It has been the great money-making machine that has moved from success to glittering success. Now, for the first time in almost two decades, Apple’s shareholders are to share directly in that glory.
In a break with the policy adopted under the late Steve Jobs, the world’s largest company by market value will pay its first quarterly dividend since 1995 and launch a $10 billion (£6.3 billion) share buyback.
The move announced yesterday by Tim Cook, the chief executive, signals a shift in strategy for the company, which has nearly $100 billion of cash on its balance sheet. Mr Jobs, one of the co-founders, is believed to have opposed paying a dividend, arguing that the money should be used for acquisitions, buying key components or investing in new products.
Addressing concerns that the payments would affect Apple’s ability to react to rivals, Mr Cook said: “Innovation is our most important objective. These decisions will not close any doors to us.”
He added: “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 pre-payments and capital expenditures in our supply chain, and building out our infrastructure. You’ll see more of all of these in the future. Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business.”
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Apple said that it intended to “neutralise the impact of dilution from future employee equity grants and employee stock purchase programmes”, meaning that it wanted to buy back stock so that it could be offered to its workers in the future.
Mr Cook added that he wanted to make Apple’s stock attactive to new investors. Bill Choi, a managing director for Janney Montgomery Scott, the investment adviser, said it was likely that there would be record trading in Apple stock in the next few days as investment funds pile in.
The planned dividend payout will cost the company $9.88 billion a year. The yield of 1.81 per cent is below that offered by technology giants such as Microsoft and Intel but is in line with Hewlett-Packard, IBM and Oracle.
The $10 billion buyback will start in its financial year for 2013 and take place over three years. The moves will lead to Apple using about $45 billion of its domestic cash over that period.
Apple shares rose by 2.4 per cent to $599 a share in pre-market trading in New York. They briefly passed $600 last week before the launch of the new iPad, but have never closed above the milestone.
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The company did not provide an update on the current quarter. In its most recent reporting period Apple reported a record profit of $13.06 billion and record revenues of $46.33 billion.
• Apple has launched an appeal against a fine for breaching European consumer legislation by advertising that its products come with a one-year manufacturer warranty without making it clear that customers are entitled to a free guarantee of up to two years under European Union law. Apple was fined €900,000 (£749,000) by the Italian competition watchdog in December for breaching European consumer legislation. Consumer groups have raised concerns that customers could be paying for cover that they are guaranteed by law. Under British law, customers have up to six years to demand a refund, repair or replacement for a faulty product, although the rules are complex. The appeal will be heard tomorrow.