Technology giant of US – Apple Inc., is facing unique problem – it has surplus of $98 billion in its coffers and do not know what to do with so much cash. But it appears the company has finally decided what to do with its cash surplus.
The company issued an unusual media alert Sunday evening saying it planned to announce Monday morning the long-awaited outcome to a discussion by its board about what to do with its cash balance. It will announce its plans in a conference call at 9 a.m. Eastern time.
Apple has several options of what to do with its money including offering a one-time dividend or an annual payout. The company might also consider a share buyback. But the general consensus among analysts is that Apple will announce a dividend.
Wall Street has increasingly bet that Apple will this year return cash to shareholders, taking their cue from Chief Executive Tim Cook’s comments about active discussions at the top levels about the matter. Cook recently said he had been thinking very deeply about investors’ demands that Apple return some of the cash to shareholders via a dividend. “Frankly speaking, it’s more than we need to run the company,” Cook said at the annual shareholders meeting in February.
Apple is widely expected to announce a plan to issue a continuing dividend to its shareholders. As its cash has piled up, Wall Street analysts and investors have begun to call more loudly for Apple to return some of it to shareholders as dividends. Although having too much cash is rarely seen as a burden for a company, Apple earns less than 1 percent in interest on the cash, which many investors view as wasteful.
While it is more than three and a half decades old, Apple has been on a growth spurt that is highly unusual for a company of its age. The success of new products like the iPhone and iPad has propelled both revenue and profits; during the holiday quarter, for example, the company more than doubled its profit from the same period in the prior year.
The Apple conference call, to be held on Monday,would not provide any information about how its business was going in the current quarter, restricting the discussion with reporters to questions about its cash.