Why Apple Is Giving Cash Back to Shareholders

Apple on Monday announced a solution to an enviable problem: Too much cash. But does giving money back to shareholders in the form of dividends make sense? Why not hoard it?
There are several reasons Apple is giving dividends, but the primary one is that investors feel they have a right to some of Apple’s $100 billion. “People expect a return on their investment,” says Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “If you can’t do anything with the money, then you should give it back.”
Elson says that Apple is not the only company to deal with this issue. At some point, every successful public company will get pressure to give money back. (Before the recession, Exxon Mobil, Dell and Pfizer, among others, got the same kind of pressure from investors to give back their cash or find a way to invest it.) In Apple’s case, closing in on $100 billion seems to have triggered a call to launch a dividend for investors, but there’s usually no benchmark for such decisions. “It’s all up to the judgment of the board,” says Elson.
Tim Bajarin, president of Creative Strategies, says $100 billion is way more than Apple needs, so it doesn’t make sense to keep all that money on hand. He points out that even after the company pays out its $45 billion in dividends, Apple will still have more than $50 billion in cash plus whatever it puts aside in the future. “They’ll always have cash for even big acquisitions if it enhances their position,” says Bajarin, who expects Apple to start buying more companies.
During the call with analysts Monday morning, Apple CEO Tim Cook repeatedly stressed that the dividend would also attract new investors. With a share price of $600, drawing new shareholders doesn’t seem like an issue, but Bajarin notes that there’s a type of investor that is primarily concerned with dividends. “Most of the guys buying [Apple stock] today are buying on a holding basis,” says Bajarin, who notes that such investors believe Apple is a good long-term buy. “But there are a lot of people who buy stock only on a monthly basis.”
Another point Bajarin emphasized is that some 65% of of Apple’s cash is based outside the U.S. Merely bringing that money — now housed in foreign banks — back to the U.S. would force Apple to lose cash in taxes and other fees. “Apple’s not the only one,” he says. “No corporation wants to bring money back to the U.S.”
Known for its dramatic product introductions, Apple’s Monday morning announcement will probably seem ho-hum for non-investors. But, based on Apple’s stock performance Monday morning, the company has at least prompted a squib of excitement among its intended audience: At press time, the company’s stock was up about $6 or 1% at the iDividend news.

The New iPad Details Hit Apple.com

The new 9.7-inch iPad has 2048 x 1536-pixel retina display, 5-megapixel camera (with the same optics sensor from the iPhone 4S) and 1080p video recording. It is available March 16 in black and white, powered by A5X chip (with quad-core graphics) and supports 4G LTE networks. It's 9.4 millimeters thick and 1.4 pounds.


Wi-Fi only iPads cost $499 for 16 GB, $599 32 GB and $699 for 64 GB, while 4G versions cost $629 for 16 GB, $729 32 GB and $829 for 64 GB. Pre-orders start today, and the devices will be in stores March 16 in these 10 countries: U.S., UK, Japan, Canada, Switzerland, Germany, France, Hong Kong, Singapore and Australia.


Credit: Apple.com

Apple.com Touts New iPad Features

"Pick up the new iPad and suddenly, it’s clear. You’re actually touching your photos, reading a book, playing the piano. Nothing comes between you and what you love. To make that hands-on experience even better, we made the fundamental elements of iPad better — the display, the camera, the wireless connection. All of which makes the new, third-generation iPad capable of so much more than you ever imagined."

Credit: Apple.com

IDC: Apple’s iPad Rules Tablet Sales Today But Android Makers Will Overtake It By 2016

With news of Apple’s new iPad selling out its first run due to overwhelming demand, 2012 is off to a galloping start for the tablet market; and because of that IDC is upping its forecasts for how many “media” tablets will be shipped this year. The analysts predict that the number will top 106.1 million units, up from their previous forecast of 87.7 million units, due in part to strong demand for that new iPad, but also a number of other devices at a range of price points.
Indeed, while Apple will continue to be the single biggest tablet maker on the market, Android, collectively, will continue to hold its own against it, with some notable devices like the Amazon Kindle Fire doing particularly well. But it will not be until 2016 — four years from now — that IDC thinks that Android shipments will outnumber those of iOS.
Even though the Kindle Fire was available only in the U.S. in Q4, IDC says that the $199 device accounted for 16.8 percent of all tablet shipments in Q4 2011, or some 4.7 million units, making it the largest “Android” vendor. Samsung, despite its multiple Android tablets, was bumped down to second-biggest Android maker with a 5.8 percent share of the market. Barnes & Noble and Pandigital, the other top Android tablet makers, both saw their shares of shipments slide. The tablets to watch, it seems, are those that combine low price with high content promise.
None of that was a match for Apple, however, which accounted for 54.7 percent of all shipments in Q4, or 15.4 million units. While that was a rise of 110 percent over the year before, that still did not outpace the overall growth of the tablet market, which IDC says grew by 155 percent between the two quarters. Overall, Android tablets accounted for 44.6 percent of all sales, while RIM’s PlayBook slipped down to 0.7 percent from 1.1 percent a year before.
A couple of things worth noting about IDC’s numbers, taken from its quarterly tablet and e-reader tracker:
Although many predict that e-readers will eventually die a death blow dealt by tablets, for the moment their fortunes look okay. They grew less than half as well as tablets did — up by 64.3 percent between Q4 2011 and 2011 — but they are still on the rise, with e-reader makers like Amazon, Barnes & Noble and Kobo in total shipping 10.7 million units in the quarter.
IDC gives no weight to Microsoft and its new, tablet-friendly Window 8 platform in its “media tablet” forecasts. As we saw last month, there are a number of devices being built on the OS, and if you believe all the reports, there will be more coming from the likes of Nokia to add to that. These are not expected to start shipping in earnest until much later this year. In its forecast, “others” apart from iOS and Android account for only a tiny sliver of overall shipments — and, by default, sales.
And that’s the other point always worth remembering about shipments. This tends to be the metric tracked most closely by analysts, because they get their numbers from device makers but also the channels that receive and distribute them; the shipment numbers are based on estimated demand. Ultimately, though, sometimes these shipments are out of sync with how a product actually gets bought — although analysts usually say that in the long run those corrections are accounted for with fewer shipments in subsequent quarters.

New iPad Pre-Orders Now Shipping On March 19

As it was the case with the iPad 2, the iPhone 4S (and pretty much every device Apple announces), pre-orders are now being shipped a little bit later for people that were not quick enough (or unlucky) to secure a unit in time.

While this doesn't necessarily mean the new iPad is out of stock, it might be a good indication that sales, as usual, were solid. If initially, pre-ordered tablets were shipping on March 16, those that only now decided to grab one will get it earliest on March 19.

On the same note, Apple has started shipping initial pre-orders for the new iPad. Those who managed to place one on March 7, the event day, are now receiving notifications; delivery day, via FedEx, is scheduled for March 16, the launch day.

Apple announced the new iPad on March 7 and it brings an improved A5X chip, a "Retina Display", better camera sensor and lens, more memory as well as 4G LTE capable radio.

This Article Generating Thousands Of Dollars In Ad Revenue Simply By Mentioning New iPad

SAN FRANCISCO—According to industry sources, this news article is generating a veritable bonanza of highly lucrative advertising revenue by mere virtue of the fact that it mentions Apple's new iPad. "Current estimates show that the particular article I am being quoted in at this very moment began to accumulate thousands of dollars in ad-based profits as soon as the words 'new iPad' appeared in the headline," said market analyst Jonathan Bowers, who single-handedly and out of thin air created cold hard cash for a media organization simply by adding that the new Apple iPad will feature a high-definition screen and an improved processor. "Furthermore, any subsequent mention of the new iPad in this article—as well as any mention of the fact that preorders for the device start today—is resulting in increased reader traffic and, thus, increased revenues for your company's ad-based business model." At press time, new iPad, new iPad, new iPad, new iPad, new iPad, new iPad, new iPad, new iPad, new iPad, new iPad.