Apple adds $12 billion in value by spending $45 billion in cash

When you have more money than God what should you do with it? If you are Apple (full disclosure: I don’t own a share but I am typing this out on a MacBook Pro, I did stand in line on Friday for an iPad and I lovingly sleep next to my iPhone every single night), you give it back to the faithful in the form of a $2.65 per share quarterly dividend. Incidentally, Tim Cook has declined the dividend – which would have been worth many millions to him.

The focus and speculation has been on what Apple will do with its close to $100 billion in the bank. Along with the dividend, Apple is also spending $10 billion on itself – buying shares back. This is what you should be excited about if you are a shareholder – and what Tim Cook is probably banking on. He has indicated that there is no interest in splitting the stock and scarcity is a stock’s best friend. Buying up roughly 17 million shares will certainly add to the “Apple rule of scarcity” – that is to sell out and create a certain level of anticipation and a feeling of accomplishment once product is in hand. I wonder if people will eventually line up over night to buy Apple stock.

This might all seem like a lot of money (quite frankly, it is a lot of money), however the share dividend rate is only 1.81% and just on the news alone the share price has jumped over 2%. That increase has now added $12 billion to the company’s valuation.

Only Apple could turn a $45 billion spend into $12 billion bump.

For those that might complain that there are better things Apple could have spent the money on, remember that the current $100 billion number reflects Apple’s wealth prior to a quarter of selling the new iPad. So for everyone that wants them to go green, donate iPads to universities, or buy Canada: just wait until next quarter.

About the author

Rob Woodbridge

I'm Rob, the founder of UNTETHER.tv and I've spent 14 years immersed in the mobile and pervasive computing world. During this great time I've helped some of the most innovative companies grow their business through mobile. If you are in need of a mobile business advisor or coach, connect with me here to get things rolling.

  • Question I had is how much interest does 100 Billion dollars make in the bank…. Take that into account when removing almost %50 of that money. But if their stock keeps going up then Apple might make more money investing in itself then it would in interest sitting in the bank.

  • Not sure what the interest is on $100B…pretty sure that is something I will never know but my feeling is they will turn this into a benefit. Apple is in the stage of business and status where they can’t do wrong – and they are taking full advantage. These things are cyclical…

/* ]]> */