We’re used to Apple making history, but today’s entry is one that’s surprised even the best of us. Yes, this very March 19th has proved to be the day that Apple took a leaf from a book other than its own and to some extent started to act like most other companies it is in many ways considered so much higher and mightier then.
Or to put in in plain English – Apple issued a dividend and began a stock buy-back program.
Analysts in growing numbers had started to question whether or not Apple was about to make an unexpected move in relation to what the company referred to as “cash balance situation”. The thing is, the overwhelming majority are already familiar with the fact that Apple rarely, if ever does anything by the book and therefore what would have been standard or at least expected moves could for the most part be written off as improbable at best.
From manufacturing to advertising to the way it handles itself in the public eye, there’s almost nothing Apple does that’s covered in the manual. And the same can be said for its book-balancing, as the company as a whole has for so long been sitting on massive sums of spare cash the likes of which haven’t been doing a great deal.
This is of course what Steve Jobs wanted though – a means by which to avoid a repeat of 1997’s drama by never coming close to running out of money again. What’s more, he also saw buybacks are shareholder bribes and was rather outspoken of his dislike for them.
The funny thing is, ask even the most well-connected and informed financial types in the world what they expected Apple to do with all its cash and chances are none would return a sensible or likely answer. Apple isn’t the type to blow eleven-figure sums on buyouts and acquisitions, but even if they did they’d still be looking at only a drop in the well.
Even when it comes to investing in innovation and development, when you think that Apple is taking home a good $16 billion during Q1 of 2012 alone, you start to realize that there’s no way their product research and development costs could make a dent in their cash flow.
So, much to the surprise of all of us, Apple has instead made an announcement that really couldn’t have been predicted by anyone. Over the next four years or so, Apple will pay a quarterly dividend of $2.65 and buy back up to $10 billion worth of stock, which will see shareholders returned a lofty $40 billion from the company’s cash-piles gathering dust in the US.
As expected, when speaking (sort of) openly about the decision, Tim Cook and Apple CFO Peter Oppenheimer never once deviated from their script and sidestepped all efforts to interpret, understand or analyses what they were saying.
When Steve Jobs was in charge of Apple it was a company notorious for not listening to its shareholders, with something of an ‘our way or the highway’ business model.
This week may just go down in history for the day Tim Cook’s Apple did exactly the opposite