News - Apple will pay dividends and buy back shares

[HEXUS]

The firm lays out plans to use £28 billion of its £61.5 billion stock pile.

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[bradyjames]

I don't get this. They have a cash mountain of over £60 billion and they plan to spend £28 billion over the next three years. They are making £15-£20 billion per year so that means they will end up with more money at the end of the three years than they started out with. So it seems more like a plan to grow it's stockpile rather than reduce it.

[Barakka]

I don't get this. They have a cash mountain of over £60 billion and they plan to spend £28 billion over the next three years. They are making £15-£20 billion per year so that means they will end up with more money at the end of the three years than they started out with. So it seems more like a plan to grow it's stockpile rather than reduce it.

Well yes, but if growth continues at £15-20 billion/year for 3 years they'll be worth £77-92 billion rather than £105-120 billion if they didn't spend it, so they will still have a massive pile of cash, just they'll be able to fit it in the vault they currently keep it in and don't have to got through all that messy planning permission to build an extension ! We all know what a pain it is when your money vault gets full



The key here for me is they're going to a) pay dividends and b) spend £6.3 Billion on buying back shares so around 16 million less Apple shares out there and less of the company is owned by shareholders.

[peterb]

Wish I had some Apple shares

[Scribe]

I don't get this. They have a cash mountain of over £60 billion and they plan to spend £28 billion over the next three years. They are making £15-£20 billion per year so that means they will end up with more money at the end of the three years than they started out with. So it seems more like a plan to grow it's stockpile rather than reduce it.

A lot of the money is locked up abroad so they can't spend it or release all of it as a dividend at once as bringing it into the US will require Apple to pay tax on it.

[Gordy]

I don't get this. They have a cash mountain of over £60 billion and they plan to spend £28 billion over the next three years. They are making £15-£20 billion per year so that means they will end up with more money at the end of the three years than they started out with. So it seems more like a plan to grow it's stockpile rather than reduce it.

This isn't to reduce the cash surplus, but so that any stock they give to employee's doesn't dilute the normal stock.

[Funkstar]

So anyone care to give me a quick run down of the idea behind buying back shares?

I can understand it from a company that has always given dividends, it would mean less cash leaving the company, but not so much for Apple who don't usually.

[badass]

Well yes, but if growth continues at £15-20 billion/year for 3 years they'll be worth £77-92 billion rather than £105-120 billion if they didn't spend it, so they will still have a massive pile of cash, just they'll be able to fit it in the vault they currently keep it in and don't have to got through all that messy planning permission to build an extension ! We all know what a pain it is when your money vault gets full



The key here for me is they're going to a) pay dividends and b) spend £6.3 Billion on buying back shares so around 16 million less Apple shares out there and less of the company is owned by shareholders.

So anyone care to give me a quick run down of the idea behind buying back shares?

I can understand it from a company that has always given dividends, it would mean less cash leaving the company, but not so much for Apple who don't usually.

Ignoring the stock options etc this is about for a second:

Buying back shares means the company buys shares from the market and "destroys" them. The company does not won the shares - they disappear. With less shares on the market, any of their "per share" performances look better such as EPS (earnings per share) and same amount of money paid out as dividends results in a higher dividend per share (as there are less shares).
Because there are less shares on the market, this will be hoped to increase the share price.

It's another way of giving money to shareholders basically.

[dave87]

Ignoring the stock options etc this is about for a second:

Buying back shares means the company buys shares from the market and "destroys" them. The company does not won the shares - they disappear. With less shares on the market, any of their "per share" performances look better such as EPS (earnings per share) and same amount of money paid out as dividends results in a higher dividend per share (as there are less shares).
Because there are less shares on the market, this will be hoped to increase the share price.

It's another way of giving money to shareholders basically.

Buyback out of distributable profits, as Apple is doing, is a way of giving money back to shareholders, but also concentration of ownership. Fewer shares out there, each share represents a greater proportion of the company (the company is owned by its shareholders) so the greater potential dividend from the company, as well as the aforementioned performance metrics used in share trading.

Also a control issue potentially - if certain groups hold big enough percentages (either by actual ownership or by a binding shareholder agreement) - then they have potential influence or control (depending on level of shareholding) over the direction of the company. Depending on how this is exercised, it may affect that control (I've no knowledge of the particular ownership of Apple shares, how they are held or any agreements which may or may not exist between the shareholders).