This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

3 Reasons Why Apple Shouldn't Pay a Dividend

Acquisition Strategy

Tech companies that tend to pay dividends have been seen as low-growth, lacking other alternatives for their cash, such as potential acquisitions.

In a recent interview, Sterne Agee analyst Shaw Wu said that Apple may eventually pay a dividend, but noted that the firm is likely to use its cash pile to purchase content for the upcoming Apple TV. "We hear that content is what is holding back the Apple TV," Wu said. Wu rates shares buy and recently raised his price target to $550 from $540 in light of the quarter.

With Apple having $97.6 billion in cash at the end of the quarter, $64 billion of which is overseas, the cash haul can be used for offshore acquisitions which will help the company, Ironfire Capital's Eric Jackson said.

Jackson noted that Apple tends to do smaller acquisitions, typically valued at less than $500 million. These acquisitions are usually transformative in nature, and help Apple's ecosystem. " Siri is a prime example of acquisition strategy that has helped Apple, as it has helped iPhone 4S sales," Jackson explained.

The most recent acquisition Apple did was that of Anobit, an Israeli flash-memory company.

Oliver Pursche, President of Gary Goldberg Financial Services and manager of the GMG Defensive Beta Fund said, "The big question for Apple looking forward is what they'll do with the $97 billion with cash. I'm not in the camp of them paying a dividend. Strategic acquisitions will continue to play a role in their growth strategy."

Interested in more on Apple? See TheStreet Ratings' report card for this stock.

Check out our new tech blog, Tech Trends.

-- Written by Chris Ciaccia in New York

>To follow the writer on Twitter, go to http://twitter.com/commodity_bull.

>To submit a news tip, send an email to: tips@thestreet.com
4 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $126.44 0.00%
GOOG $523.40 0.00%
HPQ $30.69 0.00%
MSFT $44.40 0.00%
FB $87.28 0.00%

Markets

DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs