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Apple to spend $45B over 3 years on dividend & share repurchase program - Page 4

post #121 of 183
3/19/12 at 10:28am
Quote:
Originally Posted by Woodlink View Post

Yes, Congress has approved corporate tax holidays in the past.

Problem is, every time Congress has done such, corporations just park even more money off shore hoping for another such holiday.

so Congress just needs to find a way to make sure the money stays here in the US. Either put a time requirement on the break, tie it to some kind of 'physical' item like a tax break on the money because they are using it to built a new data center with a minimum of X jobs created, or to start assembly factories in the US, or even a scholarship fund for students that want to get into engineering etc, or a grant program for schools that want to adopt iPads but it's a bit out of reach funding wise. I'm sure there's a way in the various rules they can set up such a game in a way that is legal and Apple etc would bite and bring some of that money home
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post #122 of 183
3/19/12 at 10:31am
Quote:
Originally Posted by khmann View Post

The competition in the future is tough,

Which competition exactly are you talking about. Because there has been a lot of signs of whom you speak.

Quote:
the money can be invested in other great technology rather than paying dividends and buyback stocks. It is very disappointing to a long term investor and fan such as me.

THey still have $55 Billion dollars after this to play with and who knows how much they will earn over several months. they could be back up to $100 Billion within a couple of years. while still making great tech etc.

These kinds of decisions aren't made quickly or lightly, have a little faith
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post #123 of 183
3/19/12 at 10:36am
Quote:
Originally Posted by charlituna View Post

Yep. and they probably spent several months considering that issue, plus the legal issues and concerns before going forward on this.

And yet there will be folks that will talk of this as a Tim Cook decision, making it sound like he decided to do it the moment Steve was buried now that Steve wasn't around to say no. Because they don't understand the amount of back work that has to go into such things, same for things like charity match programs, new cash discounts for employees and so on.

I was just thinking about this. One has to wonder whether Steve knew that this was in Apple's future. My hunch and feeling, especially gauging how passionate and true to form Tim Cook is, is that he did.
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post #124 of 183
3/19/12 at 10:46am
Quote:
Originally Posted by melgross View Post

I understand share repurchases just fine. You don't recognize what happens in the real world. Besides, I've already stated in other posts that shares are being repurchased here for the reason of taking them out of circulation because of share number increases over the years. Perhaps you should read all of my posts before you comment.

You can state the academic reasons for anything, but theory and practice usually have a disconnect. That's true here as well.

Sorry, but I live in the real world. For example, you were talking about how much dividends would increase share values - while Apple shareholders largely yawned (certainly not the 15% you and others were talking about).. That coincides with the real world evidence I provided.

Furthermore, you don't understand the scenario. Shares are NOT being taken out of circulation in this case. Apple has stated that they will be buying the shares to redistribute them to employees.

Quote:
Originally Posted by asdasd View Post

Thats wrong because the company has lost it's cash, which would be a loss equivalent to the gain of the stocks purchased, and cash should be factored into the cost of the shares. Imagine a company which has no revenue but has lots of cash ( its a funny company for sure, but this is a thought experiment). The company has $80B in the bank and 1 billion outstanding shares. The shares should be worth $80 each. If the company buys back 500M stock for $40B, the cash on hand falls to $40B, the 500 million remaining stock should still be worth $80 reflecting the book value of the company.

Even if you add on revenue that calculus still holds barring market sentiment, which is a mugs game.

They could have sold the stock yesterday for the same price. The money has in effect disappeared.

Again, you're not paying attention.

Apple has 932 M in shares right now. They're going to buy back something like 20 M of them. You could pretend that the money has disappeared. But you have to look at the alternative. If they don't buy the shares back, they will issue 20 M shares to give away to employees - which dilutes the share value. So the $10 B is being spent to prevent issuance of 20 M in new shares - so there is value retained for individual shareholders.
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post #125 of 183
3/19/12 at 11:03am
Quote:
Originally Posted by anantksundaram View Post

You are double-counting your returns. The reason that the dividend yield - say, 2.5% - is so low is precisely because the capital gains is so high (i.e., (595 – 80)/80 – 1 = ~550%).

You can't, in your calculations, say that you got a 550% return over your holding period plus a 10% dividend. Your dividend yield is based on the current price. Period.

Your math does not make any sense.

It's a huge yield based on the book price of his stocks. So he's getting a 10+% yearly return AND the 500+% when he sells.

But yes, if you calculate yield based on current stock price and not book price of 80 dollar shares, then the yield is low.

But for the types who like to hold stock forever and got Apple very cheap, they will be making a lot of money from the dividend.
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post #126 of 183
3/19/12 at 11:20am
Quote:
Originally Posted by anantksundaram View Post

We are back to disagreeing: I don't agree with your math here!

But I'll stop there.

I'm not disagreeing with you here. I'm just saying that he FEELS that way about it.

By the way, I'm sitting in the dentists chair while I'm posting. Great fun. You should all try it.
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post #127 of 183
3/19/12 at 11:27am
Quote:
Originally Posted by anantksundaram View Post

We are back to disagreeing: I don't agree with your math here!

But I'll stop there.

I don't agree with using the current stock price as a measure against your investment. Unless you are buying or selling the stock means nothing, but $2.65 per share can directly be compared by price(s) in which you purchased your stock.

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post #128 of 183
3/19/12 at 11:33am
Quote:
Originally Posted by melgross View Post

By the way, I'm sitting in the dentists chair while I'm posting. Great fun. You should all try it.

Think about Apple's stock price.

Will make the dentist go away....
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post #129 of 183
3/19/12 at 11:35am
Quote:
Originally Posted by CGJ View Post

Buyback is good, gives shares to hard-working employees who grow the business.

Dividend's are bad, gives rich 'investors' even more money; even though they don't contribute at all to the way Apple is run. It's like a sportsman paying the owner of the sports club, as opposed to the owner paying the sportsman.

Surely, going from $370 in October 2011 to $590 in March 2012 is enough money for these 'investors'. Dividends are for companies with no room for growth, like Microsoft.

Just because you have money, doesn't mean you have to spend money.

A lot of those rich investors are index funds and pension funds. Dividends are good. Although there are tax consequences to dividends.

I believe they were going to do the stock options for employees regardless, so a buyback helps current stockholders.
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post #130 of 183
3/19/12 at 11:48am
Quote:
Originally Posted by anantksundaram View Post

Actually, it's not true that they are destroyed. They can be kept as treasury stock. While they will not have voting rights or receive dividends, they can be reissued, kept forever, or simply canceled. While it's kept, it appears as "negative" equity on the balance sheet. It counts as "authorized" but not issued shares.

Yes, it can be, but if they buy them to retire them, then they usually will destroy them.
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post #131 of 183
3/19/12 at 11:52am
Quote:
Originally Posted by jragosta View Post

Sorry, but I live in the real world. For example, you were talking about how much dividends would increase share values - while Apple shareholders largely yawned (certainly not the 15% you and others were talking about).. That coincides with the real world evidence I provided.

Furthermore, you don't understand the scenario. Shares are NOT being taken out of circulation in this case. Apple has stated that they will be buying the shares to redistribute them to employees.

That's not what I read, or heard.

Did I say 15%? If so, I didn't mean right away. I meant over some time.
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post #132 of 183
3/19/12 at 12:00pm
Quote:
Originally Posted by anantksundaram View Post

We are back to disagreeing: I don't agree with your math here!

But I'll stop there.

Its pretty simple. If you bought shares at $80, Apple will start paying over 10 per year in dividends per share. That's over 10%. An individual's dividend yield is calculated based on the purchase price not todays closing price.
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post #133 of 183
3/19/12 at 12:03pm
Quote:
Originally Posted by backtomac View Post

Its pretty simple. If you bought shares at $80, Apple will start paying over 10 per year in dividends per share. That's over 10%. An individual's dividend yield is calculated based on the purchase price not todays closing price.

Where are you getting 10% from? All I see is $2.65 per share.

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post #134 of 183
3/19/12 at 12:03pm
Didn't I read earlier, that much of Apple's ballyhooed $100 billion is actually tied up overseas - in the countries where the products were purchased? How will dividends be paid with this money? Will Chinese investors get paid by Apple's pile of money in China? US investors from Apple's profits made in the US? Etc? Or does paying dividends allow them to return foreign profits back to the US without paying taxes?
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post #135 of 183
3/19/12 at 12:05pm
Quote:
Originally Posted by SolipsismX View Post

Where are you getting 10% from? All I see is $2.65 per share.

That's per share per quater. Multiple by 4 to get the yearly dividend and then use that to compute the yield. Thats over $10 per share per year in dividends.
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post #136 of 183
3/19/12 at 12:05pm
Quote:
Originally Posted by SolipsismX View Post

Where are you getting 10% from? All I see is $2.65 per share.

It's actually $10.60 per share per year. It's $2.65 per quarter.
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post #137 of 183
3/19/12 at 12:06pm
Quote:
Originally Posted by melgross View Post

It's actually $10.60 per share per year. It's $2.65 per quarter.

That's $10.60 per share, not 10% per share. The value of the stock is irrelevant as it's a flat pay out per share, not a percentage.

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post #138 of 183
3/19/12 at 12:12pm
Quote:
Originally Posted by melgross View Post

I'm not disagreeing with you here. I'm just saying that he FEELS that way about it.

By the way, I'm sitting in the dentists chair while I'm posting. Great fun. You should all try it.

...punch line to old joke -- said by woman in the chair to dentist: "Now, we aren't going to hurt each other... Are we?"

...you filli in the lead up story
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post #139 of 183
3/19/12 at 12:13pm
Quote:
Originally Posted by SolipsismX View Post

That's $10.60 per share, not 10% per share. The value of the stock is irrelevant as it's a flat pay out per share, not a percentage.

Yeah, we know, we know. But dividends are always referred to in percentage. Thats not me, that's how it works. I don't know how he got 10%. It's actually more.
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post #140 of 183
3/19/12 at 12:15pm
Quote:
Originally Posted by jragosta View Post

Apple has 932 M in shares right now. They're going to buy back something like 20 M of them. You could pretend that the money has disappeared. But you have to look at the alternative. If they don't buy the shares back, they will issue 20 M shares to give away to employees - which dilutes the share value. So the $10 B is being spent to prevent issuance of 20 M in new shares - so there is value retained for individual shareholders.

I am not pretending anything, and I most certainly am paying attention.

What I did was give a thought experiment about the standard share repurchase in a theoretical company- one with no revenue to make the point clear - , a reply to your claim that a buying X% of stock always increases the stock by X% in any company.

Here is your original quote.

If it is a true share repurchase (the shares are removed from circulation), the gain is that there are fewer shares in circulation. So if a company removes 10% of the shares from circulation, the per share income goes up by 10%. If the multiple remains the same, the share price would also go up by 10%.

Thats what I was responding to, because it is wrong. The supposed 10% increase should in theory be balanced by the drop in cash value, any actual increase depends on market sentiment.

Moving onto the fact that Apple are issuing shares to employees is to change the goalposts.
I wanted dsadsa bit it was taken.
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post #141 of 183
3/19/12 at 12:20pm
http://www.thestreet.com/story/11461...m_ven=CNNMONEY
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post #142 of 183
3/19/12 at 12:22pm
Quote:
Originally Posted by melgross View Post

Yeah, we know, we know. But dividends are always referred to in percentage. Thats not me, that's how it works. I don't know how he got 10%. It's actually more.

I was using round numbers to try to make things simple but oh well.
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post #143 of 183
3/19/12 at 12:28pm
Quote:
Originally Posted by backtomac View Post

I was using round numbers to try to make things simple but oh well.

I didn't start reading this discussion until the end but as long as you qualifier your comments to indicate how you got 10% I'd say it's accurate. Example, "Based on my buy in I'll be earning over 10% per year on my initial investment."

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post #144 of 183
3/19/12 at 12:31pm
Quote:
Originally Posted by SolipsismX View Post

I didn't start reading this discussion until the end but as long as you qualifier your comments to indicate how you got 10% I'd say it's accurate. Example, "Based on my buy in I'll be earning over 10% per year on my initial investment."

I thought I was being pretty clear (see my post 132) but I apologize if I was confusing.
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post #145 of 183
3/19/12 at 12:32pm
Quote:
Originally Posted by Godzilla View Post

I was just thinking about this. One has to wonder whether Steve knew that this was in Apple's future. My hunch and feeling, especially gauging how passionate and true to form Tim Cook is, is that he did.

Below is one of the quotes from the discussion on the Asymco site that I think may apply -- In 2 years, Likely, Apple's cash balance will be back to where it is today. They may have missed an opportunity for investment -- but the cash was just sitting there, earning minimal return. Appaently, Apple couldn't find anything significant (for their needs) in which to invest that cash.

Quote:
FalKirk

Here is what Tim Cook has done at a cost of $45 billion over three years:

1) Taken a contentious item off the table, mollifying stockholders while still allowing Apple to continue to grow its cash pile.

2) Preserved from taxation all of the cash held outside of the U.S.

3) Added a new class of dividend-only institutional investor.

Overall, I conclude that this is a strategic maneuver. Sometimes an immediate concession provides a long-term strategic advantage.
"So at the end of the presentation, Steve came up to me and said: Is the iPhone worth criticizing? And I said: Make the screen five inches by eight inches, and you’ll rule the world."
– Alan Kay –
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– Alan Kay –
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post #146 of 183
3/19/12 at 1:02pm
All this discussion of dividend yield percentage is making my head spin.

I have some AAPL that I bought in 2003 for $17 -- if I use the $17 as a base for the yield then $10.60/year would be 62%.

But, there was no dividend when I bought the shares or for the next 9 years -- so that's actually 7% yield per year less the time/value of money.

I also bought some AAPL recently at $392, $446, $476 and $518...

I guess my point is that when I look to purchase a stock for income, I look at the dividend in effect at the time of purchase.

All of my AAPL were purchased for growth, so any dividend is just a bonus (albeit one with tax implications).

I would be happier with a DRIP as that would be consistent with the reason I bought the stock.
"So at the end of the presentation, Steve came up to me and said: Is the iPhone worth criticizing? And I said: Make the screen five inches by eight inches, and you’ll rule the world."
– Alan Kay –
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"So at the end of the presentation, Steve came up to me and said: Is the iPhone worth criticizing? And I said: Make the screen five inches by eight inches, and you’ll rule the world."
– Alan Kay –
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post #147 of 183
3/19/12 at 1:11pm
Quote:
Originally Posted by Dick Applebaum View Post

All this discussion of dividend yield percentage is making my head spin.

I have some AAPL that I bought in 2003 for $17 -- if I use the $17 as a base for the yield then $10.60/year would be 62%.

Yep. Even though you did not anticipate the dividend its a pretty nice windfall no? Did you expect those shares to rise to nearly $600?
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post #148 of 183
3/19/12 at 1:20pm
Quote:
Originally Posted by thataveragejoe View Post

Kind of. If Congress did nothing and companies needed to bring money back they would just have to suck it up, no? That makes what you say more an opinion and not really fact. If companies just continually waited for tax holidays what's the point of having rules at all? Whole thing seems like a joke. No wonder we're in such a mess.

We're in this mess largely because of the ridiculous amount of taxes that exist in general...
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post #149 of 183
3/19/12 at 1:24pm
Quote:
Originally Posted by backtomac View Post

Yep. Even though you did not anticipate the dividend its a pretty nice windfall no? Did you expect those shares to rise to nearly $600?

Not the original $17 ones... but certainly the more recent purchases! Market closed at $601.10... After market 602.36.... $603.56.

Not a big movement or a lot of trades... Gonna' watch and see what happens for a while.
"So at the end of the presentation, Steve came up to me and said: Is the iPhone worth criticizing? And I said: Make the screen five inches by eight inches, and you’ll rule the world."
– Alan Kay –
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"So at the end of the presentation, Steve came up to me and said: Is the iPhone worth criticizing? And I said: Make the screen five inches by eight inches, and you’ll rule the world."
– Alan Kay –
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post #150 of 183
3/19/12 at 1:38pm
Quote:
Originally Posted by backtomac View Post

Its pretty simple. If you bought shares at $80, Apple will start paying over 10 per year in dividends per share. That's over 10%. An individual's dividend yield is calculated based on the purchase price not todays closing price.

I think you need to figure out the notion of opportunity cost.

Anyway, if you think you're getting a better deal, good for you! Be happy.
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post #151 of 183
3/19/12 at 1:41pm
Quote:
Originally Posted by SolipsismX View Post

I didn't start reading this discussion until the end but as long as you qualifier your comments to indicate how you got 10% I'd say it's accurate. Example, "Based on my buy in I'll be earning over 10% per year on my initial investment."

You do need to ponder the difference between "Based on my buy in I'll be earning over 10% per year on my initial investment.." and "Based on my buy in I'll be earning over 10% per year on my initial investment after I spent 10 years waiting for it."
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post #152 of 183
3/19/12 at 1:47pm
Quote:
Originally Posted by anantksundaram View Post

One thing I am super happy about: they didn't announce some large acquisition.

That would have been a terrible move.

Maybe if it was a lame acquisition.

As it is, Apple should just buy Google and get it over with.
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post #153 of 183
3/19/12 at 1:48pm
Quote:
Originally Posted by anantksundaram View Post

You do need to ponder the difference between "Based on my buy in I'll be earning over 10% per year on my initial investment.." and "Based on my buy in I'll be earning over 10% per year on my initial investment after I spent 10 years waiting for it."

It wasn't an option then so it doesn't count. Plus, my statement didn't mention anything about all years one has held the stock. As of the time this is counted you'll get $10.60 per share per year. I hope you aren't suggesting Apple owes you that much per share per year you've held the stock.

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post #154 of 183
3/19/12 at 1:54pm
Quote:
Originally Posted by Dick Applebaum View Post

All this discussion of dividend yield percentage is making my head spin.

I have some AAPL that I bought in 2003 for $17 -- if I use the $17 as a base for the yield then $10.60/year would be 62%.

But, there was no dividend when I bought the shares or for the next 9 years -- so that's actually 7% yield per year less the time/value of money.

I also bought some AAPL recently at $392, $446, $476 and $518...

I guess my point is that when I look to purchase a stock for income, I look at the dividend in effect at the time of purchase.

All of my AAPL were purchased for growth, so any dividend is just a bonus (albeit one with tax implications).

I would be happier with a DRIP as that would be consistent with the reason I bought the stock.

I sympathise. Truly.

Here's a simple example that might (or not!) help to clear things up. Suppose a stock you bought for $100 went up to $120 in Year 2, and to $144 Year 3. Suppose that the stock paid $5 in dividends in Year 2 and Year 3.

What is your total shareholder return (TSR) between Years 1 and 2? It would be calculated as [(120 100)/100 + (5/100)] 1 = 20% + 5% = 25%.

What is your total shareholder return (TSR) between Year 2 and 3? [(144 120)/100 + (5/120)] 1 = 20% + 4.17% = 24.17%.

See how the TSR fell in the second year (i.e., it's not the original 25% anymore)? This is the conventional way to calculate it.

Another way to calculate is would be as an annualized "holding period return" of a compounded annual growth rate (CAGR). Suppose you bought and held for 2 years. Your 2-year return was [(144 100)/100 + 10/100] 1 = 44% + 10% = 54%. The CAGR from this holding would be: √(1.54) 1 = 24.1%.

Notice it's not 25%?
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post #155 of 183
3/19/12 at 1:55pm
Quote:
Originally Posted by SolipsismX View Post

It wasn't an option then so it doesn't count. Plus, my statement didn't mention anything about all years one has held the stock. As of the time this is counted you'll get $10.60 per share per year. I hope you aren't suggesting Apple owes you that much per share per year you've held the stock.

As I said, you need to ponder the difference.... I don't know how else to explain this!
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post #156 of 183
3/19/12 at 1:57pm
@Dick Applebaum

Quote: "Sigh! My late wife, Lucy -- the love of my life, was Croatian (dark hair, tan complexion and amazing blue eyes)... She was beautiful, stubborn, open to anything, funny... and a wink and smile that would melt the hardest heart!


Condolences for your loss..and sharing this deepens the poignancy of your signature.
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post #157 of 183
3/19/12 at 2:10pm
Quote:
Originally Posted by anantksundaram View Post

I sympathise. Truly.

Here's a simple example that might (or not!) help to clear things up. Suppose a stock you bought for $100 went up to $120 in Year 2, and to $144 Year 3. Suppose that the stock paid $5 in dividends in Year 2 and Year 3.

What is your total shareholder return (TSR) between Years 1 and 2? It would be calculated as [(120 100)/100 + (5/100)] 1 = 20% + 5% = 25%.

What is your total shareholder return (TSR) between Year 2 and 3? [(144 120)/100 + (5/120)] 1 = 20% + 4.17% = 24.17%.

See how the TSR fell in the second year (i.e., it's not the original 25% anymore)? This is the conventional way to calculate it.

Another way to calculate is would be as an annualized "holding period return" of a compounded annual growth rate (CAGR). Suppose you bought and held for 2 years. Your 2-year return was [(144 100)/100 + 10/100] 1 = 44% + 10% = 54%. The CAGR from this holding would be: √(1.54) 1 = 24.1%.

Notice it's not 25%?

I understand... but I was trying to look at dividend yield -- not growth.
"So at the end of the presentation, Steve came up to me and said: Is the iPhone worth criticizing? And I said: Make the screen five inches by eight inches, and you’ll rule the world."
– Alan Kay –
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"So at the end of the presentation, Steve came up to me and said: Is the iPhone worth criticizing? And I said: Make the screen five inches by eight inches, and you’ll rule the world."
– Alan Kay –
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post #158 of 183
3/19/12 at 2:12pm
Quote:
Originally Posted by anantksundaram View Post

I think you need to figure out the notion of opportunity cost.

Anyway, if you think you're getting a better deal, good for you! Be happy.

Its not opportunity cost because the dividend is icing on the cake. I bought those shares with no promise or guarantee of capital appreciation or dividend payments.

Your trying to minimize the effect of the dividend on the long term shareholders but I assure you that investors that bought in years ago are going to be very happy when those checks come.
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post #159 of 183
3/19/12 at 2:41pm
Quote:
Originally Posted by Slang4Art View Post

We're in this mess largely because of the ridiculous amount of taxes that exist in general...

Look at it this way. We have higher corporate taxes and lower personal taxes. Most other developed countries have lower corporate taxes and higher personal taxes. Choose your poison.
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post #160 of 183
3/19/12 at 3:34pm
Quote:
Originally Posted by jragosta View Post

Sorry, but I live in the real world. For example, you were talking about how much dividends would increase share values - while Apple shareholders largely yawned (certainly not the 15% you and others were talking about).. That coincides with the real world evidence I provided.

Furthermore, you don't understand the scenario. Shares are NOT being taken out of circulation in this case. Apple has stated that they will be buying the shares to redistribute them to employees.



Again, you're not paying attention.

Apple has 932 M in shares right now. They're going to buy back something like 20 M of them. You could pretend that the money has disappeared. But you have to look at the alternative. If they don't buy the shares back, they will issue 20 M shares to give away to employees - which dilutes the share value. So the $10 B is being spent to prevent issuance of 20 M in new shares - so there is value retained for individual shareholders.

That sounds right (don't understand anyone who disputes this interpretation). Here's what I don't get - $10B to buy back shares that will (might?) be distributed to employees. $10B worth of stock/options for employees?
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