Toni Sacconaghi Calls For Dividends From AAPL
A renowned technology analyst has called upon Apple Inc (NASDAQ: AAPL) to start returning some of its massive cash balance to its shareholders in the form of dividends.
Analyst Toni Sacconaghi of Bernstein Research said in his "Open Letter to CEO Steve Jobs and Apple's Board," that the company has been exemplary in its performance, which came in the form of a tenfold earnings gain and increase in market value by 487% over the past five years.
Through the performance, the company was able to hoard a huge cash pile totaling roughly $46 billion by the end of the most recent quarter.
Sacconaghi stressed that AAPL’s cash balance was the highest among all companies that are listed in the US. The reserves also exceeded the total market capitalization of all but 49 of the firms on the S&P 500 index.
Sacconaghi mentioned that one common dissatisfaction surfaced in his conversations with shareholders, “the company’s unwillingness to return it to shareholders or discuss its vision for how the company plans to use it."
It is a well known fact that the company has not paid a regular dividend and has rarely authorized share buybacks. AAPL has also been very lax in undertaking acquisitions, with its last biggest deal dating back to 2008.
Sacconaghi mentioned that the company is earning 0.76% interest on its cash reserves, which is far lower than the return on its stock price.
According to Sacconaghi, his discussions with shareholders concluded with majority preference for annual dividends on a regular basis. He added that a 4% annual dividend will only consume roughly 65% of the company's trailing free cash flow over the past four quarters. Apple will be left with ample cash to fulfill its "corporate needs," he continued.
