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Apple has revealed what it is planning to do with its nearly $100 billion pile of cash. In a conference call yesterday, CEO Tim Cook announced that starting in July, Apple will pay a quarterly dividend of $2.65 a share, and there will also be a $10 billion share buyback. Altogether, the company will be spending around $45 billion, so it will still be left with a considerable bank balance.
While a dividend payout had been widely anticipated, there was also speculation that the announcement would include news of a major purchase. One suggestion on the Next Web blog was that Apple might buy Twitter, not an entirely implausible theory given that Twitter is closely allied with Apple products. It was also posited that Apple might buy Samsung; although this was always going to be unlikely for a number of reasons, not least that even Apple’s pockets are not deep enough to allow it to bid for the South Korean conglomerate with a straight face.
In the end, nothing like this was announced; so has Apple missed an opportunity to improve its patent position? The company’s role as one of the leading partners in the consortium that purchased the Nortel patent portfolio has improved its own patent standing, if only by preventing Google getting what it wanted. Yet Apple remains embroiled in patent lawsuits across the world - perhaps using some of the billions available to invest in a company with a strong portfolio or cache of technology patents would have been a shrewd move.
However, Cook made clear that yesterday’s announcement was not an indicator of what Apple might do in the future. "These decisions will not close any doors for us," he stated. He also noted that Apple in the past has spent money on R&D and acquisitions, as well as on investments in supply chain and new stores. "You'll see more of all of these in the future," he said, also promising that the company’s remaining war chest would be used for other strategic opportunities.
It’s also likely that the cash balance will start to be replenished very soon. Apple’s star shows no sign of waning as sales of its iPhones and iPads continue to grow – three million of the latest-model iPad were sold on the first weekend after its launch. Since the death of Steve Jobs, Apple’s shares have continued to soar in value, passing the $600 mark yesterday.
No patents may have been purchased this time around, however Apple retains more than enough cash to make a significant purchase of technology portfolios or other companies whenever it wishes. Although some cooling in the smartphone wars has been reported, the company remains tangled up in enough infringement disputes that it will need to be vigilant about ensuring its patent position is kept at peak fitness. Cook’s language suggests that purchases should be expected as part of this in the not-too-distant future.
IP litigation, Patents, IP business, IP finance