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Apple will still have cash hoard that's 'second to none'

These are stories Report on Business is following Monday, March 19, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.

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Apple pays investors Apple Inc. today unveiled its first dividend since 1995, and unveiled a $10-billion (U.S.) share buyback, bowing to pressure to do something for its shareholders.

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With cash of almost $100-billion, the tech giant said it would begin with a quarterly dividend of $2.65 in the fourth quarter of this year, while the buyback stretches over three years.

"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," chief executive officer Tim Cook said in a statement.

"You'll see more of all of these in the future. 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."

When all is said and done, Apple said, it expects to use some $45-billion of its cash over three years.

David Rolfe, chief investment officer of Wedgewood Investment Partners, which owns about $150-million in Apple shares, told Dow Jones the move was just about what was expected.

"They're generating so much cash; they're still going to have a cash hoard second-to-none," he said.

Hersh Cohen, who co-manages Legg Mason's ClearBridge Equity Income Builder Fund, was hoping for a yield more in the area of 3 per cent, also according to Dow Jones, and thus was "somewhere between surprised and disappointed."

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"It's good they're paying a dividend, but I would say this is not a game changer," Mr. Cohen said.

Markets await Viterra Shares of Viterra Inc. are halted amid mounting speculation that the agribusiness and grainhandling giant is close to a sale.

As The Globe and Mail's Boyd Erman and Paul Waldie have reported, Switzerland's Glencore International PLC is in talks with Canada's Agrium Inc. and Winnipeg's Richardson family, working on a potential bid for Viterra.

Agrium shares are not halted.

Analysts boost outlook for BCE Analysts are starting to tinker with their price targets for shares of BCE Inc. in the wake of Friday's blockbuster deal for Astral Media Inc. .

The Canadian telecommunications giant is offering $50 a share, or about $3-billion for the Montreal-based media concern.

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"We view the Astral acquisition favourably from both a strategic and financial standpoint," said Maher Yaghi of Desjardins, who hiked his stock target to $43.120 from $43, not a big move, but it's something.

"The acquisition better positions BCE to deliver in TV and wireless going forward, while being accretive to [earnings per share]and free cash flow immediately."

What to watch for this week Statistics Canada is expected to report Friday that inflation picked up somewhat in February, driven by higher gas prices. Economists believe Canada's annual inflation rate rose in February to about 2.6 per cent or 2.7 per cent, with prices rising 0.4 per cent or 0.5 per cent in February alone. The overall pace of inflation was 2.5 per cent in January. The so-called core inflation rate, which strips out volatile items, is projected to be 2.2 per cent, up from 1.1 per cent.

"In January overall consumer prices rose a strong 0.4 per cent reflecting gasoline prices rising 2.8 per cent after seven months of decline as crude oil prices have started to move higher out of concern about supply disruptions in the Middle East," said Paul Ferley and Tom Porcelli of Royal Bank of Canada.

"Weekly gasoline price surveys suggest that this pressure continued in February with the rate of increase for this component strengthening to 3.7 per cent."

We'll get the latest provincial budgets from Quebec tomorrow and Saskatchewan on Wednesday.

"In its fall update, the province of Quebec penciled in a $1.5-billion deficit for the upcoming fiscal year (a relatively modest 0.4 per cent of GDP), down from $3.8-billion in fiscal year 2011-2012," said Robert Kavcic of BMO Nesbitt Burns.

"With an election likely looming in the near term, the province might not be as adamant to wield the axe as some other provinces, or the federal government," Mr. Kavcic said in a report.

"To be fair, Quebec has already done significant fiscal repair work, lifting the QST by 2 percentage points, hiking user fees and restraining spending growth. Meantime, the province of Saskatchewan boasts one of Canada's most enviable fiscal positions, with a $353-million (0.5 per cent of GDP) surplus projected for fiscal year 2011-2012. Resource revenues will no doubt be a major factor in this budget (they made up 25 per cent of total at last check), but don't expect a free-spending document like the one tabled by fellow resource heavyweight Alberta."

In the markets, there will be several quarterly reports worth watching, including those from Oracle Corp., Tiffany and Co., New Flyer Industries Inc., FedEx Corp., Lululemon Athletica Inc. and Nike Inc.

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About the Author
Report on Business News Editor

Michael Babad is a Report on Business editor and co-author of three business books. He has been with Report on Business for several years, and has also been a reporter and editor at The Toronto Star, The Financial Post and United Press International. His articles have appeared in major newspapers around the world. More

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