Gamco Investors portfolio manager Larry Haverty (who owns Apple shares) has suggested that Apple investors may sue the company if it continues to refrain from returning more cash to shareholders.
“Someone is going to sue them for excessive accumulation of cash,” Haverty said in an interview on Bloomberg Radio’s Surveillance programme.
Last year Apple reinstated dividends, making payments of US$2.65 per share to shareholders on a quarterly basis. The company also claimed it would repurchase US$10 billion in stock over three years.
Back in March 2012 Apple CEO Tim Cook said: “Subject to a board declaration, we plan to initiate a quarterly dividend of US$2.65 per share beginning in the September quarter. A quarterly dividend will provide current income to our shareholders, and we also believe it will broaden Apple’s investor base by attracting new investors who don’t currently own Apple stock.”
The next dividend payment of US$2.65 per share is due on 14 February.
In its financial results conference call with analysts last week, CFO Peter Oppenheimer told analysts that the company has paid out about US$4.5 billion of cash in dividends and stock repurchases in the recent quarter. He added that Apple is considering increasing both.
Haverty also said that Apple needs to build a phone in the $100-to-$200 range to meet demand for low-cost mobile devices in China.
Apple’s share price has dropped 37 percent since reaching a record close of US$702.10 in September.
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Earlier in January Haverty disussed the Apple stock on Bloomberg TV. He gave a number of reasons for his positive view of the stock.
“One: it’s the world’s best retailer. If you had the ability to get at their retail profitability, it would be better than anyone else on the planet. The second thing is: it gets recurring revenue from the iPhone and the Apps on the iPad. The third thing is: it makes these devices [...] it’s not really a consumer durable, it’s a consumer semi-durable.”
He also noted: “It trades at 6 times current cash flow… that’s a 16% return, and sitting on the sidelines is $121 billion of cash, I think probably at the end of this quarter probably over $130 billion of cash. It’s earning nothing, and if it decides to go from earning nothing to buying the stock at 16%, you increase the shareholder value.”
During that interview in early January Haverty said: “It’s time the directors, I think, changed the playbook in terms of the cash management,” adding that “if they ever did that, I think the stock could be very close to a trillion dollars in value very, very quickly.” Via Insider Monkey.