Originally Posted by Blastdoor
Kind of like how cell phones were beyond their core competency as of 2006?
I don't think it's an issue of core competency, it's an issue of whether they can just smoke everyone in one product launch.
Originally Posted by Blastdoor
I certainly agree.
And as you stated elsewhere, Apple is very close to being a bank already -- people just don't realize it, because (1) they don't understand what a modern bank really consists of and (2) they don't understand there's more to Apple than the devices they see in front of them.
Thank you. I've been saying this for almost a year now [as nvidia2008].
Originally Posted by cameronj
I think Apple should start a concrete company so they can stop paying these outside companies for the concrete for their stores. And a glass company. And why isn't Apple in the aluminum refining industry anyway? Why do they let these aluminum companies make all that cash?
Speaking of which why do they let Foxconn take the high margin manufacturing business out from under their noses?
Again, it's about focus. Apple can now do anything they want. It's just whether they want to do it. Not doing everything themselves keeps them focused. They would only start a concrete company if they could make the best, most delightful concrete in the world that everyone would want to buy. Focus is about saying "No".
Originally Posted by Godzilla
These Wall Street bloodsuckers and their Dividend BS. They just want Apple to become "Another Company", riddled in debt, at the mercy of Wall Street and Banks.
Thank you. At least someone agrees to what I've been saying for quite a while now.
Originally Posted by syracuse
When/If Apple issues a dividend, that DOES NOT
raise cash for Apple.
The analyst makes the point and shows the statistics that Apple is under owned by the Fund industry and in particular Funds that invest in dividend paying stocks.
Do people even read the articles that they comment on? Or do they just make comments to be disagreeable?
OK, fair enough on the raising cash issue.
But, there's several things wrong with the analysts' comments (or, just right, if you're trying to push the stock price higher).
Clearly Wall Street wants stocks to go up, they want AAPL to go up ever more, and they want Apple to issue dividends so AAPL goes up. For Apple, why would they care about the stock price at the moment? If the company doesn't have any legal or ethical obligation to issue dividends, for where Apple is at, why would it need to? To me, it doesn't make any sense. They might do it, but they would have to have a good(almost charitable) reason.
Originally Posted by macarena
At the end of the day, one has to evaluate what one can earn on the money, and what one can buy with the money. If you can buy something that earns you more than what the money itself earns you, then you are better off buying that with your money.
In Apple's case, the stock trades at a Forward P/E of about 11. If you invert that, then E/P is 1/11. That means, Apple shares earn about $1 for every $11 of Price - so that works out to a yield of just over 9%.
The cash on the other hand has two types of earnings - one is the yield on the cash when it is invested into Long Term and Short Term securities. In current market conditions, this would be anywhere from 1-4%, so lets assume that Apple earns about 2.5% on their securities investments. The other type is invested in prepaying for components, or for investing in plants on behalf of partners, to lower their component costs. It is difficult to calculate a yield for this investment.
However, the beauty is that Apple is obviously not going to use its entire cash hoard to buy back its stock. So we can ignore the second type (component investment). If you just consider the first type, it is very obvious that it is much better for Apple to invest in its own shares than in Securities.
There is yet another advantage to buying back shares. It is perfectly legal for Apple entities overseas to buy Apple shares with the cash they own. And they don't have to pay tax on the cash - if it is used to buy back shares. The entire transaction can be conducted overseas - where some overseas investment bank buys Apple shares on behalf of the overseas entity, and the overseas entity buys these shares from the investment bank. This sort of transaction is the simplest way for Apple to avoid the proposed Obama tax on foreign earnings.
Now this is a compelling argument, rather than dividends, since it offers real bang for the buck. Unless someone can quantify how giving dividends financially benefits Apple, it's money down the drain. I know if you own AAPL stock you'd want dividends, but hey, you're enjoying a good ride on the stock price already. I'd rather Apple use that cash to continue making superb products and services at affordable prices for everyone.
The only thing is I know Apple would be somewhat uncomfortable investing too much in its own stock, since that's not "real equity". As we know, if Apple stock plummeted tomorrow, and much of that $100b is in AAPL stock, that won't be good for Apple.
Obviously Wall Street just wants more of the Apple pie, and they will stop at virtually nothing to get it.
As for yields, even a regular Joe investing in AUD cash savings can get amost 6%. So given the global diversification of Apple's investments, 5% yield is a minimum amount. And like they say, it's mostly short-term securities, which runs at very much reduced risk... Compared to Apple investing in AAPL and other stocks which would significantly increase their risk.
Isn't it amazing that (A) analysts are trying to tell what the most successful company in the world should do, and (B) that analysts are saying Apple has too much money, and it's not investing it properly. To paraphrase Steve, "I know these analysts, and some of these guys haven't done anything in 7 years...!" I empathise with their work and their efforts, but I question whether the financial industry actually creates any ~real~ value in our lives.
I think Apple knows what it is doing.