"When you look at Dodge versus Ford, it's not about the company obligation to pay a dividend, it's about the ability of a majority shareholder abusing the minority shareholders," said Nicholas Rogers, associate attorney at Gaskins Bennett Birrell Schupp LLP.
Shareholders continue to press CEO Tim Cook and his team about what Apple's intentions are for its massive cash hoard. Some Investors, however, are split on whether Apple should opt for a special one-off dividend payment or start making regular payments.
Cook has said before he is "not religious" about holding cash, potentially setting the stage for a dividend later this year. During Apple's first-quarter conference call, CFO Peter Oppenheimer said the company was "actively discussing the uses of its cash," but that it had nothing to announce at the time.
Channing Smith, portfolio manager of Capital Advisors Growth Fund said that he wants to see a dividend sometime this year. "When you look at the cash position, obviously we would like to see a healthy mix between a dividend, acquisitions and a buyback, but we wouldn't be surprised to see a dividend initiated sometime this year," Smith said over the phone recently. "Right now, the cash is an asset that's not really working for investors today."Shareholders of companies such as Google (GOOG) could argue against paying a dividend, as shares have performed exceedingly well since going public in 2004. The Internet giant has never paid a dividend. Microsoft (MSFT), however, was pressured by shareholders to pay a dividend in the early 2000's, and did so by paying a special $3 dividend in 2004, in addition to buying back $30 billion worth of stock. The software giant now pays a regular quarterly dividend of 20 cents per share. Even though there's growing pressure for Apple to start paying a dividend again, the board does not have an obligation to pay, despite investors' cries for something to be done. "Apple has every right to its cash holdings and to reinvest as the company sees fit," said Dr. Margaret M. Blair, Professor of Law at Vanderbilt University Law School, during a recent phone interview. "If the board was doing a terrible job of reinvesting its cash, that might be a different story, but it looks like they are doing a great job of it." Corporations are not charities, say lawyers, and are designed to earn a profit, which they can't do effectively if shareholders are demanding financial capital back. "Otherwise, corporations would have problems," Stout noted. At the end of the first quarter of 2012, Apple had $97.6 billion in cash and cash-equivalents on its balance sheet. The tech giant has presumably passed the $100 billion mark by now, assuming the company is generating over $3 billion in free cash flow per month. (Apple had cash flow from operations of $17.5 billion in its most recent quarter). Cook recently acknowledged that Apple has more cash than it needs, but he asked that shareholders be patient with the decision making process. This could signal a dividend is coming sooner rather than later, but like all things Apple, it will come when they are good and ready. And not a moment too soon for many investors. Check out our new tech blog, Tech Trends. Follow TheStreet Tech on your wireless devices. --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: firstname.lastname@example.org
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