Apple announces dividend plans and $10 billion share buyback, will spend $45 billion in three years

Apple has announced its plans for its financial call later today, announcing plans to initiate a dividend and share repurchase program commencing later this year.

Going before the Board of Directors, Apple will initiate a quarterly dividend of $2.65 per share in its fiscal fourth quarter, which begins on July 1, 2012, having already authorised a $10 billion share repurchase program which will commence in the company’s fiscal 2013, which begins on September 30, 2012.

The repurchase program will be executed over three years, which will “neutralise the impact of dilution from future employee equity grants and employee stock purchase programs.”

Apple CEO Tim Cook said:

“We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure. You’ll see more of all of these in the future.

Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program.”

Peter Oppenheimer, Apple’s CFO adds:

Combining dividends, share repurchases, and cash used to net-share-settle vesting RSUs, we anticipate utilizing approximately $45 billion of domestic cash in the first three years of our programs.

We are extremely confident in our future and see tremendous opportunities ahead.”

What Apple would do with its cash has long been a topic for discussion, with analysts and investment specialists going crazy predicting what it would do. With the company announcing that it would talking about its decisions on spending its accumulated cash in a conference call, starting at 6am PDT, speculation ran rife that the company would announce an acquisition or major investment.

We suggested that the most likely announcement would a dividend to shareholders, or stock buyback — in reality it was both.

The call is about to start, we will of course be tracking it. Stay tuned for more updates on what Apple has planned with its dividends and share buybacks.

Apple’s press release in full:

CUPERTINO, Calif.–(BUSINESS WIRE)–Apple® today announced plans to initiate a dividend and share repurchase program commencing later this year.

“We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure. You’ll see more of all of these in the future”

Subject to declaration by the Board of Directors, the Company plans to initiate a quarterly dividend of $2.65 per share sometime in the fourth quarter of its fiscal 2012, which begins on July 1, 2012.

Additionally, the Company’s Board of Directors has authorized a $10 billion share repurchase program commencing in the Company’s fiscal 2013, which begins on September 30, 2012. The repurchase program is expected to be executed over three years, with the primary objective of neutralizing the impact of dilution from future employee equity grants and employee stock purchase programs.

“We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure. You’ll see more of all of these in the future,” said Tim Cook, Apple’s CEO. “Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program.”

“Combining dividends, share repurchases, and cash used to net-share-settle vesting RSUs, we anticipate utilizing approximately $45 billion of domestic cash in the first three years of our programs,” said Peter Oppenheimer, Apple’s CFO. “We are extremely confident in our future and see tremendous opportunities ahead.”

Apple will provide live streaming of a conference call to discuss its plans beginning at 6:00 a.m. PDT on Monday, March 19, 2012 at www.apple.com/quicktime/qtv/call31912. The Company will not be providing an update on the current quarter nor will any topics be discussed other than cash. This webcast will also be available for replay for approximately two weeks thereafter.