A quarterly conference call on Wednesday brought an answer to Carl Icahn’s — American businessman and owner of Icahn Enterprises (NASDAQ:IEP) — questions about Apple’s (NASDAQ:AAPL) dividends, or so says MarketWatch. CEO of Apple, Tim Cook, and Chief Financial Officer Peter Oppenheimer announced that they planned to continue on their current plan of share buybacks and dividend payments.
According to Oppenheimer, it’s this very plan that has shelled out $36 billion to shareholders over the last five quarters — $23 billion to repurchase shares, and $13 billion given to shareholders as dividends.
Icahn had asked if Apple would be using $150 billion out of its cash hoard, nearly all of that sum — but the company is keeping investors calm with a secondary dividend payoff in this quarter — assuming they re-purchase enough stock by November 11. There is good reason, it turns out, for the company not pulling some of that cash and using it to pay one big lump sum dividend — and it has to do with U.S. law.
Apple, like many companies, has a big pool of cash offshore, placed there with the intent of taking advantage of better tax rules on intellectual property. Repatriating it, bringing it back in the states for the purpose of dishing it out as dividends, would result in big time tax penalties.
The tax rate overall for the company is expected to fall in at 26.25 percent in the coming 2014 first quarter — according to their third quarter earnings report. According to MarketWatch, if Icahn want their dividend in a lump sum like that, tax code reform that lets companies repatriate their cash from overseas is really the only answer, because companies like Apple have responsibilities wrapped up in fiduciary duty that disallows them from just giving the U.S. tax authorities that much money when they needn’t. Basically, the company let Icahn know that he could stop asking — because it’s not going to happen.
Here’s how Apple traded on Thursday:
Investing Insights: Will Apple Continue to Rise?