Financial News

  • 21 March 2012, 12:41

Apple To Pay First Share Dividend Since 1995

Apple has announced that it will start paying a quarterly dividend to shareholders of $2.65 (1.66) per share in a break with tradition after the death of the technology firm's founder, Steve Jobs.

It is the first time since 1995, when Mr Jobs came back to run Apple and reversed the ailing company's fortunes, that Apple will share its profits with shareholders.

The California-based company will also spend $10bn (6.29bn) on buying back its shares which is likely to drive up their value for existing shareholders.

There had been widespread speculation over how Apple would spend a cash pile of $98bn (61.7bn) amassed over a decade of phenomenal growth in demand for its consumer technology products, which include the iPhone, iPad and MacBook computers.

Speaking on Jeff Randall Live, Tim Bradshaw, digital media correspondent at the Financial Times, said: "This is Tim Cook trying to make an early impression and show that he listens to investors and analysts.

"Steve Jobs always gave the indication that he was his own man, and he was very cautious about cash."

In a conference call to investors, chief executive Tim Cook said the company would keep $45bn (28bn) in a "war chest for strategic opportunities" over the next three years.

"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 prepayments and capital expenditures in our supply chain, and building out our infrastructure," he said.

"You'll see more of all of these in the future."

Analysts had speculated that Apple would use its cash pile to buy the micro-blogging service Twitter or rival manufacturer Samsung.

However, Apple is also thought to be interested in developing content such as TV shows or music that can be sold through its iTunes service for use on its popular iPad and iPhone devices.

The new iPad went on sale in the UK on Friday and Mr Cook said sales last weekend hit record levels.

Mr Cook, who took over as chief executive after Mr Jobs resigned due to his ill health in August 2011, also said that Apple had "lots of new products in the pipeline" but would not announce what they were.