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Apple to spend $45B over 3 years on dividend & share repurchase program - Page 2

post #41 of 183
3/19/12 at 6:38am
Quote:
Originally Posted by melgross View Post

If you listened to the call, you would see that they did it simply to account for the share growth over the next few years from employee compensation.

Right. Apple is on the hook to give away lots of (well earned) shares of AAPL to employees and executives. If they didn't do a stock buy-back these would be created out of thin air (essentially printing money). With a buy-back they are essentially buying the shares they are giving away from sellers rather than taking them from all investors (through dilution).
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post #42 of 183
3/19/12 at 6:40am
Quote:
Originally Posted by KDMeister View Post

I would rather see Apple stick to their guns despite all the pressure from the investor community. I'd rather see Apple shares go up because of organic growth and not because of dividends. Buybacks are the biggest waste of money - the money will go into thin air when the stock price comes down at some point. I'd rather see Apple end world hunger than pay people who already have a lot of cash to spare. After all they have money to spend on Apple products and Apple shares.

Unfortunately, world hunger is due to incompetence and corruption in the countries that are most affected. Despite many billions poured into these countries over the decades, little has changed. Selling all of Apple wouldn't change it much either.
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post #43 of 183
3/19/12 at 6:43am
Quote:
Originally Posted by melgross View Post

They made the point, several times that repatriation would be too expensive, and pointed the finger at the government for that. Everything they're doing is from domestic cash and holdings.

Can Apple make foreign purchases, like the Israeli company, from foreign cash -- without repatriating the cash?
"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 #44 of 183
3/19/12 at 6:45am
Quote:
Originally Posted by malax View Post

Right. Apple is on the hook to give away lots of (well earned) shares of AAPL to employees and executives. If they didn't do a stock buy-back these would be created out of thin air (essentially printing money). With a buy-back they are essentially buying the shares they are giving away from sellers rather than taking them from all investors (through dilution).

That's right. Tech companies have traditionally given good share plans to employees as shares increased substantially in value. Some companies, such as MS, have made dozens of people very rich in the company. While MS's shares haven't gained in a long time, Apple's continue to do so. But issuing new stock constantly, as Apple has done over the years, leads to a diminishing of equity per share.

Apple really doesn't need to worry about that as equity per share is increasing at high rates. But they have said that they consulted with shareholders about this, and the program they announced it the result of those considerations, and their plans for the cash.
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post #45 of 183
3/19/12 at 6:47am
Quote:
Originally Posted by Dick Applebaum View Post

Can Apple make foreign purchases, like the Israeli company, from foreign cash -- without repatriating the cash?

They can use that cash as they see fit. The purchase price for a foreign company goes wherever the shares are, basically. Foreign cash can be used as any other. I don't know how Apple does it though.
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post #46 of 183
3/19/12 at 6:54am
Quote:
Originally Posted by Dick Applebaum View Post

Yeah, all of this with domestic cash... waiting for a better tax environment to repatriate foreign cash...

They have a very long wait then.
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post #47 of 183
3/19/12 at 6:56am
Quote:
Originally Posted by Dick Applebaum View Post

Can Apple make foreign purchases, like the Israeli company, from foreign cash -- without repatriating the cash?

Probably. Microsoft used that strategy with Skype.
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post #48 of 183
3/19/12 at 6:56am
Quote:
Originally Posted by Dick Applebaum View Post

Can Apple make foreign purchases, like the Israeli company, from foreign cash -- without repatriating the cash?

Yes and no.

The foreign subsidiary can buy shares if it wishes and the shares remain in the hands of the foreign subsidiary.

However, Apple wants to use those shares to reward employees who are mostly U.S. citizens. So the shares would need to be moved back to the U.S., incurring taxation, before they could be distributed to the employees so little would be gained.
"I'm way over my head when it comes to technical issues like this"
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"I'm way over my head when it comes to technical issues like this"
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post #49 of 183
3/19/12 at 6:59am
Quote:
Originally Posted by thataveragejoe View Post

They have a very long wait then.

Not necessarily. I would not be surprised if some type of "one time" tax reduction/amnesty is allowed on repatriated funds, soon after the 2012 elections (believe it or not, there's bipartisan support for something like this).

Such a "one time" tax holiday has happened a couple of times before.....
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post #50 of 183
3/19/12 at 6:59am
1.8% annual return on your investment.

Not sure Wall Street is going to be too happy with that.
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post #51 of 183
3/19/12 at 7:02am
Quote:
Originally Posted by anantksundaram View Post

Not necessarily. I would not be surprised if some type of "one time" tax reduction/amnesty is allowed on repatriated funds, soon after the 2012 elections (believe it or not, there's bipartisan support for something like this).

Such a "one time" tax holiday has happened a couple of times before.....

I expect something similar.
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post #52 of 183
3/19/12 at 7:02am
Quote:
Originally Posted by Shaun, UK View Post

1.8% annual return on your investment.

Not sure Wall Street is going to be too happy with that.

It's actually not bad for tech companies. I don't remember what the average for them is, but I don't think it's far off.

Apple's up about $7.50 now.
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post #53 of 183
3/19/12 at 7:03am
found some answers to my questions

how do investors benefit with a stock buy back

http://beginnersinvest.about.com/od/.../aa091806a.htm
I APPLE THEREFORE I AM
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post #54 of 183
3/19/12 at 7:03am
Quote:
Originally Posted by anantksundaram View Post

Not necessarily. I would not be surprised if some type of "one time" tax reduction/amnesty is allowed on repatriated funds, soon after the 2012 elections (believe it or not, there's bipartisan support for something like this).

Such a "one time" tax holiday has happened a couple of times before.....

It has happened before, but given the gridlock in congress, and massive deficits the US has, to get anything done seems a long ways off. I could careless about politics, but I doubt a change of the guard is coming in November for better or worse. Funny how everyone wants to avoid paying taxes, even the richest company in the world.
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post #55 of 183
3/19/12 at 7:04am
Quote:
Originally Posted by Shaun, UK View Post

1.8% annual return on your investment.

Not sure Wall Street is going to be too happy with that.

but they are doing both dividends AND repurchase see my link

http://beginnersinvest.about.com/od/.../aa091806a.htm
I APPLE THEREFORE I AM
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post #56 of 183
3/19/12 at 7:08am
Quote:
Originally Posted by anantksundaram View Post

Not necessarily. I would not be surprised if some type of "one time" tax reduction/amnesty is allowed on repatriated funds, soon after the 2012 elections (believe it or not, there's bipartisan support for something like this).

Such a "one time" tax holiday has happened a couple of times before.....

Quote:
Originally Posted by melgross View Post

I expect something similar.

Me too -- there are a few US companies with large foreign cash holdings who, with Apple, are lobbying for a tax holiday.
"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 #57 of 183
3/19/12 at 7:12am
Quote:
Originally Posted by thataveragejoe View Post

It has happened before, but given the gridlock in congress, and massive deficits the US has, to get anything done seems a long ways off. I could careless about politics, but I doubt a change of the guard is coming in November for better or worse. Funny how everyone wants to avoid paying taxes, even the richest company in the world.

Actually, it helps reduce the deficit: a smaller percentage of repatriated funds is better for the treasury than 0% of funds sitting abroad!

Congress can't force companies to bring their money back to the US.
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post #58 of 183
3/19/12 at 7:14am
Quote:
Originally Posted by Shaun, UK View Post

1.8% annual return on your investment.

Not sure Wall Street is going to be too happy with that.

Shareholder Return = % Capital Gains + % Dividend Yield.

Wall Street is very happy with Apple's return, thank you.
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post #59 of 183
3/19/12 at 7:15am
Perfect! That's what everyone expected they at least should do. In 3 years they can make-up that $45 billion.
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post #60 of 183
3/19/12 at 7:17am
Per Zerohedge, "Apple admits it has spoken to Congress and the administration about tax issues relating to cash repatriation.". I hope Apple gets some tax breaks. It just isn't fair to pay taxes when they are giving out dividends, money which will pump up the economy or the stock market.
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post #61 of 183
3/19/12 at 7:18am
Quote:
Originally Posted by melgross View Post

Apple's up about $7.50 now.

What are you quoting ?
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post #62 of 183
3/19/12 at 7:19am
Quote:
Originally Posted by anantksundaram View Post

Actually, it helps reduce the deficit: a smaller percentage of repatriated funds is better for the treasury than 0% of funds sitting abroad!

Congress can't force companies to bring their money back to the US.

As I understand it, Apple would need to pay the difference between the foreign taxes already paid -- and the taxes that would be due if the money had been earned/booked domestically.

Say Apple pays 20% taxes in France and 30% taxes in US -- they would need to pay 10% US tax to repatriate the money.

Though, I do recall a recent (last 6 months) statement by Tim or Peter that Apple had set aside funds to pay US taxes on foreign earnings -- going forward (I think).
"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 –
Reply
"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 #63 of 183
3/19/12 at 7:20am
Quote:
Originally Posted by anantksundaram View Post

Actually, it helps reduce the deficit: a smaller percentage of repatriated funds is better for the treasury than 0% of funds sitting abroad!

Congress can't force companies to bring their money back to the US.

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.
I'm not a pessimist. I'm an optimist, with experience.
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post #64 of 183
3/19/12 at 7:21am
Quote:
Originally Posted by NOFEER View Post

found some answers to my questions

how do investors benefit with a stock buy back

http://beginnersinvest.about.com/od/.../aa091806a.htm

Yeah. But a lot of that is Voodoo. The point is that generalizations about this, as with most other things, doesn't help in an individual situation. It isn't even correct in a number of ways.

Generally, share repurchasing is done to lift shares that are tottering, by supposedly showing that management has confidence that share prices will go higher in the future. Of course, in reality, is says no such thing. If management purchased those shares with their own money, THEN it would say something. But even then, management can be wrong, and often has been.

With Apple, it's different. While I'm against share repurchaseing in principle, Apple has done it for a reason that really isn't saying that their shares should be worth more, and so this is going to prove they mean it. They are buying simply to equalize out the share growth over the years. Is that needed? I really don't think so, but it's not the worst thing.

The problem with share repurchasing is that it throws money away. It's GONE! Nothing can be done with it. And for most companies doing it, it doesn't result in share price accumulation over the long term.

That's why I prefer a dividend, or a disbursement. The money is actually going somewhere. It isn't being burned.
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post #65 of 183
3/19/12 at 7:21am
Quote:
Originally Posted by thataveragejoe View Post

It has happened before, but given the gridlock in congress, and massive deficits the US has, to get anything done seems a long ways off. I could careless about politics, but I doubt a change of the guard is coming in November for better or worse. Funny how everyone wants to avoid paying taxes, even the richest company in the world.

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.

It's a tricky situation to say the least, both for Congress and the corporations that take advantage of it.

Our IRS tax code is a complete cluster - - - - .

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post #66 of 183
3/19/12 at 7:24am
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.

I think that a big part of the problem is that foreign countries are friendlier towards business -- lower taxes, fewer regulations...

At times, I think that the US and some states (California) are doing everything they can to discourage business/investment.
"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 –
Reply
"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 #67 of 183
3/19/12 at 7:24am
Quote:
Originally Posted by anantksundaram View Post

Shareholder Return = % Capital Gains + % Dividend Yield.

Wall Street is very happy with Apple's return, thank you.

By capital gains I assume you mean the share price when you buy and sell. That means you will continue to make most of your profit from the rising share price rather than the dividend payments.

So we are still going to have all these dipshit analysts talking up the share price all the time so their colleagues in the trading division can make a quick buck.
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post #68 of 183
3/19/12 at 7:25am
Quote:
Originally Posted by jannewmx View Post

I hope Apple gets some tax breaks. It just isn't fair to pay taxes

I know right, taxes are just so unfair! Why would anyone want to do that? Let's get rid of all of them! Surely someone else must be willing to pay up for everything in our society.
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post #69 of 183
3/19/12 at 7:31am
Quote:
Originally Posted by Dick Applebaum View Post

As I understand it, Apple would need to pay the difference between the foreign taxes already paid -- and the taxes that would be due if the money had been earned/booked domestically.

Say Apple pays 20% taxes in France and 30% taxes in US -- they would need to pay 10% US tax to repatriate the money.

Though, I do recall a recent (last 6 months) statement by Tim or Peter that Apple had set aside funds to pay US taxes on foreign earnings -- going forward (I think).

No, that's not correct. I earlier quoted from today's Times article on this. They said that Apple could pay 30%, or more, on repatriated cash. It's a misconception to think that all they would pay is the difference.

But, even if that were true, it could still be an additional 10%, which for Apple would be almost $7 billion.
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post #70 of 183
3/19/12 at 7:33am
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.

It's a tricky situation to say the least, both for Congress and the corporations that take advantage of it.

Our IRS tax code is a complete cluster - - - - .

No they don't. If the government gives a one time holiday, that's exactly what it is. Companies then continue to accumulate cash outside of the US, because that's where a lot of their income is. The cycle continues.
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post #71 of 183
3/19/12 at 7:35am
Quote:
Originally Posted by melgross View Post

No, that's not correct. I earlier quoted from today's Times article on this. They said that Apple could pay 30%, or more, on repatriated cash. It's a misconception to think that all they would pay is the difference.

But, even if that were true, it could still be an additional 10%, which for Apple would be almost $7 billion.

Wow! Are you sure? Don't multinational companies get credit for foreign taxes paid?

If not, then wouldn't the US's generally higher corporate tax rates tend to drive US companies off shore?

Maybe Apple should buy Schlumberger

Edit: I checked your posts and couldn't find it -- could you relink the article?
"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 –
Reply
"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 #72 of 183
3/19/12 at 7:38am
Quote:
Originally Posted by melgross View Post

No they don't. If the government gives a one time holiday, that's exactly what it is.

And unlimited internet is really unlimited huh?

Yes, just this one time little boys and girls...wink wink nudge nudge. See you again in 7 years when you beg for it again. And the band played on...
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post #73 of 183
3/19/12 at 7:39am
Quote:
Originally Posted by Shaun, UK View Post

By capital gains I assume you mean the share price when you buy and sell. That means you will continue to make most of your profit from the rising share price rather than the dividend payments.

So we are still going to have all these dipshit analysts talking up the share price all the time so their colleagues in the trading division can make a quick buck.

Well, I'm long. I last purchased a large number of Apple share in the middle of 2004, and have bought more during large dips, such as the recession. I don't make money trading. I just make it from long term growth. I've been fortunate to be able to have a fairly large number of shares, so this dividend, even though it's somewhat lower than some expected, will give me a fair amount of income. Couldn't be happier.
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post #74 of 183
3/19/12 at 7:40am
Quote:
Originally Posted by Dick Applebaum View Post

Wow! Are you sure? Don't multinational companies get credit for foreign taxes paid?

If not, then wouldn't the US's generally higher corporate tax rates tend to drive US companies off shore?

Maybe Apple should buy Schlumberger

It's not so simple.
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post #75 of 183
3/19/12 at 7:46am
The competition in the future is tough, 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.
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post #76 of 183
3/19/12 at 7:47am
Quote:
Originally Posted by Shaun, UK View Post

By capital gains I assume you mean the share price when you buy and sell. That means you will continue to make most of your profit from the rising share price rather than the dividend payments.

So we are still going to have all these dipshit analysts talking up the share price all the time so their colleagues in the trading division can make a quick buck.

The average dividend yield in the US stock market is at about 2%. (So Apple is right about at the average.) A vast majority of the historical gains from owning shares has come from capital gains, not dividends.

I think you have an excessively cynical view of stock markets. Perhaps it's not for you. I am simply pointing out a fact.
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post #77 of 183
3/19/12 at 7:49am
Quote:
Originally Posted by Dick Applebaum View Post

Wow! Are you sure? Don't multinational companies get credit for foreign taxes paid?

If not, then wouldn't the US's generally higher corporate tax rates tend to drive US companies off shore?

Maybe Apple should buy Schlumberger

Edit: I checked your posts and couldn't find it -- could you relink the article?

Maybe they should buy an offshore tax haven like the Bahamas and move there

They could turn into Tracy Island. Thunderbirds are go.......
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post #78 of 183
3/19/12 at 7:50am
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.

If they have to bring their money back, then you would be right. The fact that an estimated $1.2 trillion of US corporate cash (of an estimated total of $2 trillion) being held outside the US by companies tells me that they think $800B is plenty for whatever it is they want to do at home.

Indeed, most of the growth opportunities - and hence, investment needs - are abroad, rather than in mature economies such as the US.
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post #79 of 183
3/19/12 at 7:52am
This just in...

Apple gets Dubrovnik City Council approval for plans for new World Headquarters:



"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 –
Reply
"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 –
Reply
post #80 of 183
3/19/12 at 7:56am
Quote:
Originally Posted by Dick Applebaum View Post

Wow! Are you sure? Don't multinational companies get credit for foreign taxes paid?

If not, then wouldn't the US's generally higher corporate tax rates tend to drive US companies off shore?

Maybe Apple should buy Schlumberger

Edit: I checked your posts and couldn't find it -- could you relink the article?

You'll have to look at the Times article today in the business section. But the quote was this:

Quote:
\tWhile Apple ended last year with a cash balance of $97.6 billion, it cannot easily gain access to most of that for a dividend because roughly 66 percent of the money is held by its foreign subsidiaries. To bring that cash back to the United States, Apple would have to pay hefty repatriation taxes, very likely more than 30 percent.

I don't know if they're talking about 30% more than the average of their foreign tax rate, or an actual 30% of the total. Whichever it is, it's a lot.
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