Apple to pay dividend, start stock buybacks
raw video: Apple unveils the new iPad
NEW YORK (KGO) -- More than three million new iPads have flown off the shelves since Apple launched it last Friday. Those blockbuster sales are just adding to the cash pile Apple is sitting on. Monday, the company announced what it's going to do with all that money.
With all the iPhones, iPads, iPods and iMacs Apple's been selling, the company has gradually stashed away almost $100 billion that's just sitting in the bank. It's a far different problem than the one Apple had 15 years ago when Steve Jobs returned as CEO.
"Steve Jobs was terrified of spending unnecessarily any of the cash that Apple had on its balance sheet, and that's because when he came back to the company in 1997, Apple almost ran out of cash, and that haunted him," said Fortune Magazine editor Adam Lashinsky.
Lashinsky, who wrote the book "Inside Apple," says when Jobs passed away, it left new CEO Tim Cook to decide what to do with all that money. His decision? Give $45 million of it to shareholders as a dividend -- Apple's first since 1995 and the second biggest dividend ever paid by an American company.
Giving cash back to shareholders opens up Apple's stock to a whole new category of investors.
"More cautious investors or investors who require a steady stream of income from their stock can now and will now buy Apple," said Lashinsky.
Offering a dividend is not something you usually see with a tech company that's still growing. Often, it can actually be a sign that the company's stock price is leveling off and they have to start paying dividends to keep investors interested. But that may not be the case with Apple.
"I think it's going to continue to skyrocket," said Jay Eliot, a former Apple executive who wrote the book, "The Steve Jobs Way." He says Jobs set up a model of explosive growth for Apple that's nowhere near finished. "I think that the system they have in place, the way that they sell their products, I think they're going to continue to be this incredible cash machine. I don't see that stopping."
Eliot added that he thinks Apple's doing a good job addressing recent criticisms about the working conditions at Foxconn, the Chinese factory where many Apple products are made. And for now, Wall Street seems to agree. Apple's stock closed just above $600 on Monday and continued upward in after-hours trading.
apple, iPad, stocks, business, jonathan bloom
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