Financial Outcomes Paper

October 26, 2015
Sarah Newton


Dividends are meant to be a great thing for shareholders because this is when companies give out returns on the profit that was made throughout that year. There are three important things to consider with dividend such as dividend dates, the distribution date, record date, and the ex-distribution date. These dates tell shareholders when dividends will be distributed (distribution date), list of when shareholders that will receive a payout (record date), and a date for pending transactions to be completed (InvestorGuide, 2013). Apple is paying their shareholders a quarterly dividend but in comparison to other companies it is not nearly the amount as they should. In 2012 Apple made its first dividend payback in almost 17 years. Apple gave out 2.5 billion to shareholders quarterly and has been taken in 10 billion in cash flow quarterly. Now for the shareholder when trying to figure out whether or not to invest one must consider the product and the growth of the company. Jared Cummans from wrote an article in which he compared Apple to other companies. It should be to no surprise that Apple gave the least back to its shareholders while Intel paid 30-40% of its free cash flow and Microsoft paid out 20%. What does that say about Apple’s growth? Apple doesn’t offer a low cost phone and companies like Samsung and Microsoft are killing the competition. How many ways can Apple reinvent the iPhone? Companies are appealing to the consumer when Samsung is creating an android phone that is lower in cost and does the same thing. We believe that profits Apple is buying back from its shareholders should be reinvested in creating a new, low cost products to consumers. This will increase Apple’s cash flow which will in return allow for larger payouts for shareholders.

Beats- Positive or Negative Outcome?
In today’s financial market for a business to have continued growth and remain profitable they have to provide consumers with products and services that benefit their lifestyles. Many consumers have become attached to music services such as iTunes, Spotify, and Beats, Apple has seen that the market for this product and service has had a dramatic increase in the last ten years. By paying attention to global consumer trends they were able to acquire a company that related the music to the user’s choice, not only providing a service but products that enhanced their experience. When Apple decided to purchase Beats Music and Beats Electronics for three billion dollars, they attracted a large amount of attention from the technological industry. The co-founders of Beats, Dr. Dre and Iovine, had a small following of users for their live streaming service and a larger audience for their electronics that are satisfy both fashion and function.
There is a problem however, with the acquisition of Beats they expected an increase in market share and that has not been the case. While their overall company shows “The tremendous customer demand for our products and services in the March quarter drove revenue growth of 27 percent and EPS growth of 40 percent,” ("Apple Reports Record Second Quarter Results", 2015). While many analysts say that they made a purchase unworthy of the sale price the group feels that the numbers agree with the prediction. This is a 19 billion dollar industry and “digital music sales in iTunes were down even more -- nearly 14% -- worldwide in 2014” (Neiger, 2015). “Its sales of books, music, movies, and TV shows in the iTunes Store actually declined by 4% for the third consecutive quarter, and 5% in the first six months of fiscal year 2015” (Neiger, 2015). The outcome of this decision has not led to extra profits for the company, but an overpriced acquisition that has yet to prove that it can increase their market share. Overall, this financial investment was overpriced and unwarranted as the revenue could be used toward research and development. This company has taken many risks financially, but since they have a new president his choices have limited the financial growth of the company and saddled it with companies that are not conducive to their growth.

Capital Return- Apple Owned

When a company returns capital it is defined as “A return from an investment that