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Hedge fund manager David Einhorn sues Apple over $137B cash hoard - Page 3

post #81 of 175
Quote:
Originally Posted by jungmark View Post

yes but I don't want Apple to spend money just to spend money. In addition, how may multi $billion companies are for sale?

Agree wholeheartedly.

 

There are even fewer -- perhaps zero -- multibillion dollar companies that are undervalued and from which Apple can create significant synergies.

post #82 of 175
Quote:
Originally Posted by sog35 View Post

 

Apple has a fiduciary responsibility to protect the Apple brand and stock price.  When baseless 'reports' come out about crashing demand Apple needs to speak up.  Cook spoke about it in the earnings call but it was already to late.

 

Apple has almost $150 Billion and are doing NOTHING with it.  The cost of doing nothing with the money is a 8-10% loss every year.  There is no reason Apple needs to hoard so much cash.  They need to return some of it to investors, make an acquisition, or at least tell investors what they plan to do in the future.

 

Apple has NO fiduciary duty to "protect stock price". First, a fiduciary duty is a specific legal obligation and they would need to have control over the stock price before that duty could even start to arise. Second, there is a huge myth in this world that a company has a duty to focus on shareholder value. That claim only arose in the 1970s and has been a terrible change to business that create real goods and services. It is the root cause of the short term decision making that has destroyed many companies. The real obligation of a company is to obtain new customers and retain its existing ones by creating and selling a compelling product. That is the absolute best way to create long term shareholder value. Of course, for a hedge fund that is looking to increase the short term valuations of their funds, the long term approach doesn't match up. And that leads to the kind of crap that you and Einhorn focus on.

 

One more thing, do you really think Apple just has that cash sitting in a bank account? It has short term investments that are liquid, but earn a return.

post #83 of 175

The problem is this:

 

$150 Billion in cash and short term investments.

$40-$50 EACH YEAR from operations

$15 Billion each year in buybacks and dividends

 

So how much cash does Apple need?  Isn't $150B enought?  At this rate they will increasing their cash pile by 25-35 billion each year.  And why?  To earn 1% interest? They need to either increase the dividend or make it clear that acquisitions are coming (they don't need to say who or what).  If not it makes Apple look like they don't give a crap about the investors.  And that's one reason why the stock is stalling.

post #84 of 175
" So if Einhorn can persuade the shareholder majority, or whatever the company rules of incorporation define, to do anything, then that's the way the ball will roll. Thats the capitalist system."

That's all and good, but this young punk 1-percenter and his horde only showed up a couple of years ago, and this article makes it pretty clear that he's NOT trying to work with the shareholders as a whole but is instead trying to use our tax money to get the courts to do it for him. I know that his fund has a lot of money invested, but not so much in the larger scheme of Apple's total finances. If someone was to go out on the street, buy 1 share of Apple stock, then pursue an agenda through the courts because they cannot persuade the majority of stockholders, they would be met with snorts of derision. This doesn't sound very different.

"Capital trolls" sounds like a pretty apt description.
post #85 of 175
Quote:
Originally Posted by Gatorguy View Post

Apple themselves have one of largest ones, Braeburn Capital.

Now, this is typical of the misinformation you post about Apple. (i) Braeburn is not a 'hedge fund' (look up what that phrase means); (ii) It is fundamentally an asset management business with a primary focus on managing tax savings from Apple's cash; (iii) Apple generated interest income of about a billion dollars for all of 2012, on an average cash base of about $100B, i.e., ~1% return -- does that look like a hedge fund to you?

post #86 of 175
Quote:
Originally Posted by jungmark View Post


How would apple address these problems. They don't comment on rumors. Should they confirm or deny them? If so then the media will keep playing 20 Qs.

I agree that Apple shouldn't be commenting on rumors. There are countless dumb rumors every day, and it would obviously be foolish for Apple to start getting involved in every dumb rumor about Apple.

 

I was just thinking that Apple should try to figure out a way to change the narrative, to control it. Exactly how is the $20,000 question. 

post #87 of 175
Quote:
Originally Posted by anantksundaram View Post

Now, this is typical of the misinformation you post about Apple. (i) Braeburn is not a 'hedge fund' (look up what that phrase means); (ii) It is fundamentally an asset management business with a primary focus on managing tax savings from Apple's cash; (iii) Apple generated interest income of about a billion dollars for all of 2012, on an average cash base of about $100B, i.e., ~1% return -- does that look like a hedge fund to you?


1% return on $100 Billion is a disgrace.  Apple shareholders should be appauled at this lack of capital management.

 

Apple needs to do something in Feb meeting. Increase the dividend, buyback, or at least make it know they are looking for major acquisitions.  Doing nothing is losing money.  It sucks to have a 1% return on capital.

 

Also just from free cash flow Apple gets $35-$40 billion a year.  A big chunk of that money should be returned to the investor.  $150B is enough for an emergency. PERIOD.

post #88 of 175
Quote:
Originally Posted by sog35 View Post

The problem is this:

$150 Billion in cash and short term investments.
$40-$50 EACH YEAR from operations
$15 Billion each year in buybacks and dividends

So how much cash does Apple need?  Isn't $150B enought?  At this rate they will increasing their cash pile by 25-35 billion each year.  And why?  To earn 1% interest? They need to either increase the dividend or make it clear that acquisitions are coming (they don't need to say who or what).  If not it makes Apple look like they don't give a crap about the investors.  And that's one reason why the stock is stalling.

You must be naive if you think it's all cash in a saving account. They invest it or Tim Cook swims in a vault of gold coins.

No company announces it is acquiring companies until the deal is made. Why should Apple be any different?

If you can't handle Apple's secrecy, get out and stop whining.
post #89 of 175
Quote:
Originally Posted by Apple ][ View Post

I agree that Apple shouldn't be commenting on rumors. There are countless dumb rumors every day, and it would obviously be foolish for Apple to start getting involved in every dumb rumor about Apple.

 

I was just thinking that Apple should try to figure out a way to change the narrative, to control it. Exactly how is the $20,000 question. 


Easy.  Do what all the other companies do.  Make threats in private or totally humilate writers who are spreading lies.  Other companies do it all the time.  It's business and its ugly.  Its the game, Apple needs to play it.

 

The biggest problem to me is this:  All the negative talk on the news about Apple dying can have a negative impact on the brand image.  When people on CNBC say Apple is struggling don't you think the consumer may think the brand is hurting to? 

post #90 of 175
Quote:
Originally Posted by focher View Post

 

Second, there is a huge myth in this world that a company has a duty to focus on shareholder value. That claim only arose in the 1970s and has been a terrible change to business ..... etc etc.

You need to brush up a bit about the history of corporate governance in the US.

 

For starters, please do a search for the following three phrases: (i) Michigan Supreme Court Dodge v. Ford; (ii) MBCA; (iii) ALI Principles of Corporate Governance Section 2.01.

post #91 of 175
Quote:
Originally Posted by jungmark View Post


You must be naive if you think it's all cash in a saving account. They invest it or Tim Cook swims in a vault of gold coins.

No company announces it is acquiring companies until the deal is made. Why should Apple be any different?

If you can't handle Apple's secrecy, get out and stop whining.

 

You are naive.  The $130 billion is in cash and very liquid investments which can easily be converted to cash.  They are only making a 1% return on that huge cash pile which is a joke.

 

Apple does not need to say who/what they are acquiring.  They just need to make it clear that that's what they are reserving the cash pile for.

 

I have a right to whine because I'm an owner of Apple.  So you are telling me when you own a business and things are not going the way you want it you just quit?

post #92 of 175
Quote:
Originally Posted by sog35 View Post


1% return on $100 Billion is a disgrace.  Apple shareholders should be appauled at this lack of capital management.

Apple needs to do something in Feb meeting. Increase the dividend, buyback, or at least make it know they are looking for major acquisitions.  Doing nothing is losing money.  It sucks to have a 1% return on capital.

Also just from free cash flow Apple gets $35-$40 billion a year.  A big chunk of that money should be returned to the investor.  $150B is enough for an emergency. PERIOD.

How dare Apple have the most profitable calendar year in human history. How dare Apple keeps selling record amounts if iDevices. How is a larger dividend going to make Apple better?
post #93 of 175
Quote:
Originally Posted by sog35 View Post


Make threats in private or totally humilate writers who are spreading lies.  Other companies do it all the time.  It's business and its ugly.  Its the game, Apple needs to play it.

Not in a million years. Companies get badly burnt by silly strategies like this.

 

Arguably, something like this was beginning of the end for HP (see, e.g., http://www.nbcnews.com/id/14721854/ns/business-us_business/t/hp-investigators-hacked-reporters-phone-data/#.URP60qV3yfQ).

post #94 of 175
Quote:
Originally Posted by sog35 View Post

You are naive.  The $130 billion is in cash and very liquid investments which can easily be converted to cash.  They are only making a 1% return on that huge cash pile which is a joke.

Apple does not need to say who/what they are acquiring.  They just need to make it clear that that's what they are reserving the cash pile for.

I have a right to whine because I'm an owner of Apple.  So you are telling me when you own a business and things are not going the way you want it you just quit?

1% on $130 billion is $1.3 billion which is not a joke in anyone's book.
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post #95 of 175
Quote:
Originally Posted by sog35 View Post



The biggest problem to me is this:  All the negative talk on the news about Apple dying can have a negative impact on the brand image.  When people on CNBC say Apple is struggling don't you think the consumer may think the brand is hurting to? 

You can fight stupid analysts with facts. That's what they do when they release earnings. They don't control the media.
Quote:
Originally Posted by sog35 View Post

You are naive.  The $130 billion is in cash and very liquid investments which can easily be converted to cash.  They are only making a 1% return on that huge cash pile which is a joke.

Apple does not need to say who/what they are acquiring.  They just need to make it clear that that's what they are reserving the cash pile for.

I have a right to whine because I'm an owner of Apple.  So you are telling me when you own a business and things are not going the way you want it you just quit?
Apple doesn't need to announce anything until the deals are done. How much do you have in your bank account. I think you should announce specifics of what you're going to do with your money.

You don't own Apple. You own stock. You didn't put any hard work into the biz. You probably have less than 0.000001% as a stakeholder.
post #96 of 175
Quote:
Originally Posted by anantksundaram View Post

Now, this is typical of the misinformation you post about Apple. (i) Braeburn is not a 'hedge fund' (look up what that phrase means); (ii) It is fundamentally an asset management business with a primary focus on managing tax savings from Apple's cash; (iii) Apple generated interest income of about a billion dollars for all of 2012, on an average cash base of about $100B, i.e., ~1% return -- does that look like a hedge fund to you?

It looks like a hedge fund to the article's author. (No relationship by the way before you ask if he's my cousin1wink.gif)

 

There's some additional background on Braeburn here for those curious:

http://www.zerohedge.com/news/2012-09-30/presenting-worlds-biggest-hedge-fund-you-have-never-heard


Edited by Gatorguy - 2/7/13 at 11:27am
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post #97 of 175
Quote:
Originally Posted by dasanman69 View Post


1% on $130 billion is $1.3 billion which is not a joke in anyone's book.

I think that a 1% return is a joke. And investors obviously aren't impressed by $1.3 Billion. I'm not. If a more than $130 Billion cash pile is not doing the stock any good, then what's another Billion or so?

 

Any bum can sign up for Ally bank and deposit a buck and get almost a 1% return.

post #98 of 175
Quote:
Originally Posted by sog35 View Post

You are naive.  The $130 billion is in cash and very liquid investments which can easily be converted to cash.  They are only making a 1% return on that huge cash pile which is a joke.

No.

Be realistic.

http://usatoday30.usatoday.com/money/perfi/columnist/krantz/2011-08-09-apple-cash_n.htm

The cash and cash equivalents is roughly 10% of the publicly claimed cash numbers.
post #99 of 175
Originally Posted by sog35 View Post
The problem is this:

 

$150 Billion in cash and short term investments.

$40-$50 EACH YEAR from operations

$15 Billion each year in buybacks and dividends

 

So how much cash does Apple need?  Isn't $150B enought?  At this rate they will increasing their cash pile by 25-35 billion each year.  And why?  To earn 1% interest?

 

People complaining about a for-profit company having "enough" cash. Claiming this is a "problem". That's hilarious.

 

You want to know their plan for it? Their plan is to never be anywhere near bankruptcy again, ever, until society changes enough to no longer require money. Their plan is to have multiple centuries worth of financial security for their company and its employees. Their plan is to always have on hand enough money to do whatever they want to do whenever they want to do it. To be able to respond to any change in the market, and to have the financial security to return to not only their feet, but a running pace, if they ever screw up. To be able to purchase any patents, companies, or other resources when opportune. To be able to invest in manufacturing plants and third-party companies for components.


Originally Posted by Apple IIc
Apple wouldn't have this "cash problem" if it spent some of that money on US production facilities and other investments in the US.
 

http://appleinsider.com/articles/12/07/19/made_in_america_apples_supply_chain_increasing_us_production

http://appleinsider.com/articles/12/12/06/foxconn-seeks-expansion-to-us-as-apple-gears-up-for-made-in-america-macs

http://appleinsider.com/articles/12/12/26/rumor-apple-to-build-mac-mini-in-us-starting-next-year


Edited by Tallest Skil - 2/7/13 at 12:15pm

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply
post #100 of 175
Quote:
Originally Posted by JeffDM View Post


No.

Be realistic.

http://usatoday30.usatoday.com/money/perfi/columnist/krantz/2011-08-09-apple-cash_n.htm

The cash and cash equivalents is roughly 10% of the publicly claimed cash numbers.

The latest breakdown is here:

http://seekingalpha.com/article/1159991-is-apple-s-secret-hedge-fund-prepping-for-a-dividend-boost?source=google_news

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post #101 of 175
Quote:
Originally Posted by RS9 View Post

Not too long ago Bill Gates and Steve Jobs told Congress, we need to allow more immigration because Americans lacked technology skills. Why not use some of this "cash horde" and offer scholarships and internships so we can teach these important skills?

 

Well, there are already plenty of scholarship/grants (jobs upon graduation) for those who want to study math/science/engineering now, but many Americans still shy away from hard subjects.

post #102 of 175
Quote:
Originally Posted by sog35 View Post

 

Apple has a fiduciary responsibility to protect the Apple brand and stock price.  When baseless 'reports' come out about crashing demand Apple needs to speak up.  Cook spoke about it in the earnings call but it was already to late.

 

Apple has almost $150 Billion and are doing NOTHING with it.  The cost of doing nothing with the money is a 8-10% loss every year.  There is no reason Apple needs to hoard so much cash.  They need to return some of it to investors, make an acquisition, or at least tell investors what they plan to do in the future.

 

Apple has no obligation to carry out any actions as you've described.

 

Frankly, I'd buy back Einhorn's shares at the current market value and "fire" him as a stockholder.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #103 of 175
Sounds like another wall street douchabag to me.

By the way apple pay your taxes like the rest of us.
post #104 of 175

deleted


Edited by MacRulez - 7/5/13 at 3:15pm
post #105 of 175
Originally Posted by frankie View Post
By the way apple pay your taxes like the rest of us.

 

They do. Don't start that again…

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already f*ed.

 

Reply
post #106 of 175
Quote:
Originally Posted by Gatorguy View Post

It looks like a hedge fund to the article's author. (No relationship by the way before you ask if he's my cousin1wink.gif)

 

There's some additional background on Braeburn here for those curious:

http://www.zerohedge.com/news/2012-09-30/presenting-worlds-biggest-hedge-fund-you-have-never-heard

Just because some moron bloggers says so doesn't make it so. Most of the links that you provide are trash like this. That's why you can't blame me for thinking that you must be promoting some of these sites, and perhaps because they are related to you.

 

You also never really answer the questions you are asked. Time and time again, you'll pick one, go off on a tangent, and ignore other substantive questions.

 

So, let me ask you again: Do you know what a 'hedge' fund is? If so, please define it for us. Does earning a return of 1% sound like a hedge fund operation to you? (No need to show me statistics of some hedge fund that might have actually earned that return; the question really has to do with Apple's investing style with its cash. If you don't know how to answer my question, I'd be happy to try and find some credible links on Apple's investment approach to its cash).

post #107 of 175

Thanks. I just grabbed the first apropos article I could find on the subject, I forgot to mention it's two years out of date. "cash" is a term that's very loosely defined when Apple's is discussed, anyway.
post #108 of 175
Quote:
Originally Posted by JeffDM View Post


No.

Be realistic.

http://usatoday30.usatoday.com/money/perfi/columnist/krantz/2011-08-09-apple-cash_n.htm

The cash and cash equivalents is roughly 10% of the publicly claimed cash numbers.

This is not correct. That will give you the wrong number.

 

At a minimum, you have to add Short-term Marketable Securities to Cash and Cash Equivalent under Current Assets -- the two together, from the Balance Sheet for the latest quarter (you can look it up in Apple's investor website), total $16.2B + 23.7B = $39.9B. And even then, the two together only give you Apple's financial securities holdings with a maturity of less than one year.

 

Since most of Apple's cash has been sitting around for longer than a year, it has been moved to Long-term Marketable Securities which, as of the end of the latest quarter, amount to $97.3B. (Now you can see where the $137B number comes from -- it is $39.9B + $97.3B; it turns out that on this aggregate amount, they've been earning a return of about 1%).

 

Edit: I see after I posted this that gatorguy actually provided a useful link that answers your question! Thanks, and hooray! There's hope yet....


Edited by anantksundaram - 2/7/13 at 12:10pm
post #109 of 175
Did Apple ever promise to spend lots of its cash to lure investors to buy its stock? Did this guy not do any research into Apples business practices before investing in the company? If so he knew what Apple was about beforehand so why is this such a big deal to him now? He is just trying to see if Cook and co. will blink now that Jobs has been gone awhile. If you don't like the way the company runs sell the stock. Quit crying.
post #110 of 175
Quote:
Originally Posted by Apple IIc View Post

Apple wouldn't have this "cash problem" if it spent some of that money on US production facilities and other investments in the US.

But that assumes you can find the trained labor, materials, supply chain, components etc. to support the gargantuan scale that Apple needs.

 

As an aside, Apple has started to do exactly this.

post #111 of 175
This guys proposal is to issue new share which will no be offer to the general public and allow owners of those share to siphon off the money without out it going to the over major share holders.

So allow only those who are rich enough to buy these preferred shares. neat trick wouldn't say.
post #112 of 175
Quote:
Originally Posted by anantksundaram View Post

Just because some moron bloggers says so doesn't make it so. Most of the links that you provide are trash like this. That's why you can't blame me for thinking that you must be promoting some of these sites, and perhaps because they are related to you.

 

You also never really answer the questions you are asked. Time and time again, you'll pick one, go off on a tangent, and ignore other substantive questions.

 

So, let me ask you again: Do you know what a 'hedge' fund is? If so, please define it for us. Does earning a return of 1% sound like a hedge fund operation to you? (No need to show me statistics of some hedge fund that might have actually earned that return; the question really has to do with Apple's investing style with its cash. If you don't know how to answer my question, I'd be happy to try and find some credible links on Apple's investment approach to its cash).

No sir, I don't have an in-depth knowledge of investing either. All I really know of hedge-funds is what I've read. I don't have any money invested in one either, nor any other tech stock for that matter. I tend to invest in new businesses and/or expansion of existing ones. I look at it as a safer investment with better returns than playing the stock market. Particularly true if the market is as heavily manipulated as you and most others here say.  IMHO that would put a lowly individual investor like me at a severe disadvantage so why play?

 

BTW, what questions have I ever avoided answering? You make it sound like a habit of mine (time and again??). It sounds more like a red herring. 

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post #113 of 175
Those that can do, those that can't become Hedge Fund Managers. :-)
post #114 of 175

Bottom line is this:

 

having $140 Billion doing nothing but returning 1% is horrible for shareholders and the company.

 

Apple will net about $20-$25 billion more this year in cash. (after dividend / buybacks)

 

Apple needs to let investor know if this cash will just be wasted away return 1%

post #115 of 175
Quote:
Originally Posted by anantksundaram View Post

This is not correct. That will give you the wrong number.

At a minimum, you have to add Short-term Marketable Securities to Cash and Cash Equivalent under Current Assets -- the two together, from the Balance Sheet for the latest quarter (you can look it up in Apple's investor website), total $16.2B + 23.7B = $39.9B. And even then, the two together only give you Apple's financial securities holdings with a maturity of less than one year.

Since most of Apple's cash has been sitting around for longer than a year, it has been moved to Long-term Marketable Securities which, as of the end of the latest quarter, amount to $97.3B. (Now you can see where the $137B number comes from -- it is $39.9B + $97.3B; it turns out that on this aggregate amount, they've been earning a return of about 1%).

Edit: I see after I posted this that gatorguy actually provided a useful link that answers your question! Thanks, and hooray! There's hope yet....

OK, if they're only getting 1% on that much money, then something is wrong. I expected that it would be a lot better than that. So I agree on that part with Einhorn, but I don't agree with the way he's trying to fix it, at least the timing of the lawsuit, or the specific changes he demands.
Edited by JeffDM - 2/7/13 at 12:59pm
post #116 of 175
Quote:
Originally Posted by Creid1987 View Post
 Frankly, he's right. There's no conceivable use for $137bn in cash.

 

Oh I don't know, if you wanted to buy Samsung Electronics....

post #117 of 175
Oh great. Now the arguements start here too. Basically if the share holders are in it for the money then sell the apple shares and buy stock of another company that will pay big enough dividends for them. It's not like you have to keep the shares you have! That's the point of the stock exchange! Honestly some people would rather sue than actually trade. Both in my opinion are sleazy and dishonest but at least traders make no bones about being ruthless!
post #118 of 175
Quote:
Originally Posted by cnocbui View Post

 

Oh I don't know, if you wanted to buy Samsung Electronics....

..... and shut it down (like Oracle did with PeopleSoft)...... ;-)

post #119 of 175
Quote:
Originally Posted by sog35 View Post

Bottom line is this:

 

having $140 Billion doing nothing but returning 1% is horrible for shareholders and the company.

 

Apple will net about $20-$25 billion more this year in cash. (after dividend / buybacks)

 

Apple needs to let investor know if this cash will just be wasted away return 1%


You truly, really need to stop smoking whatever it is you bought on the street.  Your humor is getting old.

post #120 of 175
Great - another D-Bag - as if we don't have enough.

Who is John Galt?

My GOD - all these people that don't do SHIT - complaining that Apple is making too much money and not giving it to them fast enough. Maybe Apple should pull a Dell and go private. Then we can laugh as all the of Wall St. masturbates with their $100 bills - only to realize the party is over - that the cash tree has dried up - and the locus and lemming herd need to go find a different company to manipulate and rape.

Personally - I don't give a rat's ass about their stock. I care about great products. If it takes having $100B in the bank to make great products - then so be it. What do I care?
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