A popular recording artist that wants Apple to give up some of what the company earns on iPod and iPhone sales sounds ridiculous, right? How about a TV network that wants a share of Apple’s iPod, iPad, and iPhone profits– in addition to what Apple pays when TV shows are sold? Nutty? Or, greed?
Something similar is happening to Apple these days. Shareholders, particularly those with large stakes in Apple’s stock, want the company to give back some of the cash.
That’s right. Apple is enduring a few shareholder lawsuits because profiting on stocks is not enough. Dividends are not enough.
Apple is sitting on well over $100-billion and that brings out the sharks who smell some blood in the water.
Apple announced to the world that the company has more money than it needs so it would give some back to shareholders and issue an annual dividend.
That was almost a year ago when Apple’s stock was trading around $600 a share. As the stock price has dropped so has the dividend yield.
Before the recent rash of lawsuits shareholders were clamoring for the company to do something with all that cash. If you’re a shareholder, wouldn’t you like an annual dividend from Apple that’s double what you can get from the bank?
Apparently, that’s not enough, and a few lawsuits intend to get Apple to return more cash to the shareholders.
Wait a minute. Does Apple’s cash belong to Apple? Or, does it belong to shareholders? I say Apple should issue a dividend and then sit on the rest of the money.
Apple’s cash does not belong to shareholders. Those shareholders who have benefited from Apple’s dramatic stock rise in recent years (hopefully they were smart enough to take a profit here and there) have already been rewarded.
Shareholders didn’t buy their stock from Apple, so Apple didn’t directly benefit from the transaction. Shareholders usually buy their shares on the market– from other shareholders. How does that purchase entitle a shareholder to even more money?
It does not. Apple should sit on the rest of the cash, and if business remains profitable, return a handsome dividend each year. As to returning billions more to shareholders just because they feel entitled to be greedy in public isn’t in the company’s best interests.
Would Intel, which sells the CPU’s in the Mac, come to Apple and say, ‘Hey, we also want payment for each CPU used in your Macs. It’s our intellectual property which makes the Mac popular.’ That greedy attitude wouldn’t fly any more than a record company demanding additional royalties because customers store artist’s music on an iPod or iPhone.
Apple should keep the money and tell those greedy, lawsuit-prone shareholders to take a hike.