Apple Cash Balance Call : March 19, 2012Apple discusses what it will do with its $97.6 billion cash balance.
8:49 - Apple has already given its main plans: a $2.65 per share quarterly dividend starting July 1, and $10 billion in stock buybacks over three years starting from its fiscal 2013 (September 30, 2012). We're listening in to get more details.
9:01 - Beginning now. Nancy Paxton, investor relations up first with safe harbor warnings. No business updates or other topics.
9:03 - Cook up: "significant opportunities ahead of us." Recapping 37m iPhone sales; just 9% of handsets in the quarter. Expected to grow dramatically. World market from 1.6 billion in 2011 to 2 billion by 2015. Potential for iPhones is enormous.
9:03 - 55m iPads from launch to the last quarter. "Just keeps getting better." Gartner expects 325m tablets by 2015. Tablets will eventually surpass the PC market; it's just a matter of when.
9:04 - Mac has outperformed the market for 23 quarters, and yet has less than 6% share.
9:05 - iCloud is at over 100m users [nothing new]. Also recapping Siri. Expanding carriers, distribution, enterprise sales. "We don't see a ceiling" to our growth.
9:05 - You'll see more of these investments in the future, but we will have "plenty" after the dividend. "These decisions will not close any doors for us," he says.
9:06 - The dividend is broadening Apple's investor base by attracting those who don't currently own Apple stock.
9:07 - Recaps the stock buyback plan; minimizing dilution. Doing what we believe is in the best interests of Apple and shareholders.
9:08 - Oppenheimer: fiscal year 2011 saw $31 billion, another $16 billion in first quarter of fiscal 2012. Want to keep flexibility for "investment opportunities." Increase the attractiveness of Apple shares, and minimize the dilution from employment equity programs.
9:09 - Will establish payment dates with the July 1 quarter. At Tim's request, he won't participate in the dividend program.
9:10 - Cash used to repurchase shares to consume $4b in first fiscal year. Combining all factors, Apple plans to use $45b of domestic cash. Closing: "very confident" about future, "extremely enthusiastic" about opportunities.
9:11 - Q&A. Barclays' Ben Reitzes: philosophy on dividend growth? Is that factored in? We'll review our dividends periodically. $2.65 will be attractive to current and prospective shareholders. Over $2.5 billion per quarter. Would be one of the highest dividend payers in the US.
9:12 - Don't want to incur the tax to repatriate cash at this time.
9:13 - Tim Cook: "we love to announce products, just not during conference calls." We grew 73% last quarter. "Extremely confident in our future."
9:15 - Repatriating cash would involve "significant tax consequences" under current US law. Apple has expressed its views to the government, saying there's currently a "disincentive" to bring cash back.
9:17 - Stock splits? Something Apple has looked at. The current information we have would suggest that there's very little support [for the idea] that it helps the stock. We're at a unique point in time, however, and if we think it would be in our best interests, we would do it.
9:17 - Oppenheimer: very confident about our products in the pipeline. We'll invest in a disciplined manner. Make changes to our program that are in the best interests of Apple and shareholders.
9:20 - Methodology? Oppenheimer says it's "very significant." Hybrid approach is both from thinking and from listening to shareholders. Most emphasis is behind the dividend, since that's where the most cash goes. The stock buyback helps minimize dilution of the employee program. Also paying taxes and allowing for US opportunities. [mostly reiterating earlier statements]
9:22 - With tax costs, focused on domestic cash. Our focus will always be to "make the most innovative products in the world." Wanted to allow for a war chest for opportunities in the future; after we factored that in, we found that we had cash left over.
9:23 - Will keep evaluating how much we need to into dividends, share buybacks, and investments. 17.7 million RSUs that hadn't vested yet in the last quarter.
9:23 - Call wraps up; the narrow focus has made it much shorter than usual Q&A.