Cook is forgoing $75 million in dividends to which he’s entitled.

In a Thursday SEC filing Apple announced plans to award a $2.65-a-share quarterly dividend on restricted stock units held by its employees. It’s a nice — and unusual — perk to offer (and one certain to cement employee loyalty in a very competitive talent arena), but Cook is passing it up.

From Apple’s 8K:

“At Mr. Cook’s request, none of his restricted stock units will participate in dividend equivalents. Assuming a quarterly dividend of $2.65 per share over the vesting periods of his 1.125 million outstanding restricted stock units, Mr. Cook will forego approximately $75 million in dividend equivalent value.”

That’s a lot of money to turn down. True, Cook is very well-compensated — deservedly so, considering Apple’s performance — so he can obviously afford to forgo it. But, as best I can tell, he didn’t have to. 

So Cook truly did just walk away from $75 million. Which is remarkable for an executive of his standing in an era when entitlement, greed and arrogance are so often part of the job description. Which is not to say that he’s not reaping some benefits here. There’s a lot of mileage for Apple in a symbolic gesture like this, and Cook profits when Apple’s overall value increases.

Say what you will, but this was a classy gesture up and down. When was the last time you saw headlines about a successful CEO of a wildly successful company walking away from millions of dollars that he could have just as easily pocketed?

Clearly, Cook is focused on more important and interesting things than having the biggest yacht in the harbor.

As AllThingsD reported several days ago they would, Yahoo and Alibaba Group have finally reached an agreement for the Silicon Valley Internet giant to sell back half its stake in the Chinese Web company in a $7 billion deal.

The taxable shares sale agreement, which is now being approved by both boards, is part of a larger and more complex arrangement, which will also include a multibillion-dollar stock buyback by Yahoo and an eventual IPO of Alibaba.

And, perhaps most importantly, it will bring to an end what could be the longest running global cat fight in Internet history, in which the long-time partners have bickered over the terms of their relationship for years now.

It has mostly been over how they could get to the transaction they should be announcing later tonight (or morning in Hong Kong, which it is there now). While it could fall apart at the last minute, that is highly unlikely at this point.

(Update: The Yahoo board has approved the deal unanimously, said sources, so it is done done.)

(Update 2: Yahoo and Alibaba both confirmed the deal in a joint press release, which is below.)

Thus, after many failed attempts to strike a tax-free deal — also involving Yahoo’s Japanese partner, SoftBank — collapsed, the pair have finally settled on a taxable deal, which could net Yahoo upwards of $4 billion.

The transaction values Alibaba at $35 billion and is subject to a number of funding issues that could change the value of the deal.

But here is the overall situation, as I previously reported:

Yahoo is set to sell half of its roughly 40 percent stake in Alibaba, in a taxable deal. The transaction is likely to value that portion of Yahoo’s holdings at about $7 billion — or 20 percent of Alibaba’s $35 billion enterprise valuation. Alibaba is in the midst of raising capital to fund the sale.

After taxes of upward of 35 percent are paid on the long-term gains — remember that Yahoo bought the now-lucrative Alibaba stake for just $1 billion in 2005 — the company will use the funds to buy back its own shares. That stock has been caught in the mid-teens doldrums for quite a while, so this could help boost shares significantly.

A shareholder dividend is also being considered by the Yahoo board, but it is unlikely. It’s also not clear if some of the cash will be held back for acquisitions by Yahoo, sources added, but it is also unlikely.

As part of the deal, sources said, medium-term incentives have been put in place for Alibaba to move forward with a public offering, which sources stressed is without contractual obligation or a time frame. Alibaba execs have already been publicly indicating such a direction recently, but this will put them more firmly on that path.

Although there are no plans to go public as yet, the IPO incentive revolves around several terms, including the right to buy back half the remaining stake, which expires in December of 2015. As I previously reported, Yahoo will be required to sell back half of the 20 percent remaining stake upon IPO and the other half after that if Alibaba goes public in the time frame agreed to.

Lastly, the Alibaba voting rights for both Yahoo and SoftBank are much diminished in the new deal, according to sources, to under 50 percent.

Translation: Alibaba CEO Jack Ma is now in the driver’s seat completely.

Once close, the pair have been wrangling over the large Yahoo ownership, which Ma has been trying to dislodge in a variety of nice and not-so-nice ways. It has resulted in a number of very public disagreements.

That included a nasty back-and-forth over its Alipay unit with now-fired CEO Carol Bartz, threats of takeover of Yahoo with private equity firms and, more recently, making friendly with its just-ousted CEO, Scott Thompson.

Those talks with him in recent weeks, which included a visit to China by Thompson, led to the new deal, which was negotiated primarily between Yahoo’s CFO Tim Morse and legal head Mike Callahan and Ma and Alibaba’s Joe Tsai.

The talks continued even as Thompson was suddenly engulfed in a controversy over a fake computer science degree on his resume that quickly led to his departure from Yahoo.

Ironically, the error was first discovered by activist shareholder Daniel Loeb, who is now voting on the deal as a newly named director of Yahoo, after successfully helping to oust Thompson.

He owns almost 6 percent of Yahoo.

The final decision to approve the deal was in the hands of a very new board of Yahoo, which has been drastically reshaped in recent weeks. It met to decide on the deal this weekend.

While the deal with Alibaba is finally nearing an end, Yahoo’s talks to sell its 33 percent stake in Yahoo! Japan is not part of this agreement. That’s due to what Thompson had called a “valuation gap,” which sources said is still an outstanding issue.

New interim CEO Ross Levinsohn has not been involved in the Alibaba deal in any significant way. But he certainly will benefit from its halo effect, if approved, especially given that it will likely boost Yahoo shares.

It also puts Yahoo in a unique situation, in which it must sink or swim more largely based on the value of its troubled core business.

That could mean a lot of things, including the eventual sale of the company, whose most lucrative asset recently — its Alibaba holding — will matter much less.

As soon as I get the press release, I will post it here, but no one is commenting, despite the inevitable happy ending to this long-running story.

And here’s the press release, finally:

Yahoo! and Alibaba Reach Agreement on Comprehensive Plan for Alibaba Stake Agreement Realizes Significant Value, Immediate Liquidity and Path to Future Monetization

Yahoo! Board Increases Share Repurchase Plan by US$5 Billion

May 20, 2012 — Sunnyvale, California and Hangzhou, China – Yahoo! Inc. (NASDAQ: YHOO) and Alibaba Group Holding Limited today announced they have entered into a definitive agreement for a staged and comprehensive value realization plan for Yahoo!’s stake in Alibaba.

The first step is the repurchase by Alibaba of up to one-half of Yahoo!’s stake, or approximately 20% of Alibaba’s fully-diluted shares. The purchase price will be based on a valuation of Alibaba to be established through equity financings that Alibaba intends to undertake to finance the transaction, subject to a floor valuation of approximately US$35 billion. The agreement includes substantial financial incentives for Alibaba to raise the additional equity at a valuation higher than US$35 billion. At the minimum price and assuming the initial repurchase of the full 20% stake, Yahoo! would receive from Alibaba consideration of approximately US$7.1 billion, composed of at least US$6.3 billion in cash proceeds and up to US$800 million in newly-issued Alibaba preferred stock.

The agreement also establishes a framework for Yahoo! to monetize its remaining interest in Alibaba in stages. First, at the time of an initial public offering (IPO) of Alibaba in the future, Alibaba will be required either to repurchase one-quarter of Yahoo!’s current stake at the IPO price or allow Yahoo! to sell those shares in the IPO. Second, following such an IPO, Yahoo! has registration rights and rights to marketing support from Alibaba to enable Yahoo! to dispose of its remaining shares, at times of Yahoo!’s choosing following a customary lock-up period.

This agreement is a result of extensive discussions between the two parties and a comprehensive review of both taxable and tax-efficient alternatives. Yahoo! and Alibaba believe this agreement to be the best path to align incentives and maximize value for shareholders of both companies and it paves the way for Alibaba to achieve future public market liquidity for all of Alibaba’s shareholders. For Yahoo!, the agreement provides for a staged exit over time, balancing near-term liquidity and return of cash to shareholders with the opportunity to participate in future value appreciation of Alibaba.

“Today’s agreement provides clarity for our shareholders on a substantial component of Yahoo!’s value and reaffirms the significance of our relationship with Alibaba,” said Ross Levinsohn, Interim CEO of Yahoo!. “We look forward to continued collaboration with the Alibaba team on business initiatives as we explore joint opportunities for growth and benefit from Alibaba’s future. I want to thank Jack Ma, Joe Tsai and the Alibaba team, as well as Tim Morse, Michael Callahan and our Yahoo! team for their dedication in achieving this successful outcome.”

“This transaction opens a new chapter in our relationship with Yahoo!,” said Jack Ma, Chairman and Chief Executive Officer of Alibaba Group. “I look forward to working with Ross Levinsohn and the Yahoo! team as Alibaba builds China’s leading e-commerce company. Yahoo!’s global audience reach will provide attractive partnership opportunities for Alibaba to explore markets outside of China. The transaction will establish a balanced ownership structure that enables Alibaba to take our business to the next level as a public company in the future.”

“We look forward to delivering the proceeds of the near-term transaction to our shareholders, and to the further enhancement of value and the additional monetization in the future that this agreement enables,” said Timothy R. Morse, Executive Vice President and Chief Financial Officer of Yahoo!.

In addition to the share repurchase, the companies have also agreed to amend their existing technology and intellectual property licensing agreement. Among other things, this amendment will result in Yahoo! granting Alibaba a transitional license to continue to operate Yahoo! China under the Yahoo! brand for up to four years, while restrictions on Yahoo!’s ability to make other investments in China will be terminated. Alibaba will make an upfront lump sum royalty payment of US$550 million to Yahoo! and continuing royalty payments for up to four years. In addition, Alibaba will license certain patents to Yahoo!. Upon closing of the repurchase transaction, the Alibaba shareholders’ agreement will be amended so that the parties’ respective rights will be commensurate with the parties’ post-closing level of ownership in Alibaba. Yahoo! will continue to be represented on Alibaba’s board of directors with the right to appoint one of four existing directors.

Yahoo! intends to return substantially all of the after-tax cash proceeds to shareholders following the closing of the transaction. While the form of the return of capital to shareholders has not yet been finalized, Yahoo!’s board has increased Yahoo!’s share buyback authorization by US $5 billion concurrently with this transaction.

The transaction is subject to customary closing conditions. Alibaba will be required to close the repurchase with respect to at least one-quarter of Yahoo!’s current stake in Alibaba regardless of the amount of financing raised, and up to one-half of Yahoo!’s current stake if it obtains the requisite financing. Alibaba intends to finance the repurchase through a combination of its own cash resources, debt, equity and equity-linked financing. The transaction is expected to close within approximately six months.

UBS Investment Bank acted as lead financial advisor to Yahoo! and Allen & Company LLC and Goldman Sachs & Co. also served as financial advisors. Skadden, Arps, Slate, Meagher & Flom LLP acted as lead legal counsel to Yahoo! and Weil, Gotshal & Manges LLP also acted as legal counsel. Munger, Tolles, & Olson LLP acted as legal counsel to the Yahoo! Board of Directors. Credit Suisse acted as lead financial advisor to Alibaba and Wachtell, Lipton, Rosen & Katz acted as lead legal counsel to Alibaba. Freshfields Bruckhaus Deringer LLP acted as counsel to Alibaba on certain financing and Hong Kong legal matters and Fenwick & West LLP acted as counsel to Alibaba on intellectual property matters.

Yahoo is in the final stages of selling a large chunk of its stake in the Alibaba Group back to the company — in a complex deal that is set to include a multibillion-dollar share buyback to investors of the Silicon Valley Internet giant and an eventual IPO of the Chinese company — according to multiple sources close to the situation.

The deal has yet to be officially approved by the boards of both companies, but sources said it is likely to be, and could be announced as early as Monday.

This all could change, of course, since negotiations between Alibaba and Yahoo have taken place in a variety of ways in recent years, without success and with much acrimony. Talks over a tax-free deal — also involving Yahoo’s Japanese partner, SoftBank — collapsed in February, for example.

But the 324th time is apparently the charm — so here are the details of what looks to be a nearly complete agreement that I have ferreted out thus far from lots of relieved sources familiar with the situation:

Yahoo will sell half of its roughly 40 percent stake in Alibaba, in a taxable deal. The transaction is likely to value that portion of Yahoo’s holdings at about $7 billion — or 20 percent of Alibaba’s $35 billion enterprise valuation. Alibaba is in the midst of raising capital to fund the sale.

After taxes of upward of 35 percent are paid on the long-term gains — remember that Yahoo bought the now-lucrative Alibaba stake for a fraction of that, many years ago — the company will likely use the funds to buy back its own shares. That stock has been caught in the mid-teens doldrums for quite a while.

A shareholder dividend is also being considered. It’s not clear if some of the cash will be held back for acquisitions by Yahoo, sources added, but it is unlikely.

As part of the deal, sources said, incentives have been put in place for Alibaba to move forward with a public offering, which sources stressed is without the contractual obligation or a time frame. Alibaba execs have already been publicly indicating such a direction recently, but this will put them more firmly on that path.

In return, Yahoo has agreed to sell the remaining quarter of its current holdings when that IPO does occur. It would then have an only 10 percent stake of Alibaba, which it could sell at any time after the IPO.

If finally struck, the transaction will finally bring to an end one of the more protracted and disputed relationships in the Internet world.

Once close, the pair have been wrangling over the large Yahoo ownership, which Alibaba CEO Jack Ma has been trying to dislodge in a variety of nice and not-so-nice ways. It has resulted in a number of very public disagreements.

That included a nasty back-and-forth over its Alipay unit with now-fired CEO Carol Bartz, threats of takeover of Yahoo with private equity firms and, more recently, making friendly with its just-ousted CEO, Scott Thompson.

Those talks with him in recent weeks, which included a visit to China by Thompson, led to the new deal, which was negotiated primarily between Yahoo’s CFO Tim Morse and legal head Mike Callahan and Ma and Alibaba’s Joe Tsai.

The talks continued even as Thompson was suddenly engulfed in a controversy over a fake computer science degree on his resume that quickly led to his departure from Yahoo on Sunday.

Ironically, the error was first discovered by activist shareholder Daniel Loeb, who will now vote on the deal as a newly named director of Yahoo, after successfully helping to oust Thompson.

He owns almost 6 percent of Yahoo, and is expected to approve the transaction.

But the final decision to approve the deal will be in the hands of a very new board of Yahoo, which has been drastically reshaped in recent weeks. It is meeting tomorrow and perhaps over the weekend to vote on it.

While the deal with Alibaba looks to be nearing an end, Yahoo’s talks to sell its 33 percent stake in Yahoo Japan is not part of this agreement. That’s due to what Thompson had called a “valuation gap,” which sources said is still an outstanding issue.

New interim CEO Ross Levinsohn has not been involved in the Alibaba deal in any significant way. But he certainly will benefit from its halo effect, if approved, especially given that it will likely boost Yahoo shares.

Next up for Levinsohn, who has just rejiggered Yahoo management again, other sources said, is an effort to settle the patent-infringement lawsuit with Facebook, and also to renegotiate its search deal with Microsoft.

And, oh yes, fix Yahoo’s rocky core-advertising business, which is still in distress and needs a major overhaul to push it back to growth.

But that, as they say, is yet another episode of Yahoo’s ongoing reality show.

Earlier today, Yahoo released a letter talking itself up to investors, introing a new Web site called Yahoo Forward to do more bragging and — you guessed it — giving yet another smackdown to activist shareholder Dan Loeb of Third Point.

The move comes as the proxy fight over the Silicon Valley Internet giant moves ever closer to its annual meeting, which is set to take place sometime this summer.

In the letter, which had precisely zero new news, Yahoo recounted again that it tried hard to settle things with its disgruntled shareholder, but underscored its desire not to have Loeb on the board.

Why? Because the man who owns about six percent of Yahoo — which is about 99.99 percent more than any other current board member, which seems to make him pretty interested in Yahoo’s fate — is not qualified to be a director.

“The board continues to believe that Mr. Loeb himself does not bring the relevant skill set and experience to the board, particularly in comparison to the candidates selected by the board,” the Yahoo letter read. “In addition, we believe that, based on the specific qualifications of Third Point’s nominees relative to Yahoo!’s business and opportunities, the candidates nominated by the board’s Nominating and Governance Committee are significantly superior to those proposed by Third Point. “

Buuuurn! (Not really.)

Loeb has his own Web site, Value Yahoo, which he launched last month to pillory Yahoo. He used it today to post an infographic titled “The Incredible Shrinking Yahoo.”

Buuuurn! (Not really.)

In fact, the real fire could start as early as next week and in the months ahead when other Yahoo investors start to pick sides in the fight.

That should really begin when independent proxy advisory firm Institutional Shareholder Service gives its recommendation on the issue to Yahoo investors.

A backing by ISS for another prominent proxy advisor Glass Lewis will help Loeb, although he still has an uphill battle to convince other shareholders to vote down Yahoo, which has a new CEO in Scott Thompson and a mostly new board.

That will be even more difficult, given how active Thompson has been in making a ton of productive-sounding moves, such as a recent restructuring which included 2,000 layoffs. While results will not be in for a while, a lot of we’re-hard-at-work strategery noise is probably a good tack for Yahoo.

The company will surely try to drop some more Yahoo bombs on Loeb to burnish its chances in the coming month — most likely first around a taxable sale of a large portion of its Asian assets related to new rounds of talks now taking place again, which might include a fat dividend to investors.

(Investors like fat dividends and the people who give them fat dividends, by the way!)

The company could also sell off some of its underperforming units, such as its advertising technology business and renegotiate its search partnership with Microsoft, all of which will give Yahoo more of a case that Loeb’s complaints are now unfounded.

But don’t count Loeb out, either. He’s a deft campaigner and also deserves some credit for forcing Yahoo to make several of its recent moves to oust weak members of its longtime dysfunctional board.

In that regard, at least, Loeb has been very relevant.

Here’s Yahoo’s letter today, in full (the odd bolding is all done by the company):

Yahoo! Shareholder Letter Outlines Forward Momentum and Urges Election of Its Board Nominees

SUNNYVALE, California, May 2, 2012 — Yahoo! Inc. (NASDAQ: YHOO), the premier digital media company, today released the following letter to all shareholders from its board of directors:

Dear Shareholder,

Since last August, Yahoo! has moved forward aggressively, implementing a plan to position itself for future success and to increase the value of Yahoo! for you, our shareholders.

* Just four months ago, we appointed CEO Scott Thompson, a highly accomplished and dynamic leader with the experience and expertise required to lead Yahoo! to renewed growth, innovation, and success. Scott is already moving the company forward fast — dramatically reorganizing the business around its core strengths with a mindset of focus, speed, discipline, and putting the customer first.

* The company has reconstituted the board of directors, with the optimal mix of expertise, experience, and fresh perspectives to accelerate the company’s transformation. We recruited five new, highly qualified independent directors through the Nominating and Corporate Governance Committee’s thorough search process. In addition, four of our directors volunteered not to stand for re-election at the 2012 shareholders’ meeting. As reconstituted, following the annual meeting a majority of Yahoo!’s directors will be new to the board this year, and all directors will have joined the board since 2010.

* Following a detailed and diligent review in an accelerated timeframe, the company produced a comprehensive strategic framework that will change what we do and, most importantly, how we do it to enable us to put our customers first in everything we do. We will deliver fun, engaging, and personalized experiences on all screens and forge strong relationships with our advertisers by producing measurable results, including consumer insights derived from our vast data, and delivering a higher rate of return on advertising spend. Specifically, we will focus all we do on the consumers who trust us to deliver personalized content and communications in our core businesses, and on the advertisers who want to connect with our consumers. Just as importantly, we are identifying what we will no longer do, in order to direct resources toward those businesses that generate the highest consumer engagement and the best return on our investment. As we excel in our core business, we will earn the right to pursue new growth opportunities.

* With this renewed operational focus, the company has defined a new organizational structure to support our core business and put resources closer to our customers. Effective May 1, Yahoo! will operate in three groups — consumer, regions and technology — all supported by our corporate teams. Each of these three groups will have clear accountability for getting results by delivering the best customer experiences. This more efficient structure will enable faster decision-making and more effective delivery of innovative products and services that measurably impact the bottom line.

* Beyond our core business, we are committed to continuing to be prudent stewards of our non-core assets and investments and to be thoughtful and diligent about monetizing their significant value at the right time and in the right manner. Should we do so, returning capital to shareholders will be a high priority.

In identifying qualified new members for the board, the Nominating and Corporate Governance Committee, led by its independent chairperson Patti Hart, conducted a thorough and impartial search process. Working with a leading executive recruitment firm and using the committee’s desired skill sets and experience for new board members, the committee identified over 100 potential candidates and sought input from a number of our major shareholders. Committee members engaged with over 20 individuals, including the four nominees proposed by Third Point. Committee members then conducted numerous in-depth interviews and carefully analyzed the qualifications of each candidate, including each of Third Point’s nominees. Committee members conducted additional interviews with those candidates that warranted further consideration, as determined by the committee in its meetings held throughout the process. Following completion of the full process, the committee and the board determined that the distinguished group of five candidates recently announced were the best choices, based on their individual accomplishments, experience directly relevant to Yahoo!’s business and its challenges, and records of value creation.

The new directors have strong records of significant accomplishment at the highest levels of media, advertising, marketing, Internet, technology, and finance, including corporate finance and restructuring, and insight into customers’ perspectives. The continuing directors are independent thinkers who bring impressive track records of success, and have been actively and constructively engaged as the company has developed its strategic framework to deliver renewed success and value to shareholders. We are challenging Yahoo!’s entire leadership team by asking tough questions, establishing rigorous goals, and developing a framework for strict accountability to move Yahoo! forward … fast.

Our focus now is on operating the company so that it delivers superior value to our shareholders. Supported by the many talented people who have contributed to charting our new course and inspired by the many shareholders, customers, and employees who have communicated passion for this great brand, we know that we will succeed.

Regrettably, our efforts to avoid a proxy contest with Third Point were unsuccessful. Following the recommendation of the Nominating and Corporate Governance Committee, we offered Third Point two board seats, including one of its nominees and a second mutually agreeable candidate, which would bring Third Point’s perspective into the boardroom. Unfortunately, Mr. Loeb declined to end his proxy solicitation on that basis, insisting that there could be no settlement unless he was personally appointed to the board. The board continues to believe that Mr. Loeb himself does not bring the relevant skill set and experience to the board, particularly in comparison to the candidates selected by the board. In addition, we believe that, based on the specific qualifications of Third Point’s nominees relative to Yahoo!’s business and opportunities, the candidates nominated by the board’s Nominating and Governance Committee are significantly superior to those proposed by Third Point. Nevertheless, we want to emphasize that we remain committed to an open dialogue with all our shareholders and to working in a constructive manner with Third Point.

At the end of the day, we recognize that you, our shareholders, will make the decision as to the board you want to lead your company. We are confident that when you assess our new board’s qualifications against Third Point’s slate, you will come to the same conclusion that we did—that this is the right board with the right mix of skills and experience to lead the company forward to create value for shareholders. We also recognize that we have a great deal of work to do to support and challenge the management team to move the company forward fast. We intend to keep ourselves and the company focused and we do not intend to let ourselves be distracted from the work at hand.

Yahoo! is looking forward, focused on delivering superior value to all of our shareholders. We are building momentum with a great leadership team, unified in focusing the company on its core strengths, redeploying resources to the most productive areas of the business, and equipping the company to invest in growth and innovation. Your new board includes individuals who have proven operating expertise in media, advertising, marketing, Internet, technology, and finance, and have consistently proven to be thoughtful and responsible stewards of shareholder value, with a strong emphasis on disciplined capital allocation and a willingness to embrace structural change. They are already contributing to the rigorous action plan to realize Yahoo!’s potential and deliver increased value for shareholders.

With new leadership and the new board, we are building a stronger, nimbler, more profitable Yahoo! that is better equipped to innovate for our customers and will ultimately increase the value of Yahoo! for all shareholders.

You can read more about Yahoo!’s actions to move the company forward and create shareholder value at http://yahooforward.com.

Thank you for your support.

Yahoo! Board of Directors

The quarterly dividend increase, to 85 cents a share from 75 cents, marks the 17th year in a row that IBM has increased its payout. It will cost the company roughly $117.4 million more per quarter and gives IBM a dividend yield of 1.7 percent, based on current stock prices.

Read the rest of this post on the original site »

How much does the Wall Street establishment dislike Google’s proposed share split plan announced Thursday alongside its first quarter earnings report? Apparently, a lot.

The plan essentially calls for Google stock to split two for one, and all shareholders will receive a share in a new class of stock that will have no voting power. The net effect will over time preserve the roughly two-thirds majority that CEO and co-founder Larry Page, co-founder Sergey Brin and Executive Chairman and former CEO Eric Schmidt have over Google’s proxy voting structure.

Shareholders expressed their opinion with their wallets, sending the price of Google shares down by more than four percent on a day when the broader NASDAQ exchange was down by only one percent. The drop reduced Google’s market capitalization by nearly $8.6 billion, which is not a trivial amount, even for a company with a market cap north of $200 billion.

At least one shareholder advisory firm, Philadelphia-based Egan-Jones, has come out strongly in opposition to the plan. “We strongly oppose governance structures, such as currently exists at Google and as proposed, in which the holders of one class of common stock have voting rights with fewer votes per share,” the firm said.

Also on the record in opposition? CalSTRS, the $145 billion California State Teachers’ Retirement System, which owns $400 million worth of Google shares, told Reuters that it’s not happy about the proposal and intends to let Google know about it.

You can expect more fireworks from the likes of Institutional Shareholder Services and Glass-Lewis after Google files its preliminary proxy statement, which will contain a lot more detail about the plan, with the U.S. Securities and Exchange Commission, which it said it will do sometime this week.

In the end, however, even shareholders as large as CalSTRS will have little they can do but vote against the proposal at Google’s next shareholder meeting. The proxy authority Page, Brin and Schmidt already have ensures that the measure will pass. Part of the deal of investing in Google when it first came public in 2004, was putting a lot of faith in management, as the company reminded shareholders this week.

That includes those moments when it puts money and time into seemingly weird things like self-driving cars and computerized eyewear. Those things may not make sense to outsiders, Page argued during a conference call with analysts, but there’s a method to the madness, and as a shareholder you’re kind of expected to roll with it.

Clearly, many with skin in the game aren’t so sure. Sean Egan, president of Egan-Jones, spoke up for that camp in an appearance on Bloomberg TV Friday. I’ve embedded the clip below.

Impossible to say, though the company that’s likely at the top of the short list is Google.

With $44.63 billion in cash and cash equivalents on its balance sheet as of Dec. 31, the search behemoth is the most cash-rich tech company among the big dividend holdouts. In fact, it’s now the only tech company with a market cap above $100 billion that doesn’t offer a dividend.

And while Google hasn’t even hinted at offering a dividend anytime soon, some analysts believe the company is the most likely among its peers to consider one.

“We found that Google has the greatest capacity to return cash,” said Barclays analyst Anthony DiClemente.

Why?

“It probably has the most to gain in terms of positive sentiment by doing so, given its propensity for acquisitions and mixed investor sentiment around the Motorola Mobility deal.”

That’s certainly true. But there’s a problem with that view: Google is about to spend $12.5 billion of its cash stash on that Motorola Mobility deal. Now, Motorola Mobility had about $3.5 billion in its own coffers as of December 2011, with an estimated $3.2 billion of it on shore, but it’s unclear whether Google will combine the balance sheets of the two companies. Remember, the deal has yet to be consummated.

And then there’s that $4 billion in debt Google is carrying.

And a host of potentially expensive patent-related actions orbiting Android.

Add to that the fact that a big chunk of Google’s cash is held in overseas accounts and can’t be brought home without a massive tax hit and the company seems a far less likely dividend candidate that it does at first glance.

“With the completion of the Motorola Mobility deal, Google would have only around $3.5 billion in net U.S. cash/investments,” said S&P Capital IQ analyst Scott Kessler. “We think CEO Larry Page has reasons to practically and philosophically favor other uses of capital, and do not see a dividend anytime soon.”

Saddened by Apple’s plan for a huge dividend. Apparently, they have nothing truly capital-intensive in the product pipeline.

– Max Levchin, founder and CEO of Slide, bemoans Apple’s plan to spend just under half of its behemoth cash pile on dividends and stock buybacks

And something co-founder Steve Jobs famously refused for years to give it.

Asked in 2010 why Apple has never paid a dividend and rarely bought back its own stock, Jobs said dividends do not increase the value of the company for shareholders. “Our goal is to increase enterprise value,” he said. “Which would you rather have us be? A company with our stock price, and $40 billion in the bank? Or a company with our stock price and no cash in the bank?”

To Jobs, the answer to that question was clear, and the reason Apple last paid a dividend in 1995 — the year prior to his return to the company.

So why pay a dividend now? And what does the decision to do so say about Apple? Is it undergoing some great philosophical shift?

Consensus among the analysts and insiders is that it’s not. The company’s attitude toward what is today the largest cash balance in the tech industry isn’t particularly new, it’s just one that wasn’t ever expressed while Jobs was alive.

As one analyst quipped, “The driving reason for the dividend? Tim Cook actually meets with and listens to investors and shareholders. Steve Jobs did not.”

That’s an observation I’ve heard time and again this morning.

“Apple would have never paid a dividend under Jobs,” Piper Jaffray analyst Gene Munster told AllThingsD this morning. “Apple paying a dividend is evidence that the company is making its own decisions, not just blindly following in Jobs’s footsteps.”

So Apple under Cook is something of a different animal than it was under Jobs. And as much as Cook insists that he is keen on preserving Apple’s culture, he’s not unwilling to put his own mark on it. Particularly around a long-simmering issue like this, which has become a point of exasperation for many investors.

As Sanford C. Bernstein analyst Toni Sacconaghi told AllThingsD this morning, “I think the cash balance was overwhelming and the rationale for retaining it was becoming increasingly incomprehensible, particularly given the company’s capital requirements and the prevailing yield on cash.”

Ultimately, dividends are not just for slower-growth companies. They’re for companies like Apple that are still rich with ideas and poised for more growth. As Cook said this morning, “We can do this and still maintain a war chest and plenty of money to run our business. This will not close any doors for us.”

In the end, the biggest message given by Apple’s issuance of a dividend: “Under new management.”

Details from the press release:

“Subject to declaration by the Board of Directors, the Company plans to initiate a quarterly dividend of $2.65 per share sometime in the fourth quarter of its fiscal 2012, which begins on July 1, 2012.

Additionally, the Company’s Board of Directors has authorized a $10 billion share repurchase program commencing in the Company’s fiscal 2013, which begins on September 30, 2012. The repurchase program is expected to be executed over three years, with the primary objective of neutralizing the impact of dilution from future employee equity grants and employee stock purchase programs.”

The money will come from Apple’s domestic cash pile, which allows the company to avoid the heavy tax hit it would face if it “repatriated” its overseas holdings.

My hunch is that CEO Tim Cook and CFO Peter Oppenheimer won’t have a whole lot more to say during their call, but we’ll check in, anyway. You never know! You can listen for yourself at this link, or follow along here for live coverage:

9:07 am: After some technical difficulties, we’re joining the call in progress. CFO Peter Oppenheimer is speaking.

Apple wants to, among other things, attract new investors. The dividend, as already disclosed, will be $2.65. The main intent is to offset the dilution expected from employee RSU.

We will expect first year’s dividend payments to be $10 billion, Oppenheimer says.

Commencing in fiscal year 2013, Apple will begin repurchasing shares, primarily from employee stock grant. Cash use to consume $4 billion in the first fiscal year.

That will eat up $45 billion in domestic cash over three years.

Now open for Q&A:

Barclays asks about the philosophy on dividend growth. He’s wondering if the $2.65 will get higher.

Oppenheimer: We’ll review the payments periodically with the board. Payments will be more than $2 billion a quarter, making it one of the highest dividend payers in the U.S. Still avoiding the tax hit from repatriating cash held outside the U.S. Sensitive issue there.

Barclays analyst is asking a follow-up. Can you reiterate confidence in future product pipeline?

Tim Cook is speaking. We had an incredible growth last quarter of 73 percent, despite the base on the growth being large. The pipeline is full of stuff. Our customers will be incredibly pleased with what they see.

Morgan Stanley question. She’s asking about international cash, almost $100 billion overseas. How does the board think about putting that to us?

Oppenheimer: Today, we’ve got plenty of U.S. cash to invest, pay dividends and buy back shares. Repatriating cash would incur significant taxes. We have expressed our views to Congress and the White House. We think there’s a significant disincentive. He didn’t answer the question, really.

Gene Munster of Piper asks about potential for stock splits.

Cook: We have looked at it. The current information we have would suggest there’s little support that it helps the stock. We are in a unique position, so this is something we continue to look at, and if we thought it were in the best interest of shareholders, we would do it.

Munster: Any color on iPad?

Cook: Record weekend, and we’re thrilled with it.

Goldman Sachs: How do you think about growth in repurchases versus growth in dividends? Which is more important?

Oppenheimer. We remain very confident in what we’re doing. We are squarely focused on achieving our potential in the business. We will continue to assess our plans periodically. Nothing further to say today.

Cross Research: How did you arrive at the numbers you announced today?

Oppenheimer: We opted to go with a hybrid approach after doing a lot of analysis and listening to input we were getting from the shareholders. Emphasis behind the dividend. Most cash is going there. $10 billion in first year is going out in dividends. He keeps repeating the “neutralize dilution from employee RSU.” We also want to maintain sufficient U.S. cash to take advantage of strategic opportunities from time to time.

I totally missed Shannon Cross’s second question.

Cook is speaking about using domestic cash versus overseas cash. Our emphasis will always be on creating innovative products. He says even with all this cash going out the door, the domestic war chest will be big enough to do whatever they need to do. Plus, they see it as good for shareholders.

Oppenheimer says there are 17.7 million RSU (restricted stock units) outstanding.

That’s it! We’re done.

Shareholders reelected the company’s board of directors, with each member garnering more than 80 percent approval. And the company did not announce the dividend or share buyback for which some investors have been calling, despite Cook’s remark last week suggesting that the board has been considering the subject.

“I’d be the first to admit we have more cash than we need to run the daily business,” Cook said of the company’s nearly $100 billion in cash and investments. “So we’re actively discussing it. I only ask for a bit of patience, so we can do it in a way that’s best for the shareholders.”

Evidently, Cook’s request for patience was not a euphemism for “expect a dividend announcement next week,” because he reiterated that position at today’s meeting.

“On cash, we’ve been thinking about cash very deeply, the board has been looking into what is in shareholders’ best interest,” he said. “My message there is that the board and the management team are thinking about this very deeply … and we will do what we think is in the best interest of shareholders.”

In other words, be patient.

Maybe.

That was the gist of Apple CEO Tim Cook’s remarks on the issue on Tuesday, at the Goldman Sachs Technology and Internet Conference. According to Cook, Apple’s cash holdings are top of mind at the company. “We’re in very active discussions at the board level on what we should do,” he said, adding that careful consideration is the guiding principle here. “We are not going to run out and have a toga party.”

“We are judicious in our spending,” Cook said. “We are deliberate. We spend our money like it is our last penny. … I think shareholders want us to do that. They don’t want us to act like we are rich.”

Of course. But many shareholders wouldn’t mind if Apple were to issue a dividend. Surely a meaningful one-time payment like that would have little impact to the company’s earnings or cash flow these days. And Apple hasn’t paid a dividend since December of 1995.

Seventeen years is a long time.

So, can investors expect a dividend announcement at Apple’s annual shareholder meeting on Feb. 23?

Impossible to say, but read what you will into Cook’s final comment on the issue:

“I’d be the first to admit we have more cash than we need to run the daily business. So we’re actively discussing it. I only ask for a bit of patience, so we can do it in a way that’s best for the shareholders.”

Yahoo shareholders felt a little giddier earlier this week, when it seemed as if the company had finally decided to make a deal with its Asian partners.

But the happiest crew might end up being the Silicon Valley Internet giant’s outside counsel, Skadden Arps — and especially Leif King, the fantastically named legal eagle who has been advising Yahoo on the deal.

That’s because today the Yahoo board approved continuing the negotiations to come to a final agreement over the stake, sources said, which should take six to eight weeks.

It’ll surely be happy holidays for billable hours!

As costly as the legal bills will be, if it all goes well, an Asian solution will mean one major problem solved, with a possible pile of cash and new assets coming in to Yahoo.

To get there, the company signed a term sheet earlier this week with Japan’s SoftBank to sell back all its holdings there, and with China’s Alibaba Group to sell off more than half its stake (moving from a 40 percent stake to a 15 percent one).

The deal values Yahoo’s total shares in both companies at about $17 billion.

While it gets a pretty accounting name — “cash-rich split “– the vehicle to unwind it all is essentially a complex tax dodge finally cooked up by the trio, in which cash, new assets and stock will be moved around until everyone gets what they want (except the U.S. government).

I would explain it — but I am on vacation, and would rather drink eggnog and sleep — so here is The Wall Street Journal’s version, which I like because it sounds like Alibaba and SoftBank are giving Yahoo a hugely loaded Starbucks card for Christmas:

“As envisioned in the scenario, Alibaba would create a subsidiary into which it would put several billion dollars of cash, plus an operating asset that Yahoo wants to buy using additional cash from Alibaba, almost like giving Yahoo a prepaid card for an asset of its choice, the people said.”

Everyone is hoping there will not be any hiccups in the deal, which has been spearheaded by Yahoo board member and Intuit CEO Brad Smith, and Jerry Yang, who is also the company’s co-founder and a major shareholder.

Alibaba CEO Jack Ma and CFO Joe Tsai, both co-founders of that company, were the point men for the Chinese company. And for SoftBank, it was its founder and CEO Masa Son and his main U.S. exec, Ron Fisher.

Now, said sources, Yahoo’s board is hoping to still keep the bids from a pair of private equity firms — Silver Lake and TPG Capital — alive.

While initially the focus on the action, the PE bidding for partial Yahoo stakes has recently been sidelined by the Asian deal.

Now, sources said, Yahoo is hoping the new infusion of cash and assets will allow it fend off shareholder unrest — stock buybacks and dividends, anyone — to solicit higher prices from the firms to make strategic investments.

Yahoo had considered the initial bids too low, as did some very pissed-off activist shareholders.

Still, it’s not clear if those firms will jack their offers now, although sources said Silver Lake is still interested in some sort of deal that would give it influence over remaking Yahoo.

Silver Lake and others think the long-troubled company could be revived with some effort, and become a much more lucrative Web property.

But those negotiations might run into roadblocks over who gets to pick leadership for the company. Yahoo has accelerated its efforts to hire a new CEO, after firing Carol Bartz in September.

The PE firms, who would buy a large stake in Yahoo, also have wanted some level of control, including CEO and board approval, in order to be able to make massive changes at the company to turn it around.

Wall Street seems to like the Asian part of the deal, at least, since it shows some sort of forward momentum at Yahoo, and from its often-lugubrious board.

Shares are up almost 7 percent in the last few days, although they are not popping as they might be, given that new valuations based on a successful Asian deal put the stock at a much higher price.

In other words, investors like what they see, but are watching and waiting for more.

Last night, the New York Times dropped a juicy little tidbit into its everything-but-the-kitchen-sink daily update of the board mishegas at Yahoo around the deliberations yesterday over two competing private equity bids to buy a partial stake in the company.

No, not the one about Jeff Jordan — former eBay exec, OpenTable CEO and now VC at Andreessen Horowitz — possibly taking a big role at Yahoo if the firm’s bid with Silver Lake prevailed — which was mysteriously removed very soon after it posted (’cuz he will not, so good move, NYT!)

I mean the one about the venture firm’s big-kahuna partner, Marc Andreessen — who will indeed take a board seat and play a strong role in Yahoo’s future if his bid wins — getting a possible competitor in the Silicon Valley savior section of the ongoing show.

That would be in the form of Reid Hoffman, the well-known entrepreneur, VC and angel investor, who the Times said had talked with TPG Capital, Silver Lake’s rival in the Yahoo bidding, about becoming a possible partner.

Wrote the Times:

“TPG has held discussions with Greylock Partners, another venture capital firm, about a possible alignment, two people said. TPG is hoping to draw on the expertise of Reid Hoffman, one of Greylock’s partners and the founder of the professional social network LinkedIn, these people said.”

Translation: If Silver Lake has a tech icon of substance on its team to give uber-geek appeal to its offer — dagnabbit — then TPG was going to raise with another one, whom the very same Times reporter who wrote last night’s article recently nicknamed “The Start-Up Whisperer” in a recent glowing profile of Hoffman.

While I am still trying to grok what a start-up whisperer exactly means (and how someone as self-effacing as Hoffman would react to such a twee moniker without snickering), it’s a move that has likely already irritated Silver Lake.

After all, TPG aiming at nabbing Hoffman is akin to two crazy neighbors trying to one-up each other in holiday-lighting lawn decor. (You have a singing Santa, so I’ll have a singing Santa — and I might even add a Lady Gaga-themed crèche for good measure!)

But it’s not a bad instinct, either, to get your own live-action Silicon Valley legend, even if it is only half true in Hoffman’s case.

Because, according to sources who know such things, while Hoffman and TPG have had conversations, there have been no commitments, and nothing is close to being agreed on to link the pair.

That could certainly change, and quickly, but Hoffman or Greylock aren’t currently in TPG’s proposal to Yahoo.

That’s in contrast to Andreessen, who is all in (I am not even going to bother with “sources said” here, since everyone and my mother has seen the proposal) with Silver Lake on the deal to purchase 19.9 percent of Yahoo for about $16.50 a share.

As I reported earlier this week, for Silver Lake’s money and expertise in fixing broken things, the bid includes: Silver Lake getting three board seats; cash going to a buyback of stock or granting of a dividend to shareholders; the ability to select a CEO; approval of its strategic plan for Yahoo, and its solution to come to terms with Yahoo’s unhappy Asian partners; and all the purple wearables you could ever hope for (perhaps Yahoo’s best asset, IMHO, especially worn by such obviously cool dudes, as seen here).

Also, controversial Yahoo co-founder Jerry Yang gets to stay around on the board (but only if he becomes very, very quiet, so as not to rile the activist shareholders).

TPG’s bid is less formed, although its price is slightly higher. And the PE firm has yet to check the “Big Geek Included” box.

Hence, the floating of Hoffman as a contender to take on Andreessen, who was once dubbed the “Golden Geek” by Time magazine.

I hope TPG does, soon, since what a matchup it would be!

But, for now at least, the pair — who share big investments in a range of Web companies, most especially Facebook (Andreessen is on the board of the social networking giant, and Hoffman was an early investor and adviser) — are at peace.

Dagnabbit.

I have called Yahoo the Hamlet of the Internet many times, for its seemingly endless ruminating on what it should do and what it should be.

And that is true on a lot of fronts — from its strategic direction to rejiggering its advertising business to finding solid leadership to whether or not it will sell itself and how to a variety of bidders.

It’s no small irony then that perhaps it’s only easy move right now and the one most likely to happen soon — and which could temporarily assuage its always restless shareholders — is to finally settle a long and arduous effort to sell its Japanese assets.

Sources close to the situation said that the deal — as has been reported — is the closest to a deal compared to any other that Yahoo is contemplating.

Sale or outside investment discussions remain mired, while similar share sale discussions with its Chinese partner, Alibaba Group, remain a constant roundelay of dashed deals.

It has not always been thus recently between Yahoo and Yahoo Japan. Just over a year ago, the company shifted its paid and algorithmic search from Yahoo to Google, raising tensions between the companies.

Now, though, Japan has become the easy one.

In actuality, striking an actual deal is not and has been a task is on that Yahoo has been working on for many years, trying to figure out the best tax-free way to shed its 35 percent stake.

It makes sense, since the asset is no longer a strategic plus it once was.

It also frees up a lot of cash. As of September 30th, according to Yahoo, the pre-tax value of its Yahoo Japan stake was worth $6.4 billion. Presumably, Yahoo would either use the money to bolster its business or, more likely, give its shareholders some kind of dividend.

In such a deal, Yahoo’s longtime Japanese partner — and one of its very first investors — SoftBank would buy out Yahoo’s stake.

That’s the simple way of putting a deal that only an accountant can grok. But one plus is that if Yahoo does pull it off, it would be rid the company of one complication too many.

That said, any Japanese asset sale could also be impossible without a larger settlement of Yahoo’s globally connected issues — or, as I like to call it, the hairball.

And SoftBank, which already owns a lot of Yahoo Japan would certainly need more than just cash — perhaps more of Alibaba than it already owns — to be enticed to buy even more.

Also, for all intents and purpose, SoftBank is the only buyer of Yahoo’s Japan asset, so there’s that issue.

But if it could show some progress in some part of its hopelessly complicated world, for Yahoo, that is always a good thing.

The New York-based company will pay a dividend of 12 cents a share, starting in December, costing about $9.8 million a quarter. The move is notable because fast-growing companies, such as those in the Internet sector, typically preserve cash for expansion rather than return it to shareholders.

Read the rest of this post on the original site »

Do sale rumors make a troubled asset more attractive? Yes — except when more rumors (that those sales rumors might not be true) appear.

Welcome to just another day in the life of Yahoo, which saw its shares drop more than 5.5 percent today. Its stock declined almost a dollar to close at $15.64, after it was reported by various news orgs that Yahoo might be leaning toward no sale and a shareholder dividend, and toward taking control of its own sale of its lucrative Asian assets.

That was counter to the news — from a number of the very same outlets — touting a variety of ever more elaborate and sometimes breathless sale scenarios last week, featuring various configurations of Microsoft, Google and private equity firms like Silver Lake and others.

Silver Lake, in fact, appears to be the most aggressive in the possible bidding for all or parts of Yahoo, and has been noodling such a deal most intently, and for a long time now.

It makes sense, given that Silver Lake was successful in a vaguely similar deal that ultimately saved the Internet telephony service Skype, which it eventually peddled at a high price to Microsoft.

In fact, according to several sources, Yahoo director and co-founder Jerry Yang — also a former CEO of the company, who appears to have seized the ball firmly in the strategy game — met with Silver Lake today for an unspecified little chitchat.

That said, one source told me, “what is deeply uncertain is whether Silver Lake will do something at all.”

This is par for the course in this everything-but-the-kitchen-sink drama. Because — although it makes for a boring post, and the back and forth throat-clearing before an actual event might be entertaining — so far, not very much is actually happening as yet at Yahoo, with regard to its variety of options.

Of course, this could change in an hour. Or tomorrow, or the next day. Most of all, it’s clear that Yahoo’s board has to move in some significant way before the end of the year.

So, yes, the Silicon Valley Internet giant is doing all the sales-oriented stuff it should do with its coterie of pricey bankers (presumably being paid by the hour).

Yes, it has recently hired a talent-search firm, which is eyeing the landscape to find a willing CEO. (Even more adviser costs!)

And, yes, it is still wrangling with its Asian partners — Alibaba Group and SoftBank — over how to do a tax-free transaction (you’d think from all the sweating over it that this deal was harder to solve than the European debt crisis).

And, on schedule, activist shareholders — like hedge-fund agitator Dan Loeb of Third Point — should be attacking again soon, until a deal is done.

But according to many sources both inside and outside Yahoo, what’s happening is pretty much business as usual for this Hamlet of a company, which is lugubriously debating and weighing and pondering its fate.

I suppose it should, given the importance of it all, except it is a conundrum that has been going on for far too long at Yahoo, and under a number of different leaders.

In other words, it’s like “As the World Turns,” except with some new characters and a whole lot more amnesia.

But the slowness of a very real process is also causing deep frustration with all those dealing with Yahoo now — including possible bidders, and definitely its Asian partners.

Their gripes — which are louder than in most deals — are not surprising: They refuse to sign a too-onerous NDA to look at Yahoo’s books; there’s an irksome tone of indecision on the part of the company’s board; and, as always, the incessant leaks about all of this and more are making it worse.

One bidder has likened the company to a “melting iceberg that has a lot less time than the planet has to put its house in order.”

Another bemoaned the variety of trial balloons being floated, and noted that no movement was what Yahoo seems to do best.

That’s not exactly true, of course, so expect to see more leaks about plots and plans and meetings.

But no matter what you hear, keep in mind that having Yahoo’s fate being spun about like a top on a daily basis on Wall Street and in the media is not good for the company itself — or for its employees and shareholders.

Since it makes me dizzy — even though I like a good scoop as much as the next reporter — that’s the reason I have largely stuck to reporting about the actual internal turmoil inside Yahoo, from poor employee morale to various staff rejiggerings to more relentless brain drain.

Because while everyone fiddles, Yahoo’s real prospects of maintaining its core business melt a little bit more every day.

Yahoo is on its third CEO in four years, it has lost advertising momentum to Google and Facebook, its engagement levels are dangerously slowing, its social and mobile strategies are unclear and even its powerful email product is under siege.

And in the end, it is only these things that will matter to whoever runs the company in the end.

[Photo from Mat Honan's fantastic tweet here.]

According to multiple sources, 75 percent of the company’s 500-plus employees received the bonus. The dividend was based on tenure, with some of the longer-term employees receiving as much as $100,000.

Big Fish CEO Jeremy Lewis declined to comment, but confirmed that the dividend was given to shareholders and vested option holders.

The dividend shows that the privately held game maker is flush with cash, and that it may have big plans to come.

Big Fish has been considered an IPO candidate in recent years; the latest rumors hint it could come as soon as next year.

Since being founded 10 years ago, the company has grown quickly. It has hired 50 employees worldwide over the past few months, including new CFO David Stephenson. Prior to the job, Stephenson was VP of finance at Amazon.com.

The company specializes in producing games for the casual games market, including puzzles, hidden objects and other strategy games, but has steered clear of the recently popular free-to-play model adopted by newer games companies, like Zynga.

Instead, many of its games are sold through a monthly subscription online or for download on the iPhone and iPad.

The company increased its quarterly dividend payment by 10 cents to 75 cents a share. It was the 16th consecutive year IBM has lifted the payout, and the eighth year in a row the dividend notched a double-digit increase on a percentage basis. Last April, the increase was 18 percent.

The latest increase will cost IBM an additional $496 million a year. IBM has paid a dividend every year since 1916.

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Per share earnings were 54 cents, beating the consensus of 50 cents. Net income was $2.1 billion.

Oracle also said it would boost its quarterly cash dividend to 6 cents per share, amounting to a 20 percent increase over the previous dividend of 5 cents.

In a statement, Oracle CEO Larry Ellison touted the strength of the combined hardware and software businesses. “In Q3 we signed several large hardware and software deals with some of the biggest names in cloud computing,” said Ellison. “For example, Salesforce.com’s new multi-year contract enables them to continue building virtually all of their cloud services on top of the Oracle database and Oracle middleware. Oracle is the technology that powers the cloud.”

Operating margin was 44 percent on a non-GAAP basis, and the margin on hardware increased to 55 percent. President Safra Catz said in a company statement that Oracle is now “completely confident” the company will hit its previously stated goal of yielding a $1.5 billion fiscal year 2011 profit for the business it took over when it acquired Sun Microsystems.

Oracle shares rose by 7 cents to $32.25 in after hours trading.

But its statement contained a new characterization from CEO John Chambers about the circumstances Cisco finds itself in. Gone was talk of temporary air pockets that emerged in November when Cisco’s outlook turned suddenly, and unexpectedly, sour. Now it’s in a “period of transition.”

One that’s far from over, apparently. Having reported the hard numbers, it saved the bad news, in particular its outlook, for the conference call. And it wasn’t pretty. It fell to CFO Frank Calderoni to deliver the bad news. While Cisco forecast revenue to grow at a rate of 4 to 6 percent in the third quarter over the same period in 2010, profits were forecast at 35 to 38 cents a share, well below the consensus of 39 cents. Gross margins for the full year will be in the 62 to 63 percent range, down from 64 percent in 2010.

Chambers noted weaknesses both in Cisco’s switching business, where sales declined by 7 percent, and in sales to government customers, saying he expected that segment to be problematic during the next several quarters. Sales of set-top boxes were also weak. Summing it up, Chambers said: “I think we will look back on this period of time and wish we could have avoided it and yet it will make us stronger in the long run.”

There was good news. Cisco will pay its first dividend this year, somewhere in the range of 1 to 2 percent.

And then there’s Cisco’s cash position, which stands at $40.2 billion, though only $3 billion or so of it is inside the U.S.

Chambers used the subject to once again complain about U.S. tax policy regarding cash held overseas. “We have a tax policy that is just broken,” he said.

SAP also said it plans to increase its 2010 dividend by 20 percent.

For the three months ended Dec. 31, net profit fell to 437 million euros ($598 million) from €681 million in the same period a year ago. Earnings per share declined to €37 from €57.

SAP released its full results Wednesday after the firm had reported on Jan. 13 a surge in quarterly revenue, triggering a 3.5 percent rally in its share price

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Great fun to listen to for Apple watchers. But not that meaningful, really–mostly positioning and spin. There was at least one important nugget, though: Apple has a specific shopping list, with some very big-ticket items on it.

Jobs wouldn’t lay those out, of course. But when asked if he planned on spending any of Apple’s $51 billion (!) in cash via a dividend or stock buyback, he explained that he had something else in mind. From my notes, a combination of direct quotes and paraphrase:

“We strongly believe that one or more very strategic opportunities may come along that we’re in unique opportunity to take advantage of because of our cash,” and we want to keep our powder dry “because we feel that there are one or more” opportunities in the future.

M&A guys, start your engines!

The “what will Apple do with all its cash” speculation story is a time-honored tradition–I seem to remember writing one four or five years ago, when Apple had $6 billion or so lying around, and discussing whether it made sense for Jobs to buy a music company like Universal.

But I don’t remember Jobs every signaling his desire to go shopping quite as openly as this before (feel free to correct me in comments if I have this one wrong). Two caveats:

• Jobs is famous for saying one thing and doing…something else. So don’t get too riled up about this.
• Just because Jobs is talking about spending money on “opportunities” doesn’t mean he’s talking about buying a company. He could be talking about big, hairy capital expenditures, like the billion-dollar server farm Apple is finishing up in North Carolina.

Still. It’s hard not to read or hear that quote and not think that he’s thinking about some very big buys. Like what?

A lot of folks will assume that Jobs is talking about buying a big content producer. Music doesn’t make any sense, because there’s little value left in that business. But if Jobs wants to make headway in the TV business, perhaps it makes sense for him to snag a big broadcaster or programmer to give him the leverage he needs with the Comcasts, Viacoms and Time Warners of the world.

Or you could make the same argument for other content makers, like game studios. The biggest one, Electronic Arts, has a market cap of a mere $5.21 billion. Jobs could give ERTS shareholders a hefty premium and still have plenty of walking-around money.

Or perhaps it makes zero sense for Apple to be in the content business, because it’s done just fine not being in the content business to date.

So then what?

Feel free to throw your own guesses in, but I’ll kick off with my own: It’s a company that has yet to compete with or brush up against Apple in any significant way. And it’s one that Apple seems unlikely to be able to move aside, even if it wanted to. And it’s one that’s already competing directly with Google, which has to make Jobs like it even more.

And, if you believe this L.A. Times report, Jobs is already strolling around Palo Alto with its CEO: What do you think of Apple buying Facebook? Discuss….

Earlier

Apple investors who got their first look at the company’s earnings numbers don’t like them–AAPL is trading down seven percent after hours. Let’s see if Apple executives can soothe their concerns during the earnings call.

You can listen in for yourself via this link, or follow along in my liveblog below:

Live Blog

Apple or Apple’s IR company trying some very, very mellow string and piano stuff while we wait.

CFO Peter Oppenheimer kicks off. “Outstanding results” for September quarter. Highest quarterly revenue, earnings.

Mac products and services: 3.9 mm Macs. Record quarter. 27% y/y growth. Double market growth for Q.

IMac, Macbook, Macbook Pro all good. Asia/Pacific performing best.

IPods: 9.1 million.

ITunes revenue more than $1 billion.

IPhone. “Extremely pleased” with 14.4 million unit sales; basically doubled y/y.

$8.6 billion in sales value of iPhones alone.

Heaping praise on iPhone 4 (justified) and stressing iPhone’s move into corporate market, rattling off blue-chip customers.

IPad. “Thrilled” with momentum. “Great enthusiasm” from customers.

65% of Fortune 100 deploying or piloting iPad. Lists some of them.

125 million iOS device sales last month.

200,000 registered iOS developers.

“Very happy” with results of iAd so far.

On to Apple stores. More records here.

Expects to open 40-50 stores next year, 50% of them outside U.S.

IPhone sales mix “better than expected”–boosted overall margin.

$51 billion cash hoard. [Deep, longing sigh from everyone in media, tech business.]

For the year: 5x revenue and 10x earnings compared with five years ago.

“Very enthusiastic” about lineup, “extremely confident” in new product pipeline.

Rare appearance from Steve Jobs!

Had to drop by for first $20 billion quarter.

“We’ve now passed RIM, and I don’t see them catching up to us in the foreseeable future.”

They have to move into software/platform development, and I don’t think they can.

So what about Google?

Apple is activating 275,000 iOS devices per day on average over the past 30 days; peaked at 300k iOS devices some days. 300,000 apps in app store.

Unfortunately, there is no solid data on how many Android handsets sold each quarter.

Google loves to characterize Android as open, Apple as closed. “We find this a bit disingenuous.”

Windows is “open.” But Android is “very fragmented.” OEMs like Motorola install own stuff to make their phones stand out. We don’t do that.

Shout out to “Twitterdeck” ( I think he means Tweetdeck) and their challenges running 100 versions of Android client. “Compare this to iPhone, where there are two versions of the software…to test against.”

Meanwhile, at least four app stores on Android. “This is going to be a mess for both users and developers.”

Apple’s app store has 3x apps compared with Google marketplace.

“Even if Google were right, and the real issue was closed vs. open, it’s important to remember that open systems don’t always win.”

For instance: Microsoft’s [miserable] “PlaysForSure” strategy, RIP.

Google’s “open” argument is a “smokescreen.” Real issue is what’s best for customer–”fragmented vs. integrated.”

Integrated is a huge advantage for us, because it’s better for customers, and better for developers. “We are very committed to the integrated approach no matter how many times Google tries to characterize it as closed.”

Now! On to our tablet competitors:

First of all, only a few credible competitors.

Second, most of them are pushing 7.5″ screen. That means they are just at 45% size of our 10″ screen. “You heard that right….This size isn’t sufficient to create great tablet apps.”

Extolling features of iPad size vs. teeny tiny tablet competitors: They’re “tweeners”–too small to compete with iPad, too big to compete with smartphones.

IPad has 35,000 apps. New crop of tablets will have “near zero.”

Competitors having a hard time coming close to iPad pricing, even with their puny screens. We make our own everything, and this results in an “incredible product, at a great price.” Our competitors will “likely offer less, for more.” They’ll be “DOA. Dead on arrival.”

Questions and Answers

Supply constraints on iPad?

COO Tim Cook: We’ve got a handle on it. And note that we’re expanding distribution in the U.S. and internationally, with more countries to come.

Question about margins I didn’t quite catch.

Oppenheimer: Sold more iPhones than planned, and commodity prices came down, so that helped.

Q for Steve. Please talk about “iPad opportunity.” Size of business, etc., two years or more down the road?

Jobs: “The iPad is clearly going to affect notebook computers. The iPad proves it’s not a question of if, it’s a question of when.” Already seeing “tremendous” interest from education and “much to my surprise, from business.”

“The more time that passes, the more I am convinced that we’ve got a tiger by the tail here.” We’ve trained tens of millions of people on this OS via the iPhone. “I see it as really general purpose, and I see it as very big.”

Could it be the second biggest business after the iPhone?

“I try not to predict, I try to report.” We’re selling more iPads than Macs.

What about Flash? Any update?

“Flash memory? We love flash memory” [hohoho]

A question on iPhone demand, which I missed.

Q: Steve, “You are the tablet market.” Do you see tablet competitors cutting into your market in the same way you cut into RIM’s market? Won’t that fragment the market?

“I have a hard time imagining what those strategies…are.” Pricing won’t work. “Flash hasn’t presented any problem at all; as you know, most video on the Web is now presented in HTML5.” The iTunes store is dominant and “we’re not done” working on stuff for the future.

Q: Smartphones–”Do you see that as a zero-sum game?”

Jobs: As you know, most phones in the world aren’t smartphones. They’ll convert over time, so there will be room for multiple competitors, but “eventually it will turn into a zero-sum game, or close to that.”

Q: For Oppenheimer: Another margins question.

A: We do see a small sequential decline. Higher-than-expected mix of new iPods and new iPads. We’ve been very aggressive on pricing there, and that’s what’s pushing down margins.

Q: Steve, how’s your Apple TV “hobby” coming? And what’s up with streaming media?

Jobs: We don’t talk about unannounced products, but I’m happy to tell you what we know about Apple TV. We have moved to streaming. It’s all streaming. Everything is rented, and/or soon to be streamed from iPad or iPhone.

So far we’ve sold 250,000 new Apple TVs. “I’m thrilled with that.” And with Airplay set up, “it will give people another big reason to buy it.”

Another margin/guidance question. Seems to be the same one repeated each time, with the same answer.

Q for Steve: Key risks for company?

The goal is to make the best devices in the world. “It’s not to be the biggest. As you know, Nokia’s the biggest… but we don’t aspire to be like them.”

Android is the biggest competitor. Outshipped us in June quarter as we transitioned. We’re waiting to find out what happened in this quarter. “I don’t know how we’ll find out” though.

Our approach is to create products that “just work” and “their approach is very different from that.”

Questions for Steve and Tim: Aspirations for iPhone and iPad. In Mac, you didn’t aspire to high market share; in iPod, it was the opposite–you own that market. In the past, Tim you’ve described iPhone business as closer to the iPod model. Steve, you sort of said something different. Please resolve that difference: Biggest, or best?

Jobs: “Nokia makes $50 handsets. We don’t know how to make a great handset for $50.” We want to make “breakthrough, best products,” and “drive costs down” while making them better through “relentless improvement.”

We have a very low share in the phone market. Single digits. And a very high share in tablets. But we don’t think about it that way.

The reason we won’t make a seven-inch tablet isn’t because of price point, “it’s because we don’t think you can make a great tablet with a seven-inch screen.” And as a software company, we think of software first. Developers don’t want to build for all these different platforms and devices, and on this small screen. “It’s not about cost, it’s about value, when you factor in the software.”

Q: Okay, but if the market moves toward lower-functionality smartphones and “dramatically lower price points,” then you’ll cede share, right?

Jobs: “You’re looking at it wrong.” You’re looking at it as a hardware guy who doesn’t really know about software. You assume that software “can come alive on this product that you’re dreaming of. But it won’t” because developers want to build for better products, with faster processors and better screens.

Q: You have about $50 billion in cash. What are you going to do with that? Why not return it to shareholders?

Jobs: “We strongly believe that one or more very strategic opportunities may come along that we’re in unique opportunity to take advantage of because of our cash” and want to keep our powder dry “because we feel that there are one or more” opportunities in the future.

Missing next question about iPhone and iPad penetration into corporate market.

[Market not sold on Apple's story yet, btw: Stock still down 5.84%.]

Question for Oppenheimer. Guess what? It’s about gross margins. Any change in manufacturing, etc? Any color at all?

Oppenheimer: Don’t provide product-specific gross margins. Always trying to lower costs, though. “We were happy” with gross margins for quarter. Down slightly because of product mix, as I’ve said over and over.

Q: Talk about demand from carriers to pick up iPhone 4.

Cook: The pressure I’m feeling is about supply. That’s the problem. At the country level, we have 166 relationships in 89 countries. In many countries, we went to more than one carrier. Latest one of those is Germany.

IPhone 4 in 85 of 89 countries. Will be in all 89 by end of year.

What happens to margins and subsidy when you go nonexclusive?

We don’t give information out on specific markets, but you can see that our ASPs have stayed above $600.

For Steve: Why do you have advantage in price on iPad, as opposed to PC?

Jobs: We engineer so much of it ourselves. Everything from chip to battery to enclosures. We’ve learned so much. We’ve learned a lot, developed a lot of our own components, where competitors have to go through middlemen. “This is a product we’ve been training for for the last decade.”

Call is over. You can hear the whole thing on a podcast later this evening.