Monday, March 19, 2012

Apple Paying a Dividend?

Dividend or no dividend, that is the question for Apple today.  Investors are expecting that Apple CEO Tim Cook will announce a dividend as Apple’s cash hoard approaches $100 billion (that’s Doctor Evil territory).  Various estimates of how big a dividend will be announced have been put forward.  Second to plans on new products, how Apple will use its massive cash holdings is the big question for Apple.  Overall, signs are that the tech giant is maturing as even talk about a dividend, contrasts to Apple’s style from previous years.  For traders, a dividend, even if it is only symbolic in nature, could lead to increased demand for Apple shares as many portfolio managers are prohibited from buying non-dividend paying stocks in their fund charters.

For more on Apple’s upcoming meeting from Bloomberg

Apple Inc. (AAPL), which plans to discuss its $97.6 billion in cash and investments in a conference call today, is likely to announce a dividend, according to analysts’ predictions and data compiled by Bloomberg.
Chief Executive Officer Tim Cook and Chief Financial Officer Peter Oppenheimer will host the call, scheduled for 9 a.m. New York time, Cupertino, California-based Apple said in a statement yesterday. The company didn’t elaborate on its plans, and said it won’t discuss topics besides cash.
“They should pay a dividend,” said Shaw Wu, an analyst at Sterne Agee & Leach Inc. “This is something that large shareholders have been asking for.”
Apple’s cash pile has swelled amid surging demand for its products, such as the iPhone and iPad. Investors have urged Apple to return some of the balance in the form a dividend. Cook fueled speculation an announcement might be coming when he said this year that the company has “more than we need to run a company” and that the board is considering its options.
Apple directors held a meeting in the past few weeks to discuss the plans, said Wu, who predicted that Apple will announce an annual dividend of 2 percent to 3 percent of its share price. That indicates a dividend of $11.71 to $17.57, based on Apple’s closing share price of $585.57 on March 16. In German trading today, the stock gained 3.1 percent to the equivalent of $601.39 at 10:03 a.m. in Frankfurt.
Steve Dowling, a spokesman for Apple, declined to elaborate on the statement.
Dividend Estimates
Apple may issue a quarterly dividend of $2 a share, according to data compiled by Bloomberg. The estimate is based in part on the dividends paid by other large technology makers, including Microsoft Corp. and International Business Machines Corp. Brian Marshall, an analyst at ISI Group, projects an annual dividend of $14.65 a share.  Read More

No comments:

Post a Comment