Investors are begging Apple to pay dividends from its huge stash of cash. With billions in reserve for that rainy day, Apple is playing the game the same way Steve Jobs would have had them play it. This is the fortitude that took them to the top.
Finance chief Peter Oppenheimer is refusing to release a dime in dividends. This same request has been made ad nauseum, but Oppenheimer, in the spriti of Jobs, is keeping the cash for the next opportunities to arise. With stocks twice as high as the previous year, Oppenheimer made the pointed argument that they have this cash exactly because of this mentality. The cash and investments Apple holds are worth $76.2 billion.
The call to open the coffers comes only days after the death of Steve Jobs. However, he saved Apple from bankruptcy and took it to the pinnacle of the most valuable tech company in the world, and even the most valuable company in the world – beating Exxon for one week. His attitude of hoarding cash put them in the position they are now in, where they have so much money they don’t know what to do with it. As a result, Oppenheimer is being assaulted with demands to make a dividend payment or a stock buyback available.
Oppenheimer holds a bachelor’s degree from California Polytechnic University of San Luis Obispo, as well as an M.B.A. from the University of Santa Clara. He replaced Fred Anderson upon his retirement as CFO, in 2004. Apple had only $5 billion in cash and investments when Oppenheimer took over, but during the following three years it tripled to over $13 billion. The next three years saw another leap to over $40 billion in 2010.
Keith Goddar, CEO of Capital Advisors Inc., and the largest holder of Apple stocks, said, “It wouldn’t hurt their position any if they paid out a small dividend.” In 1997, Apple wasn’t sure if it would be able to pay its employees. Steve Jobs took the helm at that time and now, with the advent of the iPhone and the iPad, Apple is sitting pretty. Jobs wanted to steer Apple into new market opportunities with the cash, rather than returning it to shareholders.
In spite of the stock market slump, Apple’s stock has increased 15% this year alone. Apple is valued at $342.8 billion, placing it far ahead of the second largest tech company, Microsoft. In fact, Apple is 60% bigger than Microsoft today.
Other large tech companies have not had such an outlook on their cash management. For example, Microsoft and Google utilize their cash for large acquisitions. Cisco paid out dividends starting this year, following the $40-billion mark.
Apple is using some of its cash to purchase future supplies of the most significant components for their products. Capital expenditures ad components will take up about $3.9 billion in the next two years, according to Oppenheimer. This is a company that has demonstrated the dedication to good cash management principles in order to be ready for any potential strategic opportunities.
