(If Apple delivered cash dvd
=> Apple starts being a blue chip or “big elephant”, maybe it’s good for fund managers who like defensive stocks or high yields stks, but it really confirms our view, Apple is seeing a market consolidation …
=> Agressive growth fund managers should reduce position on Apple, given Apple’s P/E would be a bit relative high …)
By Connie Guglielmo and Rochelle Garner
Feb. 25 (Bloomberg) — Apple Inc. Chief Executive Officer Steve Jobs said he prefers holding on to the company’s cash hoard for potential acquisitions and “bold” investments, rather than paying dividends or buying back stock.
“We know if we need to acquire something — a piece of the puzzle to make something big and bold — we can write a check for it and not borrow a lot of money and put our whole company at risk,” Jobs said today at Apple’s shareholder meeting. “The cash in the bank gives us tremendous security and flexibility.”
Apple had almost $25 billion in cash and short-term investments as of December, near its record of $25.6 billion the previous year. Over the past few years, the company has made small acquisitions to expand in such businesses as mobile-phone ads and wireless music services. It also maintained hiring through the recession and invested in new products, including the iPad media tablet due in March.
While the company may benefit from other acquisitions, possibly in the chip industry, Apple should also consider rewarding shareholders with a buyback or dividend, said Sam Wilson, an analyst at JMP Securities LLC in San Francisco. Apple hasn’t paid a dividend since 1995.
“Ninety-eight percent of all tech companies should pay a dividend,” Wilson said. He has a “market outperform” rating on the stock, which he doesn’t own. “If they don’t have a productive use for the cash, before they pay a dividend they should start a share-buyback program.”
Apple, maker of the iPhone, iPod and Macintosh computer, rose $1.34 to $202 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares gained after CNBC reported that Apple was considering a 4-for-1 stock split, citing market rumors. Jobs didn’t mention a split at today’s event and wasn’t asked about it by shareholders attending the meeting.
Steve Dowling, a spokesman for Cupertino, California-based Apple, didn’t immediately respond to a request for comment.
Earlier this week, Chief Operating Officer Tim Cook said Apple will continue its acquisition strategy of buying companies for their talent and technology, rather than as assets that add to revenue. While Apple has focused on smaller acquisitions, it would consider a larger takeover if the technology and people warranted it, he said.
Last month, the company bought Quattro Wireless, a provider of mobile advertising. It acquired online music service Lala in December. Apple didn’t disclose the terms.
‘The Next Corner’
“You never know what opportunities are going to be around the next corner,” said Jobs, who turned 55 yesterday. “We are a large enough business now that, in order to really move the needle, we have to be thinking pretty bold — pretty large.”
Apple plans to expand its network of retail stores, including adding as many as 25 new outlets in China in the next 24 months, retail chief Ron Johnson said today.
Today’s meeting marked Jobs’s second appearance since September, when he returned to the public eye after a liver transplant. He unveiled the iPad at a presentation last month.
Apple shareholders re-elected all seven directors, including Jobs, former U.S. Vice President Al Gore and Avon Products Inc. CEO Andrea Jung, to a one-year term. Jobs started the meeting by thanking them for their service.
“We have some great meetings, a lot of very long discussions, a few arguments now and then. It’s terrific,” Jobs said after introducing the directors, who were all seated in the front row. “They really love Apple and they really want to see Apple be the best it could be. We are so lucky to have the board of directors that we have.”
Shareholders also approved Apple’s executive compensation plan and director stock-option program.
Jung, the newest director and the only woman on the board, quietly took over as co-lead in December, replacing former Apple executive Bill Campbell. Campbell, chairman of Intuit Inc., remains a director, along with former International Business Machines Corp. Chief Financial Officer Jerry York and J. Crew Group Inc. CEO Millard “Mickey” Drexler. Genentech Inc. Chairman Art Levinson shares co-lead director responsibilities with Jung.
Jobs, dressed in his usual black turtleneck and jeans, deflected shareholder concerns today that former board member Eric Schmidt, Google Inc.’s CEO, may have been privy to Apple’s long-term plans. Google now competes with Apple in the market for smartphones and computer operating systems. Schmidt, who joined Apple’s board in 2006, resigned last year.
“Eric conducted himself as a board member appropriately and recused himself whenever discussing matters that might involve conflict,” Jobs said.
Jobs reiterated comments by Cook earlier this week that Apple now considers itself a “mobile devices company.”
While about 95 percent of the products Apple sells are mobile devices, there are no plans to stop developing its line of desktop computers, including the iMac, Jobs said. Apple, co- founded by Jobs in 1976, was among the first personal-computer makers.
“This is not something that we’re ordaining from the top. This is something our customers are saying with their dollars, if you just look at the products that we’re selling,” Jobs said. “They’re telling us what they think is important and we’re reflecting that.”
To contact the reporter on this story: Connie Guglielmo in San Francisco at email@example.com; Rochelle Garner in San Francisco at firstname.lastname@example.org
Last Updated: February 25, 2010 19:40 EST