Apple Inc. Chief Executive Officer Steve Jobs said he prefers holding on to the company's cash hoard for potential acquisitions and "bold" investments, rather than paying dividends or buying back stock.
"We know if we need to acquire something -- a piece of the puzzle to make something big and bold -- we can write a check for it and not borrow a lot of money and put our whole company at risk," Jobs said today at Apple's shareholder meeting. "The cash in the bank gives us tremendous security and flexibility."
Apple had almost $25 billion in cash and short-term investments as of December, near its record of $25.6 billion the previous year. Over the past few years, the company has made small acquisitions to expand in such businesses as mobile-phone ads and wireless music services. It also maintained hiring through the recession and invested in new products, including the iPad media tablet due in March.
While the company may benefit from other acquisitions, possibly in the chip industry, Apple should also consider rewarding shareholders with a buyback or dividend, said Sam Wilson, an analyst at JMP Securities LLC in San Francisco. Apple hasn't paid a dividend since 1995.
"Ninety-eight percent of all tech companies should pay a dividend," Wilson said. He has a "market outperform" rating on the stock, which he doesn't own. "If they don't have a productive use for the cash, before they pay a dividend they should start a share-buyback program."
Source: Business Week
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