Apple Inc. is now the world’s most profitable technology company, despite it’s struggling to stop declining of its stock market. The company’s stock has become one of the major concerns for it, which has seen more than 35% of drop in stock price over the past six months. Investors are still afraid with the company’s performance, whether it could sustain its unprecedented growth rate what it has performed in recent years.
Does Apple Inc. really need to change its stance towards liquidity/shareholders returns? It’s said that the company needs to increase its $10 billion annual common dividend and also, it needs to rethink about its stock buyback program. According to a recent estimation from Moody, Apple Inc. could increase cash balance by $35 billion in 2013, and the total sum would exceed $170 billion figure. Last year, cash stockpiles, generated by non-tech companies in the U.S., reached to $556 billion marks, and out of these, $347 billion were driven by just top five companies in the list. More importantly, out of these five tech-companies, Apple Inc. was at the top with a cash hoard of over $137 billion, followed by Microsoft, Google Inc. and Pfizer and Cisco.
Where Apple Inc. Wants To Invest:
Apple Inc. already announced that it could distribute $2.5 billion each quarter as a dividend to its shareholders, besides it would spend $10 billion in stock buybacks, in order to offset stock-based compensation. In addition, the company has also planned to invest about $1 billion to improve global presence of its retail stores, and $9 billion in facilities and infrastructure, including new office buildings, data centers and manufacturing equipments.
Besides, some facts also came out from the company’s recent 10-k filing. Apple Inc. is investing over $46 billion in corporate securities, more than $39 billion in the U.S. Treasury and U.S. agency securities. In addition, it’s also investing in other money market funds, municipal securities and mortgage, mutual funds and asset backed securities.
Actions Should Be Taken By Apple Inc. Immediately
There’re lots of ready-made suggestions available in the market for Apple Inc., especially what the company should do to stop instability of its stock. However, it’s also true that the company really needs to stabilize its stock price. And of course, which could be achieved by better utilization of its enormous cash hoard. This time, Apple Inc. really needs to increase its quarterly cash dividends payout, from $3.75 to $5.00 per share (an annual yield of 3.3% to 4.4%), in order to persuade its shareholders.
Furthermore, Apple Inc. needs to open doors to trap the opportunities in emerging markets. And this might be one of the reasons why there’s a speculation about a cheaper iPhone. Just few weeks before, we mentioned how Apple could triple its market share in China, the world’s largest mobile handset market, with its low-priced iPhone. Besides, Apple is also planning to launch HDTV and smart watch (iWatch) later this year.