What will Apple do with its rapidly expanding cash pile? This is the question that has been hanging over the Cupertino-based tech giant for over a year and a half. But now it seems that the company will finally provide an answer to it.
Apple, whose stock is currently trading at $585, has announced that it will hold a conference call on Monday morning to discuss the company's plans for its approximately $100 billion in cash reserves.
According to Apple, it's CEO Tim Cook and CFO Peter Oppenheimer will host the conference, in which Apple will not be providing an update on the current quarter nor will any topics be discussed other than cash. The conference will solely be about the outcome of the Company's discussions concerning its cash balance, said the company.
As per a press release, sent out by Apple, the conference call s scheduled to begin at 6:00 a.m. PDT/9:00 a.m. EDT, and it will be available as a continuous rebroadcast. The dial-in number for the rebroadcast is (888) 203-1112 (toll-free) or (719) 457-0820. The confirmation code 6274937 must be entered.
Apple said the press can dial in at (877) 616-0063 (toll-free) or (719) 219-0041. They must enter confirmation code 592016.
The company will be streaming the call live on its QuickTime streaming Web site. It will also be available for replay for approximately two weeks thereafter.
Roundup of Speculations Around the Web
Starting from investor dividends to a large company acquisition, different theories are floating around of what Apple is actually planning to do with the money. Below is a roundup of reactions from mainstream publications around the Web.
CNBC's John Melloy cited analysts who believe that Apple's Monday call will be about annual dividend:
The iPhone and iPad-maker is likely to spend about $14 billion of its $98 billion cash hoard - a record for a public company - to get it a healthy and modest dividend yield in the 2.5 percent area, according to a number of analysts and investors. At Friday's closing price of 585.57, this would equate to a $3.66 quarterly payout or $14.65 a share for the year.
The New York Times' Nick Wingfield cited A. M. Sacconaghi Jr., an analyst with Bernstein Research, saying:
Mr. Sacconaghi said that issuing a dividend could help Apple appeal to new types of value investors. He said that a recent increase in Apple shares had partly been caused by more of those value investors' buying the stock in anticipation of a dividend...
If Apple wanted to pay a higher dividend, Mr. Sacconaghi said, the most attractive option for the company could be to raise tens of billions of dollars in debt at current low rates. That would give it the ability to pay a sizable dividend for years while waiting for a possible change in American laws that could allow it to bring its foreign cash back home without big taxes.
Forbes' Eric Savitz said:
My own suspicion is that they start paying a regular dividend. Were the company to generate a yield of 2.5%, they would be paying out $14.65 a share annually, or $13.65 billion a year. That would be a pretty conservative approach given how much they have - and the rate at which the cash is piling up. Paying a dividend would, among other things, provide a way for the company to lure one group of investors that have never been willing to buy the stock: institutions that only buy dividend-paying stocks.
MG Siegler, a columnist for TechCrunch is betting on Apple buying Samsung:
To that end, maybe crazy, but what about buying Samsung? It would both harm Google (Samsung is by far the most successful Android partner) and help Apple (which still heavily relies on Samsung chips and screens, etc.). They don't have quite enough cash to do that (but almost!), but the cash they do have could surely sweeten a deal.