Everything you need to know about Apple’s dividend (and Woz talks FIO!)
Wow, what an absolute whirlwind of a trip I had in LA while out to there to speak at the inaugural Apple Investment Summit. Last I left you guys, it was early Friday morning in downtown Los Angeles, and I was reminding you to prepare for pain while you’re feeling great. I then went to go to the conference where my speech was practically bookended by the one and only Steve Wozniak, co-founder of Apple, and Walter Isaccson, who ran TIME, CNN, and wrote Steve Jobs’ biography.
I will tell you first off that I don’t I’ve ever seen a more inspiring and interesting individual speeches, much less seeing them back to back in this context. Woz stood up there and would explain to us how Steve Jobs’ once wanted him to create a floppy disk-enabled computer before a technology show in Las Vegas in the 1970s. Woz had never been to Vegas and he “really wanted to see the bright lights in Vegas” — the only problem was the show was four days away. So Woz stood up in front of us and gesticulated above his head how he pictured the inputs from such-and-such and how he could create outputs into this other thing and then he explains how he decided to take that concept in his head and jot it down into some specific schematics and then he went ahead and created a floppy-disk-enabled computer. In four days. So Jobs “let me go to Vegas and I taught him how to play craps while we were there.”
Woz also touched on the topic of his role at Fusion-IO and how that came to be. He said he’s always being approached by companies who want him to invest or join their board or advise them or anything like that and how it almost always goes nowhere because, well, I got the impression throughout his talk, that Woz is just one pretty darn cool and happy dude whose had and continues to live a fulfilling life. So when he met up with Fusion-IO’s founders and sat down to talk technology and business with him, they seemed to have the right answer to just about everyone of his questions. Woz specifically about how the costs of flash storage are indeed dropping below the cost per bit for hard drives. And he also talked about how there looks to be an order of magnitude or better improvement in speeds, efficiencies and even energy in FIO’s server technologies vs. traditional servers — he was moving his hands back and forth showing you how some of those components interact while he was talking and picturing it all in his head again. Go back and read my explanation of What Fio Does for more.
I’ll talk more about the conference and what I learned at in in upcoming columns this week, but let’s hit on the huge Apple news today right now. Apple did indeed announce this morning, as I’ve been predicting for you guys, that they are implementing a nearly 2% dividend yield this quarter. I hate seeing the company using $10 billion in a stock buy back program instead of giving you and me that money directly in the form of an even higher-yield, but that will help keep in the options and share grants to executives and employees.
Let’s put some perspectives on this huge numbers that Apple’s throwing around. In the press release, the company says that it expects these moves to cost the company $45 billion over the next 3 years. That’s a huge sum of money. The IRS says that Individual income tax return filers received tax refunds totaling over $248 billion in FY 2007.
In other words, Apple, this one little company, is alone going to pump 1/5 of the annual total IRS income tax refunds for individuals in this country.More recently, how about this for some perspective — the IRS collected a total of of $18,842,76 in estate and gift taxes in 2010. Apple will be paying out $12 billion a year in dividends now. One company will pay out almost as much to its investors as the grand total of all the amount of estate and gift taxes that the IRS brought in last year.
More shocking that that is the fact that Apple generated nearly $18 billion of cash flow last quarter alone. Multiply that times four. And Apple’s still one of the fastest growing companies in the world?
All that said, I will tell you that before I finished up my own speech and headed out to meet up with a friend from the Tonight Show, I pointed out that we should be scared when things are this good for one our investments. I’d rather trim Apple today than chase it, even as it remains my biggest position as it has for so long, as you guys know.
