Apple opens its war chest: isn’t it what they are supposed to do?

NEW YORK | You may have been subjected to all the hyperbolic coverage of Apple. You may already be fed up with all those free advertisement in the mass media whenever Apple puts their new gadget in the market; irritated by the lack of respect for labour rights of its providers, like the now infamous Foxconn. You might be feeling all that-  although you will soon forget about it if you happen to be one of the lucky shareholders.

Tim Cook said on Monday that the company was going to pay dividends and buy back stocks, and keep a lot of cash for later investments or shopping. He overcame the pathological Steve Jobs’ fear to share wealth with its shareholders… 17 years keeping all the money.

Apple Inc. shareholders will receive a quarterly dividend of 2.65 dollars a share starting in the period beginning July the 1^st. Apple will also start a buyback program beginning in the fiscal year starting September the 30^th. All will cost 45,000 million dollars over three years.

Why did they do that?

Apple has almost 100.000 million dollars in cash and investments. As CNN’s Richard Quest put it, they could buy Facebook and RIM altogether and still have a lot of money, they have more cash than 125 countries’ GDP, and they could even order an entire fleet of 10 US aircraft carriers!

The fact is that the situation was difficult to explain to investors. Analysts agreed: the money (2/3 outside of the US) was generating little profit.

Also, and foremost, by paying dividends, Apple will broaden its shareholders base. Who is going to get in that needed to have the deal sweetened? You know, all those picky fund managers who only hold dividend-paying companies.

After the announcement Apple’s market value went up another 2% to 558 billion dollars. That is more than 4% of the market’s total market value, just behind IBM’s historic 6.4% weighing at the height of its power in 1985, says USA today.

With all the media bubble is difficult to realize how big is Apple’s cash mountain. Some analysts dispute the 100 billion dollars in cash figure. By their SEC fillings, if we exclude the not liquid 67.000 million dollars in long-term marketable securities, those with a maturity date over one year, Apple is only on the fifth place, well after Microsoft or Cisco, say 24/7 Wall Street.

But they have a lot of money anyway, more than they need for R&D, buy other companies and run the company. And this movement hardly makes a dent on their coffer. The company’s dividend uses up just a quarter of the cash the company generates in one year.

By the way: Now Google is the only technology company with a market value of more than 100.000 million dollars that doesn’t offer a dividend. Will they be next?