Apple Inc. (NASDAQ: AAPL) has recovered sharply today from its lows, although it may be on more noise than news. The company at its annual meeting reelected its seven board members. There were market rumors that Apple was going to announce a stock split today for a ratio of 3-to-1 or 4-to-1 but this was not announced at the meeting. And as far as a dividend, that has not come to play either.
What is interesting is that Steve Jobs did say that there is no case yet Apple to issue a dividend. Jobs noted that he’d rather have the cash than to pay out a dividend or to conduct share buybacks. This is going to be a critical because Apple is sitting on a mountain of cash. Our latest count of shares was close to 907 million shares.
With cash and its short-term and long-term investments coming in at $40 billion and with it adding cash flow every quarter, Apple could in theory take 75% of that cash if it wanted to and pay it out this year while dividend taxes for passive income are dirt cheap.
The 75% payout is of course unlikely, but if Jobs did this he would be able to pay a cash dividend of roughly $33.00 per share. That would effectively return 16.5% to holders. Apple would still hold $10 billion in cash and liquidity without factoring in the billion it is bringing in via cash flow.
Apple has been very slow or outright absent when it comes to making real acquisitions. Maybe the company is hoarding cash so it can go buy Nintendo and finally get into the video game console business as well. Doubtful, but possible.
JON C.OGG
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