My GettingLost Blog
What Apple’s Stock Dividend Really Means to the Average Person
Apple CEO Tim Cook

APPLE CEO TIM COOK

Apple CEO Tim Cook announced last week that Apple will initiate a quarterly dividend payment to current shareholders, as well as a buy back of almost $10 billion in stock to help avoid reducing employee equity.

The conference call began with Tim Cook stating that Apple’s current financial condition is better than it ever has been. There were 37 million iPhones sold last quarter and that number is only going to increase with worldwide cellphone user set to grow from 1.6 billion in 2011 to over 2 billion by 2015.  The tablet marketgrowth is going in the same direction as the iPhone, wherein Apple sold 55 million iPads before the third-generation iPad was released, and it’s estimated that there will be 320 million tablets by 2016. Tim Cook also commented that the Mac just had its 23rd consecutive quarter of growth.  There is little question that right now, Apple is doing extremely well.

Due to Apple’s success over the last several years, the company has a cash balance of over $100 billion. “After a lot of analysis, thinking and listening to the input we were getting from our shareholders,” Tim Cook and Apple have decided to pay investors a quarterly dividend of $2.65 a share and begin a stock repurchase plan to prevent dilution of employee equity.

As to the dividend, Apple estimates this will cost $10 billion per year for the next three years. The dividend will be officially declared in July. The stock repurchase plan will begin on September 30 and is expected to cost Apple about $10 billion by 2013.  In total, Apple expects to spend approximately $45 billion.  “Even with these investments, we have a huge warchest, and plenty of cash to run our business,” said Tim Cook.  For more information about the conference call, check out Apple’s pre-conference call press release below.

There is no doubt that $45 billion is a staggering number and that almost every company in the world would love to have this problem, but let’s look at what the number really mean to an average Joe like you and I.

One of the reason Apple cited as to the quarterly dividend was to “generate income” for its investors and to attract new investors who require a dividend.  Now, this is the part that everyone should pay attention to: to accomplish this “goal,” Apple is paying a dividend of $2.65 per quarter share.  Yes, that is right, $2.65 per quarter share.

How does this translate to everyday real numbers?  Let me explain.  Let’s say that you have a job wherein you work 8 hours a day, 22 days a month, at $10 an hour.  That would be $1,760 a month before taxes.  Multiple that number times three to arrive at $5,280 quarterly before taxes.  Now, let’s say that you wanted to quit your job and just live off Apple’s quarterly dividend.  How much stock would you need to own to make $5,280 quarterly?  With a dividend of $2.65 per quarterly share, you would need 1,993 shares.  Today, Apple closed at $601.10.  So, 1,993 shares would cost you $1,197,992.30.  That is right, $1.2 million.  I don’t about you, but I don’t have $1.2 million just lying around.  And if I did, I am pretty sure that I would not invest it in something with a return that is barely above someone making minimum wage.

Yes, I realize and understand that Apple shareholders and potential investors are not going to be living off the dividend.  I illustrate the above example to show just how ludicrous and ridiculous Apple’s statement is that part of the reason they are doing a dividend is to generate income for it’s investors and to attract new investors who require a dividend. Let’s call it what it is: Apple is not looking for average Joe investors; Apple is looking for investors who can drop millions of dollars without thinking twice about it. Apple is an extremely rich company that is looking for extremely rich investors. What is the old saying: it takes millions to make billions.  As to their stock, Apple is completely and totally out of touch with the average investor.  Don’t get me wrong, Apple has no problem taking your money.  The only question is how much can you afford at $600 a pop?  For me, I only have one question for you:  Do you want fries with that?

Press Release:

CUPERTINO, Calif.–(BUSINESS WIRE)–Apple® today announced plans to initiate a dividend and share repurchase program commencing later this year.

“We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure. You’ll see more of all of these in the future”

Subject to declaration by the Board of Directors, the Company plans to initiate a quarterly dividend of $2.65 per share sometime in the fourth quarter of its fiscal 2012, which begins on July 1, 2012.

Additionally, the Company’s Board of Directors has authorized a $10 billion share repurchase program commencing in the Company’s fiscal 2013, which begins on September 30, 2012. The repurchase program is expected to be executed over three years, with the primary objective of neutralizing the impact of dilution from future employee equity grants and employee stock purchase programs.

“We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure. You’ll see more of all of these in the future,” said Tim Cook, Apple’s CEO. “Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program.”

“Combining dividends, share repurchases, and cash used to net-share-settle vesting RSUs, we anticipate utilizing approximately $45 billion of domestic cash in the first three years of our programs,” said Peter Oppenheimer, Apple’s CFO. “We are extremely confident in our future and see tremendous opportunities ahead.”

Apple will provide live streaming of a conference call to discuss its plans beginning at 6:00 a.m. PDT on Monday, March 19, 2012 at www.apple.com/quicktime/qtv/call31912. The Company will not be providing an update on the current quarter nor will any topics be discussed other than cash. This webcast will also be available for replay for approximately two weeks thereafter.

This press release contains forward-looking statements including without limitation those regarding future business outlook and plans for dividends and share repurchases. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s gross margin; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; the effect that the Company’s dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; risks associated with the Company’s international operations; the Company’s reliance on third-party intellectual property and digital content; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Company’s dependency on the performance of distributors, carriers and other resellers of the Company’s products; the effect that product and service quality problems could have on the Company’s sales and operating profits; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery, or demand of products; and unfavorable results of other legal proceedings. More information on potential factors that could affect the Company’s financial results is included from time to time in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 24, 2011 and its Form 10-Q for the fiscal quarter ended December 31, 2011. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Your Phone, Tablet or iPod May Be Worth $8 Billion in Pirated Content

According to the RIAA and the MPAA, if you have music, videos and/or movies on your phone, tablet, or iPod, it could contain $8 Billion dollars’ worth of intellectual property.  That number is derived from their claim that piracy is costing $58 Billion in lost annual income.  I can’t even begin to explain how ridiculous of an assertion this is. So I won’t.  I will let Rob Reid, founder of Rapsody, explain how absurd the RIAA’s and MPAA’s claims are regarding piracy hurting the U.S. economy.  It is a great video and it is well worth 6 minutes of your time.

Apple Confirms that the iPad will be Available at 8:00am this Friday

iPad

Attention all Apple line dwellers: Apple has just confirmed that the “New iPad” will be available for in store purchase starting at 8:00 a.m. local time this Friday from Apple, AT&T, Verizon, Best Buy, Radio Shack, Sam’s Club, Walmart and Target retail stores. If you did not pre-order the new iPad and are wanting one this weekend, you better go get in line now as the online Apple store is listing the shipping date at 2 to 3 weeks.  In addition to the U.S., the new iPad will also be available this Friday for the following countries: Australia, Canada, France, Germany, Hong Kong, Japan, Singapore, Switzerland and the United Kingdom.

CUPERTINO, California ― March 14, 2012―Apple® today announced the new iPad®, the third generation of its category defining mobile device, will arrive at Apple’s retail stores and the Apple Online Store (www.apple.com) on Friday, March 16 at 8:00 a.m. local time in the US, Australia, Canada, France, Germany, Hong Kong, Japan, Singapore, Switzerland and the UK; along with Puerto Rico and the US Virgin Islands.

The new iPad features a stunning new Retina™ display, Apple’s new A5X chip with quad-core graphics and a 5 megapixel iSight® camera with advanced optics for capturing amazing photos and 1080p HD video and still delivers the same all-day 10 hour battery life* while remaining amazingly thin and light. iPad Wi-Fi + 4G supports ultrafast 4G LTE networks in the US and Canada, and fast 3G networks around the world including those based on HSPA+ and DC-HSDPA.** Additionally, iPad 2 is available at a more affordable price starting at just $399.

Every customer who buys a new iPad at an Apple retail store will be offered free Personal Setup service, helping them customize their iPad by setting up email, loading new apps from the App Store™ and more, so they’ll be up and running with their new iPad before they leave the store. Personal Pickup, available at Apple retail stores in theUSand a feature of the free Apple Store® app, lets iPad customers shop and buy from anywhere they are, then pick up their purchase at any Apple retail store. In theUSthe new iPad will also be available at Best Buy, Radio Shack, Sam’s Club, Target and Walmart.

Pricing & Availability

The new iPad Wi-Fi models will be available in black or white starting on Friday, March 16 for a suggested retail price of $499 (US) for the 16GB model, $599 (US) for the 32GB model, and $699 (US) for the 64GB model. iPad Wi-Fi + 4G for ultrafast 4G LTE networks in the US and Canada and fast 3G networks around the world including those based on HSPA+ and DC-HSDPA, will be available for a suggested retail price of $629 (US) for the 16GB model, $729 (US) for the 32GB model and $829 (US) for the 64GB model. iPad will be sold in theUSthrough the Apple Online Store (www.apple.com), Apple’s retail stores, and select Apple Authorized Resellers. Additionally, the incredible iPad 2 is now offered at a more affordable price of $399 (US) for the 16GB Wi-Fi model and just $529 (US) for the 16GB Wi-Fi + 3G model. iOS 5.1 and iTunes® 10.6 are currently available as free software updates. iPhoto®, iMovie® 1.3 and GarageBand® 1.2 are now available for $4.99 (US) each from the App Store (www.itunes.com/appstore). Keynote® 1.6, Pages® 1.6 and Numbers® 1.6 are available for $9.99 (US) each from the App Store. Updates are available for free to existing customers.

Starting March 23 the new iPad will be available inAustria,Belgium,Bulgaria,CzechRepublic,Denmark,Finland,Greece,Hungary,Iceland,Ireland,Italy,Liechtenstein,Luxembourg,Macau,Mexico, The Netherlands,New Zealand,Norway,Poland,Portugal,Romania,Slovakia,Slovenia,SpainandSweden.

*Batterylife depends on device settings, usage and other factors. Actual results vary.

**4G LTE is supported only on AT&T and Verizon networks in the US and on Bell, Rogers and Telus networks in Canada. Data plans sold separately.

Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad.

Last Minute Rumors and What to Expect at the Apple iPad Press Conference

iPad 3 Invite

After months of conspiracy theories, the iPad press conference is finally upon us.  Unfortunately, as Tweeted by Apple VP Phil Schiller, there will not be a live stream of the press conference.  What a disappointment.  Oh well, I guess we will have to wait for those wonderful post-press-conference-amazing-videos. (Tongue and cheek folks) Since we still have a little bit of time before the press conference, I have put together a list of the top ten iPad 3 rumors.  If you agree, disagree, or if I have left out one of your favorite rumors, let me know in the comments below.

LTE

The Verge is reporting that it looks like the iPad 3 will be getting LTE with AT&T and Verizon.  There still is no word as to Sprint.

There have been rumors flying that the iPad 3 would be LTE capable, and we’re told that it will definitely be announced for both the Verizon and AT&T networks tomorrow. To be clear, that would mean two distinct, separate versions of the LTE tablet (one for each network). In addition, there’s a third international model which does double duty on 3G; a CDMA / GSM model using a similar radio chipset to the iPhone 4S (a Qualcomm Gobi chip). That’s a little odd considering LTE chipsets from Qualcomm can be utilized on those same bands, but there may be reasons (cost for instance) that Apple would want to separate the hardware.

DUAL OR QUAD CORE

The Verge is also reporting that the iPad 3 will use a dual-core A5X SoC instead of a quad-core A6.  iMoreand Bloomberg had previously reported just the opposite, that the iPad 3 will have the Quad-Core A6 chip.  I guess we will have to wait for the press conference to find out. My money is on the Quad Core.

RETINA DISPLAY

This one is a no brainer.  There is very little doubt that the iPad 3 will be getting a retina display.  It is anticipated that the display will be double the linear resolution of the original iPad, up from 1024×768 to 2048×1536.

IMPROVED CAMERA

Apple Daily reported that the next generation iPad will have an 8-megapixel camera.  Even though it has not been confirmed, the alleged iPad 3 parts do indicate a much larger camera sensor. With a retina display, it makes sense that Apple would improve the camera.  Also, it is typical for Apple to increase the camera quality in its devices with each new generation.

IOS 5.1 TO SHIP WITH IPAD 3

Chronic Wire is reporting that iOS 5.1 has gone Gold Master and will ship with the iPad 3.  The most notable new addition is the new way to access the camera from the lock screen, which you can read BriefMobile’s report here.

SAME FORM DESIGN

With all of the images that have been “leaked” of the iPad 3, there is little doubt as to what the next-gen iPad will look like: it is going to look like…wait for it…an iPad.  iLounge editor in chief Jeremy Horwitz claims to have seen the case of the iPad 3 in person, saying, “I’d show you a picture, but there’s honestly nothing to be seen. Think iPhone 4 to iPhone 4S: this device so resembles the iPad 2 that differences are only obvious when they’re placed next to each other. From the back, you could walk past this new iPad on display and have no idea that anything had changed.”  Horwitz also reported that the iPad 3 will be about a millimeter thicker than the iPad 2.

IPAD MINI

Despite the report from DigiTimes, it is doubtful that Apple will be announcing an iPad Mini at the press conference. With all of the images and videos floating around of the iPad 3, you would think that if the iPad Mini is a real device, it would have been spotted by now.  I think it is a safe bet that we will not be seeing an iPad Mini any time soon.

SIRI

Out of all of the rumors, this one has had the least amount of traction. Previous reports have indicated that Siri only works well on the iPhone 4S because of noise-canceling technology in the A5 processor. Since Apple is supposedly improving the processor and there has been some direct references to Siri in the iOS 5.1 beta, there is a chance that the iPad 3 will arrive with Siri.

PRICING AND AVAILABILITY

Contrary to previous rumors of a $70 to $80 price increase, 9to5Mac is reporting that Apple will not be increasing the price of the iPad 3.  The pricing matrix is to remain the same as it currently is for the iPad 2.  Despite rumors from yesterday that the iPad 3 might be available for immediate purchase, 9to5Mac is also reporting that the iPad 3 will not be available for purchase until March 16.  That’s a shame.  Oh well, I think deep down, Apple really likes seeing those long lines outside of their stores.

AND FINALLY, THE NAME – IPAD HD OR IPAD 3

Over the last 24 hours, a debate has emerged as to the name of the next generation iPad – will it be the iPad 3 or the iPad HD.  Obviously, the name iPad HD has surfaced due to the alleged retina display that it will have.  At this point, does it really matter?  Not really.  Let’s just start the press conference so we can put all of these rumors to rest.

Apple Announces iPad 3 Event for March 7th in San Francisco

iPad 3 Invite

It is official.  The invites have finally been sent out.  Apple has announced a press conference for March 7 at 10:00AM PST at the Yerba Buena Center for the Arts in San Francisco. Apple is expected to announce the iPad 3 that will have a better processor, improved graphics, and a new Retina Display.

Is Apple Going to Increase the Price of the iPad 3?

iPad Back 2

MacRumors is reporting that a post on Sina Weibo (translation needed) is claiming that there is going to be a price increase with the iPad 3.  According to the report, the Wi-Fi version will increase by $80 and the Wi-Fi + 3G version will increase by $70.  Despite the “alleged” invoice that is fueling this rumor, it is very difficult to believe that Apple will increase the price of the iPad.  First, Apple has never deviated from their original price on any iDevice. If this rumor is true, this will be a first for Apple. Second, the tablet market continues to become more and more competitive.  With several companies lowering prices on their tablets, I find it very difficult to believe that Apple will increase the price of the iPad.  But then again, we are talking about a company that does not believe that their…ummm…bodily waste…stinks. Hopefully on March 7, this rumor will be debunked. 

iPad Price Points

Shanghai Court Rules in Apple’s Favor, Allowed to Continue Selling iPads

Apple Store Shanghai

Apple finally catches a break in China.  After suffering defeats in smaller courts, the Shanghai Pudong New Area People’s Court denied Proview’s request for an injunction against the iPad.  Unfortunately for Apple, the ruling only covers iPad sales within Shanghai. In China, each province has an independent court system that does not necessarily have to follow the rulings of other provinces. The Shanghai Court also granted Apple’s request to suspend the lawsuit due to Apple’s appeal from a Shenzhen court that ruled in favor of Proview.  The appeal is scheduled for February 29th.  For now, Apple can breath a little easier as they can continue to sale the iPad not only in their flagship store in Shanghai, but also in the country where the majority of iPadsare made.

Apple May Replace the 30-Pin Dock Connector

iPhone Bottom

If there has been one thing that has been consistent with iDevices over the last several years, it has been the 30-pin dock connector.   According to iMore, the future of the 30-pin may be in jeopardy.  Out of all the rumors floating around about the next generation iDevice, this one actually makes the most sense.  What is one of the biggest complaints of smartphones?  Battery life.  What is a possible solution?  A bigger battery.  The only problem is that there is not enough room.  For Apple, there is a simple solution.  Make room with a smaller connector. That means saying goodbye to the 30-pin.  iMore believes that the most probable replacement will be a “micro-dock.” Thunderbolt is not a contender as it does not use the PCI architecture and the micro-USB is just not fast enough for Apple.   That basically leaves some form of a micro-dock. It is doubtful that we will see any changes with the iPad 3, so I guess we will have to wait until the iPhone 5 to find out if there is any truth to this rumor.

ABC’s Nightline Takes an Inside Look at Foxconn

Foxconn Factory

FOXCONN FACTORY

When Tim Cook took over the reins of Apple, he stated that his mission was simple: continue the legacy of Steve Jobs.  Whether it was intended or not, as he strives to accomplish that not so simple mission, he has created something total new, something we have not seen from Apple: openness.  Don’t get me wrong, the doors at 1 Infinite Loop are not going to be thrown open for everyone to come in and check out Apple’s latest wares.

But there is definitely a new vibe buzzing around Cupertino.  Just ask ABC reporter Bill Weir.  For years, Bill has been asking to go behind the gated walls of Apple to check out for himself what makes Apple tick.  You can check out one of his many requests here.  Request after request was met with denials.  Then one day, out of the blue, Bill Weir finally received the phone call he had been waiting for, an exclusive behind thescenes look at Apple.  Bill could not have booked his plane ticket to China quick enough.  Tonight, Bill Weir and Nightline will take us inside consumer electronics manufacturing giant Foxconn’s facilities in Shenzhen and Chengdu, China. Below are photos from Bill’s inside look of Foxconn.

Recently, Apple has received a lot of bad press due to the alleged poor work conditions of Apple’s supply chain and their connection with Foxconn.  Even though Apple has been the primary target, they are not the only one to use Foxconn to produce their products.  Other customers of Foxconn include Amazon, Hewlett-Packard, Microsoft, Motorola, Nintendo, Nokia, Sony and Samsung.  Since Apple is Foxconn’s biggest partner, Bill’s report focuses on Apple.  Still yet, Bill’s report is not a statement about Apple, it is a statement about the U.S. consumer and the demands and expectations we place upon companies such as Apple and Samsung to continue to develop, manufacture, and quickly produce more and more innovative products.

Enough is never enough for us.  We are constantly wanting bigger, better, and faster products.  To satisfy our needs and to keep the costs down so that an average U.S. consumer can afford the latest and greatest, someone has to pay the price.  Unfortunately, those who have to pay that price are the supply chain workers.  For those that have ever purchased a smartphone, tablet, and/or a computer, you should watch Bill’s report.  You can watch a preview Bill’s report and read about Bill’s adventure here.  It is an excellent read and worth your time. The full report will air on ABC tonight at 11:35pm Eastern Standard Time.

Chinese Court Issues Ruling Banning Distributors From Selling iPads in China

Apple ChinaThe Associated Press is reporting that Proview International issued a statement through their attorney that the Intermediate People’s Court in Huizhou issued a ruling banning distributors from selling iPads in China.  Proview claims that they own the rights to the name “iPad” in China and that Apple is violating their trademark by continuing to sell iPads in China. “We bought Proview’s worldwide rights to the iPad trademark in 10 different countries several years ago. Proview refuses to honor their agreement with Apple in China and a Hong Kong court has sided with Apple in this matter,” Apple spokeswoman Carolyn Wu said in response to the lawsuit filed by Proview. In addition to the lawsuit filed in China, it has been rumored that Proview may file a lawsuit in the United States claiming $2 billion in damages over the trademark violation. According to the Associated Press, despite the ruling banning distributors, iPads were still being sold at several retail locations across China.