhigh77
hangemhigh77's picture

Here's Apples new call letters  AJPM.  The banks swallow up everything. They're like a giant python able to eat anything.

Mon, 03/19/2012 - 09:53 | 2269337 HungrySeagull
HungrySeagull's picture

They probably can eat this rotted apple, but will not survive tomorrow.

Mon, 03/19/2012 - 08:56 | 2269133 Dr. Engali
Dr. Engali's picture

Pre markets are red. Quick Ben put out a QE rumor !

Mon, 03/19/2012 - 09:02 | 2269163 mayhem_korner
mayhem_korner's picture

 

 

WTI isn't.  And even though Brent is (for now), the MSM has the word "Iran" velcro-ed to Brent just for hanging around $125.  The only thing changing on the memo is the date.

Mon, 03/19/2012 - 08:57 | 2269136 hangemhigh77
hangemhigh77's picture

Of course Swiss bank accounts all around for AAPL execs.

Mon, 03/19/2012 - 08:57 | 2269137 Moneyswirth
Moneyswirth's picture

In 2001, you could have bought the first generation iPod or about 30-35 shares of AAPL stock.  If you chose the latter, you would be sitting on about $20,000.

Say whatever you want about AAPL, but its created wealth for its investors, which when you look over the last decade of 'market' returns, wasn't such a bad deal.

That being said, announcing a share repurchase at all time highs is kind of...er, stupid?

Proceed with the junking bitchez

Mon, 03/19/2012 - 09:03 | 2269165 LawsofPhysics
LawsofPhysics's picture

"That being said, announcing a share repurchase at all time highs is kind of...er, stupid?"-

Bingo, that is what I was thinking.  Management being about 7 years too late does not instill confidence.  Why try to goose the stock now?  Sort of like Ben Bernanke saying "the economy is fine" but then keeping rates lows.  Somehting just does not smell right here. 

Mon, 03/19/2012 - 09:07 | 2269184 Moneyswirth
Moneyswirth's picture

They probably know they're coming to the end of the line.  I mean how many more variations of the iPad can they make? 

Mon, 03/19/2012 - 10:12 | 2269422 HungrySeagull
HungrySeagull's picture

iCremate?

Mon, 03/19/2012 - 14:43 | 2270476 smiler03
smiler03's picture

i-infinity (ooops, the infinity symbol doesn't work).

Mon, 03/19/2012 - 08:57 | 2269138 resurger
resurger's picture

Steve Jobs Short is OTW

Mon, 03/19/2012 - 09:15 | 2269143 Waterfallsparkles
Waterfallsparkles's picture

Buy back to hold the Stock up for all to Sell.  Wonder if Steves Widow needs to Sell a HUGE block of Shares? 

Now all of the Fund Managers will have plenty of time to liquidate Millions of Shares without the Stock price going down.

Dividend to keep people from shorting and cover the Dividend funds so they will not have to Sell.

Mon, 03/19/2012 - 09:09 | 2269190 ss123
ss123's picture

Reagardless of how Apple ends up in the future, people can always look back and remember the neat things Apple made over the years...

unlike another US company (Facebook *cough*) that has produced basically nothing of value other than a modern version of a bulletin board system with a backdoor for the feds.

Mon, 03/19/2012 - 09:09 | 2269192 Schmuck Raker
Schmuck Raker's picture

If you don't know what to do, do everything. Brilliant.

Mon, 03/19/2012 - 09:10 | 2269194 Sandmann
Sandmann's picture

For a company dependent upon Hon Hai and Samsung and ARM  Apple is certainly playing fast and loose. IBM once ruled the roost and let Asia make its hardware in the PC market - it too was a cash machine.

Mon, 03/19/2012 - 09:14 | 2269209 Waterfallsparkles
Waterfallsparkles's picture

Wonder where this Stock would be without the 12 hour infomercial on Aapl every day by CNBC.

Cnbc has been pumping this Stock all day long every day for the last 3 months.  You would think that it was the ONLY Stock on the Stock Exchange.

 

Mon, 03/19/2012 - 09:18 | 2269224 Waterfallsparkles
Waterfallsparkles's picture

I wonder if Aapl had to borrow against the Money they have Overseas to fund the Stock Buy Back and the Dividend?

Who did they borrow the Money from?  JPM, Goldman?

Mon, 03/19/2012 - 09:25 | 2269244 cbaba
cbaba's picture

Remember, all hedge funds are on the same Apple ship. By announcing this decision they are trying to prevent a steep decline in the share prices. Wall street cartel must have had convinced( or forced) Apple management board. If they don't buy the shares at the highest price ever ( $600) range , a small decline in Apple stock can create an earthquake in markets so they are pushing the management to take this decision.

 

Mon, 03/19/2012 - 09:37 | 2269270 Baptiste Say
Baptiste Say's picture

See Eric Englund's "Buyback Blowback at Kodak" and Stock Buybacks Are a Scam linked in the blog post below:

http://www.lewrockwell.com/blog/lewrw/archives/104181.html

It was buybacks that sunk Kodak. It was buybacks that contributed to cash burn and collapsed share prices at Citigroup, JP Morgan, Lehman, Merrill, Morgan Stanley, Wachovia and Washington Mutual which you can see at the screencapped link below:

http://i.imgur.com/wpVCq.png

 

 

Mon, 03/19/2012 - 10:23 | 2269464 HungrySeagull
HungrySeagull's picture

No the cost of silver is what sunk Kodak while Digital stole the shots.

Anyone left alive to remember those shitty koisks what you left film knowing the pictures will be ready within TWO WEEKS?!

Mon, 03/19/2012 - 12:11 | 2269910 Baptiste Say
Baptiste Say's picture

Wrong. If this was the case Fuji too would be dead as would every business with rising costs. Please read the article, between 2000-2008 Kodak in the brink of profitability paid $2.757 billion in dividends and a total of $6 billion in share repurchases leaving it with a crushing debt over $1 billion, it had a great brand & great patent base but this culture of buybacks and cash burning in the absense of real innovation lead to it's demise.

Mon, 03/19/2012 - 09:50 | 2269321 Nnthnt1
Nnthnt1's picture

Repurchasing shares for the purpose of cancelling dilution. What a great reason! A rational decision for share repurchases should always be looked at apart from everything else. - W Buffet

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