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Apple Announces $2.65/ Share Dividend, $10 Bn Buyback

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Cash-rich iPad maker Apple on Tuesday announced a $2.65 per share quarterly dividend and a $10 billion share buyback plan as part of its broad plans on how it intends to use nearly USD 100 billion reserves.

The world's most valuable company had last offered a dividend in 1995.

Apple said it will initiate a quarterly dividend of $2.65 per share in the fourth quarter of its fiscal 2012 which begins on July 1, 2012.

Announcing its plans to reward shareholders with the dividend, the California-based company said it wants to provide a current income to its long-term shareholders and increase attractiveness of Apple to a wider investor base.

Apple Inc expects its first year annual dividend payment to be over $10 billion.

The dividend "will provide a current income to our shareholders and we believe it will broaden Apple's investor base by attracting new investors who do not currently own Apple stock," Apple's Chief Executive Officer Tim Cook said in a conference call.

Apple will declare the dividend concurrent with the quarterly financial release in July.

The company board has authorised a $10 billion share repurchase programme commencing in its fiscal 2013 which begins on September 30, 2012.

The repurchase programme is expected to be executed over three years, with the primary objective of neutralising the impact of dilution from future employee equity grants and employee stock purchase programmes.

At the end of December 2011, Apple had a cash reserve of $98 billion, of which $64 billion was outside the US.

Its shares were up nearly 1.17 per cent at USD 592.70 in early morning trading. Apple boasts of a market capitalisation of about $545 billion.

Apple will be using $45 billion of its domestic cash in the first three years to fund its dividend and share repurchase programme.

"Combining dividends, share repurchases, and cash used to net-share-settle vesting RSUs, we anticipate utilising approximately USD 45 billion of domestic cash in the first three years of our programmes," Apple's CFO Peter Oppenheimer said in the conference call.

Cook, who took over as Apple head last year after the company's late co-founder and CEO Steve Jobs resigned in August, said after taking care of the dividend and share buy-back programme, the company will still have a "war chest" for strategic opportunities and have plenty of cash to run its business.

"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. You?ll see more of all of these in the future,? Cook said.

Apple's profits and revenues have soared thanks to its blockbuster products like the iPad, iPhone and the iPod.

Last week, it launched the third version of its iPad, which went on sale on Friday.

In its latest quarter, which ended on December 31, 2011, Apple posted a record revenue of USD 46.33 billion and net profit of USD 13.06 billion.

International sales accounted for 58 per cent of the quarter?s revenue. The company had sold 37.04 million iPhones in the quarter, representing 128 per cent growth over the year-ago period.

Apple sold 15.43 million iPads during the quarter, a 111 per cent increase over the year-ago quarter and it had sold 5.2 million Macs, a 26 per cent increase over the year-ago quarter.

Cook said the company was "extremely confident in our future and see tremendous opportunities ahead."

He said Apple had thought "deeply and carefully" about its cash balance.

"We will continue to invest in the business and maintain our disciplined and focussed approach in the future.

Innovation is most important objective at Apple and we will not lose sight of that. These decisions will not close any doors for us," Cook said.

He said through the new programme to utilise its cash, the company wants to "maintain the flexibility to take advantage of investment opportunities, provide a current income to our long-term shareholders, increase attractiveness of Apple to a wider investor base and limit future dilution from our employee equity programme."

In fiscal year 2011, Apple's cash had increased by $31 billion, with $24 billion coming from abroad.

During the first quarter of fiscal year 2012, Apple generated another $16 billion.


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