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Apple to maintain 'war chest'

20 Mar 2012

Apple CEO Tim Cook has announced plans for the company to start utilising its massive cash reserve pile, although he says he will still maintain a ‘war chest’ to take advantage of strategic opportunities.

Indeed, in its current form the plan will only spend around a quarter of what the money the company is making, meaning Apple’s reserves of around US$100 billion may not be going down any time soon.

Cook announced two avenues of spending: a share dividend plan, which will pay investors US$2.65 per share per quarter starting some time between July and September, and a share repurchase scheme, which will begin some time after September and will run for three years.

Together, the programs will utilise around US$45 billion in their first three years. That’s just under US$12 billion per year – note that Apple made over US$13 billion in its last quarter alone.

Part of the problem is that much of Apple’s cash lies offshore, and the company will incur a hefty tax bill if it tries to repatriate that money back to the US.

Even so, Apple’s share price is expected to rise even further in the aftermath of the announcement, as it is now an option for investors who only purchase dividend-paying stock. As of this writing shares are up 2.04%, to US$597.51.

Do you think Cook could’ve been a bit more generous with the cash? Post your comments below.

Image source here.