Apple hasn't cut a dividend cheque since 1995...until now. Starting in Q4, Apple will start issuing a $2.65/share dividend. On top of that, they're starting a 3-year share buyback worth $10 billion.
I also came across this breakdown of Apple's strategies on Reddit:The Globe and Mail wrote:March 18, 2012
Apple decision on cash balance expected Monday
By PETER SVENSSON
The Associated Press
Coming on heels of new iPad release, anticipation over possible buyback or dividend propelled stock past $600
Apple Inc. AAPL-Q said it will announce the outcome of its internal discussion concerning its enormous cash balance Monday morning.
Analysts expect Apple to institute a dividend. It had $97.6-billion in cash and securities at the end of 2011. That would be enough for a one-time $100 dividend for every shareholder, but analysts expect the company to institute a modest recurring dividend.
Apple CEO Tim Cook and chief financial officer Peter Oppenheimer will discuss the decision on a conference call Monday morning, the company said late Sunday.
A dividend would reward shareholders and open ownership of Apple shares to a wider range of funds. Many "value-oriented" funds are not allowed to buy stocks that don't pay dividends.
Analysts say the lack of a dividend or other meaningful way of using the cash has held down Apple's share price.
Mr. Oppenheimer said on a quarterly conference call with analysts in January that the board was in "active" discussions on ways to use the cash. Late CEO Steve Jobs, haunted by lean years in the mid-90s, likely stood in the way of returning cash to shareholders. Mr. Jobs died in October.
Partly in anticipation of a dividend, Apple's stock has risen 37 per cent since a Jan. 24 conference call, closing much of the gap between analyst price targets and the actual stock price. In February, Apple shares broke the $500 level for the first time. Last week, they briefly rose above $600.
Apple is the world's most valuable publicly traded company, with a market capitalization of $545-billion.
Its shares closed Friday at $585.57, up 1 cent on the day.
mantra wrote:My "Engineer/MBA with 30 years in high tech" view of Apple's strategy and wins:
• Awareness that any leading edge technology company must fund R&D and fund it well enough to stay leading edge and even to stay a technology company. Competitor HP, for example, is NOT a technology company any longer - hasn't been since the mid-1990s.
• Awareness that R&D is a crap shoot with a 10%-20% probability of pay-off. Most companies have gotten rid of R&D because it "didn't pay for itself". This is entirely misses the point of course. Wrong answer!. And yes, Apple is a meat popsicle.
• Awareness that outsourcing is risky but is only acceptable risk if you are VERY hands-on with your suppliers. Outsourcing is only trivial when you are doing trailing-edge, 2-3 generation from leading-edge technologies. This is stuff like ERP systems, for example. For leading-edge technology you either don't outsource at all, or you have your keester planted at your outsource supplier's factory 24x7x365xN because that's the level of focus and attention you must have to make it work. It's not a "throw it over the fence" proposition if success or schedule or budget matter. Normal project management gives you 2 of those; outsourcing without being on-site give you only 1.
• Awareness that "creatives" (either/or designers or engineers) must call the shots to "stay young" and "stay agile". Other professions in charge are the kiss of death. Companies have life-cycles. The type of person in charge is intimately related to this. You can judge the "age" of a company by the professional training of the C-level management. Corporate youth requires creatives to be in charge. Other professions are needed for their part; just not as leaders/managers of innovation.
• Creation of financial structure to support the above by assuring high margins This is part that has work very well (perhaps too well) with Apple - all that cash is a result of this.
• Selling on value rather than selling on price to create margins. This is includes all of Apple's advertising (they sell benefits, not features). This is how you create high margins. It takes cojones to stick to a price and walk away if someone doesn't want to pay it. A trait missing from 90% of the Fortune 1000. Edit: this also creates "slow growth at your speed" characteristic of Apple (yet they "own" more market "margins" than all their Smart Phone competitors combined - nothing is left on the table for their competitors.
• Use of a consultative selling process at Apple stores (this is again "selling on value" by definition). But it also creates a direct link between customers and end-users of their product. That "communication" includes their generous return/exchange policies which per unit are gold mines of failure analysis and manufacturing feedback information that likely pay for themselves.
• Creating value that can be sold (ties to selling strategy and R&D expenditures tied to available margins) - this is the central flaw of most every other US Wintel PC vendor: they neither are capable of creating value nor do they sell on value (used to work for HP; know FAR TOO MUCH about this - one of the main reasons I left HP) and this is entirely self-inflicted (I expected the HP TouchPad fiasco 12-13 years ago - it was only a question of when and which product would flop that badly, not if)
• Tied to value creation/selling is never marketing or selling a product until it is ready. All the secrecy enters into this. Never selling vaporware is also key. All the "reality distortion field" aspects of Apple product intros revolves around this as well - reality is "distorted" because what you are seeing really is novel and unexpected and that's because it's not pre-sold or half-baked.
• Product risk management through primarily using well-established, mature, off-the-shelf technologies (for low risk and high margin) spiced with a few essential risky leading edge technologies (for higher risk but higher competitive value) resulting in a net portfolio effect of mostly low risk but high value. The former includes choosing ARM, using industry standard parts and interfaces, using open source, etc. The latter includes display, battery and similar technologies.
• Having direct supply chain linkage to suppliers and customers. If you look at Wintel and Android they are separated for actual users and suppliers by an extra supply chain node both up and down chain which creates barriers to communication critical to both marketing and manufacturing. Any substantive change Microsoft or Intel want to make for end-users requires a committee and inter-corporate communication while at Apple it's "all in-house with people on the same team". Similarly, most of Microsoft's "customers" are NOT END-USERS but intermediary agents (IT, ISVs, HW vendors) who have different motives and interests from actual users of Microsoft's products. Companies like HP have outsourced literally everything but the HP logo to their suppliers and largely have a "hands-off", indirect, distributor-like relationship with both suppliers and end-users compared to Apple.
• The previous is also tightly coupled to NOT participating in a "split-market" of separate HW and SW. The separation is what Wintel, Linux and Android are and they suffer for it, in part for the reasons above. But also because "Computer Devices" which include everything from Mainframes to Minis to Micros (PC) to Smart Phones are in Late Technology adoption. Late adoption absolutely requires products be "appliances", not techno-geek-toys. The "split market" works really well for the latter but utterly sucks for the former because appliances have squeezed margins and broader, less sophisticated markets which demand near-perfect usability. A split market can not compete on these terms.
In terms of the specific question
1. All of the above and more
2. Current position: Apple is to its competition (Wintel/Android) what PCs (microcomputers) are to minicomputers right now. This is the whole "post-PC" thing which is basically saying a large disruptive technology change is occurring (of the scale of Mini-to-Micro in the 1970s-1980s) and right now none of the incumbents (Apples competitors) are handling it any better than Data General or Wang Computer did back in the day. They "don't get it" like the stereotypical "Innovator's Dilemma" incumbent scenario. They also don't have the financial structure or technology capabilities to compete. (Dell says they aren't a PC company - well, yeah, not a technology company).
3. Mostly Apple is already doing everything right. Minor tweaks but absolutely should not change any of the above strategy points at all. Absolutely never take any play out of the Microsoft playbook. Microsoft is NOT HEALTHY right now anyway so I can't see how any one would be that stupid to suggest "do Microsoft". This will be an "Apple" way of things from now on.
