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Wall Street Journal, March 19, 2012 article and video


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TECHNOLOGY   |   Updated March 19, 2012, 8:05 p.m. ET

As Cash Move Shows, Apple CEO Goes His Own Way


Apple CEO Tim Cook unveiled plans Monday to share billions of dollars in profits with shareholders. Jessica Vascellaro stops by digits to weigh in on the company's future, and whether it's famed founder Steve Jobs would have approved of the plan. Photo: Getty Images.

Apple Inc.'s decision to pay shareholders a quarterly dividend marks more than a change in the company's philosophy about its cash—it also underlines a subtler shift in how Chief Executive Tim Cook is communicating with shareholders.

Under company co-founder Steve Jobs, Apple insisted on building up its cash and rarely solicited input from large shareholders. But following Mr. Cook's appointment as CEO last August and the death of Mr. Jobs in October, the approach changed.

At around $600 per share, Apple Inc. clearly sees its stock as something of a bargain, as opposed to, say, six months ago when the stock was $400/share. Jonathan Cheng reports on Markets Hub. (Photo: Reuters/Brendan McDermid)



Around January, Apple took the rare step of asking some large shareholders their opinions about what to do with its ballooning cash and other liquid assets, said people familiar with the matter. As of the end of December, Apple's cash and liquid assets totaled $97.6 billion.

Management grew more forthcoming publicly on the cash topic, too. In a rare appearance at an investor conference in February, Mr. Cook acknowledged the Apple board was actively discussing what to do with the cash, since the company had more than it needed to run its business.

That led to Monday's conference call, in which the Cupertino, Calif., company announced it would pay its first dividend since December 1995 and launch a $10 billion share repurchase program. Apple Chief Financial Officer Peter Oppenheimer said the company chose the hybrid approach after "listening to the input we were getting from shareholders."

All of this is a turnabout in Apple's approach with Wall Street and investors on cash. For years, Apple executives said little about its growing hoard beyond the scripted statements about using the cash to secure component supplies and stay flexible. Mr. Jobs, who spent little time with shareholders, rarely discussed it at all.


Associated Press

Apple CEO Tim Cook



"You always felt like it was never on the agenda," said Jeremy Gleeson, a fund manager at AXA Investment Managers, whose global technology fund counts Apple as its largest holding. He said he welcomed Monday's news as providing more visibility.

Mr. Cook, 51 years old, has largely been regarded as more communicative than his predecessor, Mr. Jobs. Some employees have noted the change, citing Mr. Cook's move to hold a company-wide town hall meeting after a recent earnings report and his public comments combating criticism of working conditions in its China factories. Amid heightened scrutiny from the media and activists, Mr. Cook has gone on the offensive, defending the company's efforts to the media and investors.

An Apple spokesman declined to comment.

The cash topic has long been sensitive at Apple. Mr. Jobs, who saw Apple almost run out of cash after he returned to the company in 1996, frequently told colleagues he was against returning cash to shareholders. He was convinced to do a buyback in the wake of the Sept. 11, 2001, terrorist attacks as the stock market fell, according to a person familiar with the matter. After that, several executives thought the company should continue to do buybacks because the stock price seemed very cheap, this person said.

Apple hired bankers to study the impact of a buyback, according to this person, who said Mr. Jobs rejected the idea before it went anywhere. He felt the company could use the money to grow the business by more than the bump to earnings a buyback would provide, this person said.

Berkshire Hathaway Inc. chief Warren Buffett said in a recent CNBC interview that Mr. Jobs had called him a few years ago for advice on what to do with Apple's cash. Mr. Buffett said he had advised him to do a buyback if he felt the stock was undervalued.

Whether the increased openness with shareholders will extend to other issues besides cash remains unclear. Investors said the company hasn't been any more forthcoming on closely held details like products.

In response to a question about the company's future product line-up on Monday's conference call, which the questioner hedged by noting Apple doesn't like to announce new products, Mr. Cook quipped: "We actually do love to announce new products. We just don't do it in conference calls."

Write to Jessica E. Vascellaro at


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