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Comment by copious | Hacker News Reader

I think they'd be more likely to buy back stock than to start granting dividends.

My two worthless cents: an acquisition. Who they'll acquire is anyone's guess...a carrier (probably not), a content provider (maybe), or something more technical (my insane guess: ARM).

Not that I know more than anyone else, but I don't feel Apple really paying a dividend out. They've never really seemed too beholden to shareholders in the past (well, the Steve Jobs past anyway), and I think they'd rather invest the cash in something that would benefit the business more. It's not as if the share price is in a bad place, after all!

Apple and Tim Cook have made it clear that they have more cash than what is required to run the business. Apple is spending billions on data infrastructure, manufacturing, pre-purchasing components and expanding retail operations; despite all these investments, they still have more cash than what they need.

They will likely generate another $50B in cash this calendar year. Even if they want to maintain the $100B war chest, they could pay out ~$50/share/year. I think a share repurchase or dividend (whatever they think will return more value to the shareholders) is highly likely.

You are assuming that the profits they reported this quarter will be the same next quarters, why?

Revenue in the current quarter should be less than last quarter, but YOY growth is still insane. iPad 3 launch seems to have gone well, which will help the next quarter.

It's reasonable to at least project the same growth for future quarters, year on year, as Apple got in their Q1 (which includes christmas, iPhone 4S launch, death of Steve Jobs, ...).

This year should have a rev of most of the Mac line (hopefully Pro if they don't kill it, too, although it doesn't move the needle on revenue), iPad 3 selling an absurd number of units, and an iPhone 5. The big innovation I've seen with Apple in the past couple product cycles is keeping their older iOS products on sale at a reduced price point, so now you get to choose iPad 2 or iPhone 3GS/4 on price vs. any competitor (and still better), or iPad 3/iPhone 4S as absurdly better at about price parity. Makes more sense than trying to create low end and high end products simultaneously.

Sprint is in their range (8.7 market-cap expect a premium on top of that), but they really gotta be committed for that. ARM's business model makes anything but a investment a waste. AMD or NVIDIA would be more interesting.

I just don't know why a dividend would be more than a press release after markets closed.

let's hope not, because stock buy backs can be interpreted as a signal that management thinks tremendous earnings growth is behind the company.

Why?

I've read that they offer few benefits, but I've never heard this explanation. I also don't see how it makes sense for a company in their position?

Stock buy backs are used to reduce the number of outstanding shares available - which results in shares increasing in value due to earnings per share now increasing. It is one way to "mask" slowing growth.

I think you're mixing up cause and effect here. Even if it's true that stock buy backs are frequently undertaken by companies which doubt their future growth potential (I have no idea if this is true), I don't think there's any danger of a buyback from Apple sending this signal. They're in a historically unique position, and whatever their decision, it's not going to be analyzed solely based on the status of other companies who have undertaken similar actions.

It's taken as a sign that the company doesn't have anything more productive to do with the cash than buy back its own stock. This could be a positive or a negative.

If Apple had $5b in cash and decided to buy back stock, that would be a bit bearish -- they certainly can continue to make incremental cash investments (in supplier agreements, new products, etc.). $100b (which is actually probably $110-120b now, a month later) is way beyond that. Getting $50b returned to shareholders wouldn't be a sign of lack of investment options for Apple.

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