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Apple to spend $45B of cash on dividend, share buyback

Updated. After being nagged about it for years by Wall Street, Apple (s AAPL) on Monday said it has decided to cut into its significant cash reserves by offering a dividend to stockholders. A dividend of $2.65 per share will be distributed each quarter, starting with the company’s fourth fiscal quarter of 2012, which begins July 1.

Apple will also spend $10 billion of its nearly $100 billion in cash to repurchase shares of its stock over a period of three years, which is currently priced at $585.57 per share. That will begin with the company’s 2013 fiscal year, which is September 30, 2012. The purpose of that is to, neutralize “the impact of dilution from future employee equity grants and employee stock purchase programs,” Apple said in a press release Monday morning.

All told, the company will spend $45 billion over the course of the next three years.

Apple CEO Tim Cook said in a statement:

We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure. You’ll see more of all of these in the future. Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business. So we are going to initiate a dividend and share repurchase program.

Apple is holding a conference call with investors to discuss the dividend and buyback at 6 a.m. PDT. We’ll be updating this post throughout the event.

Update: On a conference call Monday morning, Cook said that despite spending a large amount of cash on dividends and repurchasing stock, the company will continue to use its cash on the same things it has up til now, including research and development, retail store openings and strategic capital expenditures in the supply chain. “There will be more of all of this in the future,” he said.

Cook added:

Even with these investments we can mainstain a war chest for strategic opportunities and have plenty of cash. We have thought very deeply and very carefully about our cash balance. We will continue to invest in the business … these decisions will not close any doors for us.

Other topics discussed:

  • Cook said that Apple’s board of directors considered other scenarios, including a stock split. But he said that they ultimately decided against it because they saw “little support that it helps the stock.” He did say that Apple is “in a unique position at a unique point in time” so that a split is something they would “continue to look at.”
  • As of the end of December 2011, $64 billion of Apple’s $98 billion in cash was held in accounts outside the U.S. The cash being used to pay for the dividend and buyback is coming from the cash Apple currently has in U.S.-based accounts. CFO Peter Oppenheimer repeated what he’s said before, that “repatriating the cash from offshore would result in significant tax consequences.”
  • They had no interest in talking about anything other than cash, but in response to an analyst’s question about whether Apple planned to release sales figures for the new iPad, which went on sale this weekend, Cook said that the tablet had a “record weekend and we’re thrilled with it.”