So the big Apple divident announcement hit this morning. And all the news media (including a few financial sites I’ve looked at) seem to be focusing on the wrong numbers.
As the first sentence in their announcement states: spending $45 Billion (of domestic cash…2 key words there) over 3 Years; averaging out to $3.75B per quarter. $10B of that will be to repurchase shares to negate employee stock grants (aka, dilution of public stock); averaging $.8B ($833M specifically) per quarter. If you take the repurchase program out of the equation (it’s just negating new stocking coming into the open market that’s pay for all the Apple employee’s new cars, home remodels, and kid’s college savings programs) you have just under $3 Billion of Apple’s quarterly cash hoard being returned to investors.
Now the part not being focused on in most media circles: In their 1st Quarter of FY2012 Apple Generated $16B in cash. That number is expected to grow each quarter with a FY2012 total expected to be $75B. So the dividend pay out will only slow the rate of Apple’s cash growth (in FY12Q1 they would have generated $13B instead of $16B; the FY2012 total slips from expected $75B to an estimated $63B). Most of Apple’s competitors still wish they could generate that much revenue, not just free cash.
The other small caveat being missed. The payouts come from domestic cash. Of Apple’s near $100B cash balance, about $64B of that is overseas. Not taxed by the US Government.
So the Dividend payout is great for investors as our growth stock now is also an income stock as well. It’s great for Apple because it attracts a new class of institutional investment money (income seeking) but it also allows Apple to continue to shift cash into overseas accounts. I’m not a corporate tax expert but it would be nice if a news agency would focus on the impact of this small tid bit.
(Disclaimer: I’m an Apple stockholder)
