Intel issues dividend, Apple sits on $97.6bn

Intel has quietly announced that it will pay a quarterly dividend of 21 cents per share on March 1, just as they did last September and December, and in earlier quarters at lower rates. At the end of last year, Intel had $14.84bn in cash and short-term investments, from which it pays its dividends to shareholders. Apple, on …

[Anonymous Coward]

"Yadda, yadda, yadda... Apple are meanies because they won't give out a dividend." There is no legal or moral requirement to give out a share of your profits. If you want a return on Apple shares, sell them. It's not that difficult to grasp. Are you going to have a whine about Dell after their next earnings call because they don't pay out? Any reason to have a whine. Fuck me...

[Anonymous Coward]

They have a lot of money in the bank in part because they don't pay dividends.

If Intel had kept all the dividends in the past 5 years, they would have billions more in the bank.

Apple also has a big chunk of their cash "overseas", they keep lobbying to have a tax holiday so they can bring the money back to the US without paying taxes.

[0_Flybert_0]

you wouldn't be unhappy .. APPL at over $400 ..

if you had bought Apple stock in the first months of 2011 at $325

you might be actually happy if you had bought APPL in the middle of 2010 at $250

and perhaps very happy if you had bought in late 2009 at about $180 a share

APPL started 2009 at $90 a share .. lots of happy Apple shareholders over the last 3 years

[Peter 48]

Seriously, muppets like you would happily support Apple even if they announced that from now on they would be cladding all their new phones in baby seal skin. There may be no legal requirement, but there is most certainly a moral one. You do realise that the whole point of a share is to claim part ownership of the company, which should also entitles you to sharing in the profits. Having to rely on stock trading only to reap any reward in your investment is one of the biggest ills of our current economy. This sort of behaviour encourages unrealistic and unethical trading habits, punishing and rewarding companies not for doing a good job and earning a good profit but for their ability to hype their stock and promote their worth. The end result are financial calamities such as the dotcom bubble and the current banking collapse (to some degree). This sort of behaviour by Apple and other companies should be severely punished through punitive taxation to discourage it in the first place an encourage more sensible investment in productive and progressive companies.

[Anonymous Coward]

@Peter48

'This sort of behaviour encourages unrealistic and unethical trading habits, punishing and rewarding companies not for doing a good job and earning a good profit '

True. Except, in Apple's case, it has encouraged the exact opposite

[jai]

Peter 47 whined: "which _should_ also entitles you to sharing in the profits"

should? according to whom? according to just you. certainly, not according to any part of the financial markets, their regulators or the legal system. and i think they probably ought to know more about the subject than you do.

buying a share is a gamble. just because you bet on red doesn't mean the ball on the roulette wheel should land on a red number. you just hope it will.

you buy a share and you hope to take part in the companies success. you're not entitled to anything. if the share price tanks, are you going to put your hand into your pocket and help the company out, share in the losses? no, you're going to whine about the crappy investment (which was your choice).

the only thing buying a share entitles you to is that, if you sell it in the future, you'll get the market price for it, which may or may not be above what you paid for it.

grow up and get a clue

[Peter 48]

errr, not quite

You couldn't be more wrong and deluded if you tried and your comment shows how little you understand of the financial markets. Buying a share entitles you to part ownership in the company and a say in how it is run. Morons like you are the very problem with the current system, treating it like an oversized casino. Buying a share shouldn't be a gamble at all. If a company does well you should benefit through a share of their profits and an increase in stock value as more people want a part of the company. If the company does badly you loose by not receiving any income and a drop in share value as less people want to own the company. Without dividends you aren't sharing in the success of the company but in the success of the company's stock. This is how companies become hugely overvalued or undervalued regardless of their true performance. Apple certainly deserves a high stock value as they have done exceptionally well over the last few years, and yet Google stocks were penalised for not returning even more profit that they had forecast simply because speculators gambled that they would do even better.

I fully understand how the current system works, that doesn't mean that I agree with it and that it doesn't desperately needs to change.

you sir are the one who needs to do some major growing up and clue getting.

[Anonymous Coward]

. <-- the point you missed

> You do realise that the whole point of a share is to claim part ownership of the company, which should also entitles you to sharing in the profits.

But that's the whole point. With or without a dividend you _do_ share in the profits. Ignoring the market predictive aspect of share prices, the value of one share is roughly the assetsof a company divided by the number of shares. By not giving a dividend you inflate the tangible assets, so share prices rise. If you pay a dividend and the company isn't growing the share price doesn't rise because the asset value of the company is lower.

So rather than getting a 1% dividend keep the cash, and your shareholders can sell 1% of their shares, and you end up pretty much in the same place.

Indeed, in a weak market companies like cash, as it is a nice safety net (abeit a rather huge one in Apple's case). One reason why so many big companies have died in the last 5 years is that the spent/dividended all of their cash during the good times, so they have no safety net during the bad ones, and hence run out of cash and have to go running for loans which don't exist because the banks have _also_ run out of cash.

So which one is morally bankrupt? The company which is financial stable, immune to market shocks, and able to return a reliable investment though good times and bad, or a company which gives out short term dividends at the expense of long term stability, but in reality creates no extra value for it's investors (because they could have just sold the shares).

[Tom 13]

@Peter 48: You were doing okay until the end.

The reason most American companies DON'T pay dividends is bad tax law. If you make a profit as a company, you pay anywhere from 30-50% of the profit in taxes. Then when you issue it as a dividend, the recipient pays another 25%-50% on taxes. So it is more effective to retain the profits and grow the company to increase the share price of the company. This leads to the bust-boom cycle you see in our markets. If companies could pay dividends without taking the initial tax hit, you'd see more "rational" behavior from companies. You might even see it if they didn't have to take the second tax hit. Except of course most people prefer to bitch about someone making $40+ million of income on $250 million+ of investments paying too little in taxes.

[Oninoshiko]

not to quible on the numbers

but it's 15%. Dividends are covered under capital gains, which is 15%.

This is actually widely known in the US right now, as it seems like it will be an talking point in the upcoming presidential election.

(you are correct in that it is generally considered to be double-taxed though, once at the cooperate level and once as capital gains)

[djnapkin]

They could use the Aussie system

Austrlaia has a working system to avoid the double taxation of dividends. Companies still have a choice of whether their dividends are pre- or post- taxatiion (or any mix thereof). The post-taxation component carries that tax paid to the dividend recipient. It's not that hard.

[Tom 13]

No, my ranges reflect actuals.

You're only quoting the FEDERAL tax on dividends and capital gains. I'm including STATE and LOCAL taxes, hence the ranges instead of a fixed percentage.

And it's not a talking point, its a fundamental issue.

[Eddy Ito]

Wrong dividend

Apple did pay dividends but they stopped paying quarterly like everyone else back in 1995. Since then there has been a "dividend" paid out in 2000 and again in 2005 in the form of a 2:1 split. Personally, I prefer the stock split type of dividend because it keeps the per share price reasonable allowing for greater control in allocation and that is especially true for those just starting out with a small portfolio.

Then again, I can certainly understand the shit or get off the pot sentiment toward a cash pile that is nearly a quarter of Apple's market cap. Who knows, maybe if they can hang on to the "mine is the biggest in the land" title for a quarter it will make them happy.

[Dazed and Confused]

They're going to need all that cash

to pay their legal bills

[0_Flybert_0]

almost OT

.. that pocket could hold enough for Apple to buy Intel which ... has a market capitalization of about $136bn ... Apple could buy AMD with only a mere 5 per cent of its cash – that Intel rival is worth around $4.5bn ..

.. drawfed by chipbaker Intel's massive capex outlays of $10.7bn in 2011 and $12.5bn in 2012.

so in another absurd comparison .. Intel could buy AMD for less than half it's 2011 capex

THEN Apple will buy Intel and the world's entire computer-network-communication *thang* will be ruled by the ghost of Steve Jobs

[paulf]

Not long to go

Should only be a quarter or two now and they'll get to the magical $100 billion.

[Puts little finger to bottom lip while pulling a "Dr Evil" Ooooo face]

[Anonymous Coward]

Not paying dividends is one of the factors

that causes the boom / bust cycle in the stock market.

srsly, what is the point of owning "shares" in a company if you don't get to share the profit? Speculation, that is the only reason, which means either Apple share price has to go up forever... or its shareholders are suckers and the stock market is a roulette wheel.

[Herby]

As for acquisitions...

I understand that there is a company in chapter 11, kinda "old school" that is in the "picture business" that could be picked up for a "song". Now days they do a lot in the printer business. But I still like the Paul Simon song "Kodachrome" (nice bright colors and all that!).

[Local Group]

Dividend Envy.

Corporations are controlled by shareholders (and not the 100 share kind either) and if they want a dividend, they can get Carl Icahn to lead a revolt and put in Directors and officers who support a payout. Never mind what the new guys know about fruitacious computing, dividends are the end all and be all.

Also dividends are taxed as income whereas when you sell your shares, whose price reflects the accrued, unpaid-out cash, your profit is taxed as capital gains. If this is wrong, AC will let me know.:-)

[djnapkin]

Capital gains in the US

Again another example of how screwed up is the US tax system. Why are capital gains taxed at a different rate to income? There's no good reason.

[Local Group]

Capital gains pushes money into the stock market

Because capital gains let's you keep more of your profits, it encourages those who have savings after they pay their income taxes, to put those savings into capital investments which involve starting new businesses or capital spending for an existing one, etc. Savings which are used to buy bonds that collect interest, don't involve the risk that buying stocks does, and do not enjoy a lower tax rate.

Because profits from selling stocks are taxed at a lower rate if they are held for a year (?), more investors are encouraged to buy stocks. This makes the markets more liquid and makes Wall Street happier because they have more pigeons to fleece.

Once your money is in the market, it is at risk of not being yours anymore.

[FunkyEric]

Maybe.......

They're saving up to buy a small country? $100 billion dollars should get them somewhere fairly nice shouldn't it?

[Anonymous Coward]

cash is king

They've got no more products besides a dated phone and a slick tablet. Best keep the cash.

[Eddy Ito]

Just for fun, let's stir the pot and spread a rumor I heard from the mouse in my pocket.

Apple is hoarding cash because it looking to take itself private! OMG!!

[CheesyTheClown]

Why not buy itself?

If Apple continues going down the road it has been travelling as of late which places massive amount of cash into the bank, they could effectively work towards buying themselves out of debt to shareholders and stop giving a shit about the whiners and moaners.

Being a publicly traded company is mainly a method of raising funds because the company doesn't want to spend its own cash. Apple is in a position where in a period of a few years, they could effectively own themselves and have a ton of cash left over in the bank. Perform badly for one or two quarters and crash the value of the share and they can probably be half way there with just what they have in the bank. So far as I know, Apple hasn't issued any new shares for a long time, so most of the shareholders these days are actually just freeloading gamblers who want Apple to do tricks to jack up the value of their shares. They aren't generally people who provided Apple with cash during a time which it was needed.

haha... I just noticed that before posting this, I read most of the comments from the top down and just looked up and say Eddy Ito has the same idea.

Apple should go private... why the hell would anyone want leeches trying to control their company? Now that Jobs is gone, is there actually anyone with enough shareholding in the company to override the leeches?

[I ain't Spartacus]

Hmmm. What is a share?

Sorry, (apple) pie in the sky. The shareholders own Apple. So the shareholders own all that lovely cash. It's one of the reasons that Apple have got such a high market cap. Which means you can't buy the company off the shareholders with their own money.

The way to get expensive companies for cheaps, is junk bonds. So the Glazers bought Man United for under £100m of their own cash, and the rest borrowed, which debt they loaded on the company. Slowly, as they pay off the debts, if they can manage to keep re-financing it, then they get to own the company for relatively little risk. The reason this works, is that the shareholders sold ManU too cheap - i.e. the shares were under-valued.

[Alan Denman]

It is easy to ague that in classic vulture fund style Apple are removing money from the economy in order to benefit from the thus caused Apple recession. By being the biggest they are thus the most disruptive recession causing corporate in existance.

[CarrBigDog]

The real question: Is this a valid comparison?

Apple and Intel are in two different markets and have different capitalization requirements. Apple is trying to topple Google and looking forward to the other social media players like Facebook and beyond. The cost of entry into those markets is large since they are not the leader while Intel is the king of fabrication and their future lies in moving into the low power mobile market which requires new design but existing fabrication facilities. Arguing about dividends is neither fruitful nor fruitless. 8-)!!!!