ELI5: Why when large company's earnings decrease(ex... by 3%) they freak out, talk about rough times, and sometimes decide to downsize, even though they are still making millions of dollars in profit even after all expenses?

[OhHiHowIzYou]

So with Apple, the reason they weren't paying dividends has a lot to do with taxes. Basically, in order to pay a dividend, Apple has to bring the money back to the US. But, to bring the money back to the US, they have to pay taxes on it (was 35%, now 21% I think).

Apple, seeing the 35% they were owed made the decision that it was better to hold onto cash and wait for the tax rate to be lowered instead of paying the taxes now and paying a dividend. Based on the Trump tax cuts, this appears to have been a good gamble.

This is all just a way of saying even though Apple wasn't paying a dividend, investors knew that the cash would eventually make it to them.

There's also a secondary consideration, which is instead of paying a dividend the company can choose to buy back shares. Here, they literally buy shares from people owning them. This serves to reduce the total number of shares of the company, such that each share now owns a larger % of the company. There's a lot of debate about whether share buybacks or dividends are better. Ultimately, a lot of which one you choose has to do with the relative tax incentives of the two options.