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Morgan Stanley expects 6% dividend, cheaper 'iPhone mini' after meeting with Apple CFO

post #1 of 78
Thread Starter 
Morgan Stanley analyst Katy Huberty recently met with Apple Chief Financial Officer Peter Oppenheimer, and came away with the impression that Apple will likely increase cash return to shareholders, and potentially release a lower priced iPhone to maintain growth.

Morgan Stanley


Huberty, in a note to investors on Friday, said that innovation remains a "top priority" at Apple. That's why she expects Apple to expand the iPhone lineup, and also to introduce new services that can "unlock significant value" and drive device sales.

She noted that demand for the iPhone 4, Apple's current low-end handset offering, was surprisingly strong during the December quarter. With a gross margin of 40 percent and a one-third cannibalization rate, she believes a so-called "iPhone mini" would drive incremental revenue and gross profit.

"The company's approach to product decisions and innovation has not changed in the past several years despite the CEO transition," Huberty wrote. "Making great products remains Apple's core strategy and the company is as confident as ever about the future pipeline of new products and services."

And with Apple's cash balance $40 billion higher than it was in March of 2012, Huberty believes the company will likely return more cash to shareholders. She believes the iPhone maker could match the S&P 500 IT sector's average free cash flow payout of 68 percent.

At that rate, Apple could return $28 billion to shareholders in fiscal year 2013, which would imply a 6 percent total yield on the company's dividend. That would be a major increase over Apple's current $2.65 quarterly dividend, which carries a 2.3 percent yield.

To pay out that higher dividend, Apple could borrow cash. She noted that the amount of Apple's cash overseas has limited the company's flexibility, but this could be addressed by raising low-interest debt.

Morgan Stanley has maintained its "overweight" rating for AAPL stock with a price target of $630.
post #2 of 78

Not the sharpest tool in the shed, Katy.

post #3 of 78

Sounds believable enough to me.

 

I think an iPhone Mini is more likely than the iPhone "Math."

post #4 of 78

"Making great products remains Apple's core strategy"

 

Hmmm ... I wonder if any company has ever stated: "Our core strategy is to stop making great products."

post #5 of 78
If Apple really did start borrowing in order to return capital to shareholders that is actually sequestered overseas I'd start worrying about the financial management of the company. Cash in other markets is prone to exchange rate and other risks. While this risk could be managed as there is a lot of cash outside the US it starts to look a little more like banking than the core business.
post #6 of 78
borrow cash? apple won't even spend the money they have. I think a 3-4% div is much more likely.
post #7 of 78
Borrow cash when they have billions in the bank. Gotta love it.
post #8 of 78
The stock market and market analysts will eventually ruin Apple. Only they could turn the world's most successful company into a "problem" that needs to be fixed.

I'm slowly becoming a firm believer in the theory that being a public company and having shares and shareholders has no benefits beyond the initial raising of capital when a firm first starts out.

Albatross!
post #9 of 78
I remember the advertising tag line for a company in Germany was "Competence in"... their field of expertise. Not excellence or leadership, but just competence. Some people don't set the bar too high for themselves.
post #10 of 78
Yeah and I'm expecting Adriana Lima any minute now.
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
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"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
Reply
post #11 of 78
Quote:
Originally Posted by gcguy View Post

Borrow cash when they have billions in the bank. Gotta love it.

 

Cheaper to pay the interest to borrow it (2-3%), than to pay the taxes on it (35%).

post #12 of 78
Quote:
Originally Posted by Gazoobee View Post

<snip>
I'm slowly becoming a firm believer in the theory that being a public company and having shares and shareholders has no benefits beyond the initial raising of capital when a firm first starts out.
 

 

No doubt. My kids asked me why the smaller car companies got bought by the bigger ones and then generally got messed up and I explained that as a public company, the board generally has to vote 'yes' on being taken over if the takeover price is higher than the current stock price - even if the merger is likely to destroy the company in the mid-to-long term. Hey, vote 'no' and some a-holes set up a class action against you for not taking the money (or in the case of Apple, they sue you for not giving them all of your cash).

 

In autos, it left Volvo being Chinese-owned, Jaguar first making Fords and then being Indian-owned, Saab dead with parts Chinese-owned, etc. In tech - well, I'm scared to see what happens to Apple longer-term. Lawsuits about management being willing to cannibalize their own products and take risks are surely next, which would turn it into the next Microsoft-like innovator eventually. :/

post #13 of 78
Quote:
Originally Posted by Gazoobee View Post

The stock market and market analysts will eventually ruin Apple. Only they could turn the world's most successful company into a "problem" that needs to be fixed.

I'm slowly becoming a firm believer in the theory that being a public company and having shares and shareholders has no benefits beyond the initial raising of capital when a firm first starts out.

Albatross!

I agree. My father-in-law is a retired stock broker, practicing back in the days when investors actually invested in companies. At that time, I believe the invested money was actually available and used by the company but that doesn't happen anymore, except at an IPO and especially with a company like Apple that has a ton of cash. I'm trying to remember a time when stock investments actually helped Apple or kept them alive. There might have been a few times but not many and none in the last decade. Apple survives because of its products and in spite of all the manipulation by crazy analysts and investors. The stock market has nothing positive to do with Apple's corporate growth, it's all product acceptance that increases Apple's cash stockpile. All this garbage about about where their stock price will be in a year has nothing to do with how many products it sells. History has taught us that. Apple can have a banner year but some idiot will say it wasn't enough so their stock price goes down. Samsung pumps out tons of garbage, which analysts believe hurts Apple's bottom line, but we all know companies like Samsung that produce throw-away devices will never make any money. Why can't analysts see that? Apple is making money and great products. Analysts need to get out of Apple's way and quit messing around with them. Just get a real job and participate in the re-growth of the US instead of being yet another me-to excuse for an analyst who isn't providing anything valid to this country or world.

post #14 of 78
Quote:
Originally Posted by Squeak View Post

 

Cheaper to pay the interest to borrow it (2-3%), than to pay the taxes on it (35%).

 

Yeap and then next year if the Congress decided to close this loophole and the company would've paid both interest and tax for nothing. 

post #15 of 78
Quote:
Originally Posted by gcguy View Post

Borrow cash when they have billions in the bank. Gotta love it.


This is not uncommon practice, even though I doubt Apple would do it.

post #16 of 78
Quote:
Originally Posted by mrstep View Post

No doubt. My kids asked me why the smaller car companies got bought by the bigger ones and then generally got messed up and I explained that as a public company, the board generally has to vote 'yes' on being taken over if the takeover price is higher than the current stock price - even if the merger is likely to destroy the company in the mid-to-long term. Hey, vote 'no' and some a-holes set up a class action against you for not taking the money (or in the case of Apple, they sue you for not giving them all of your cash).

In autos, it left Volvo being Chinese-owned, Jaguar first making Fords and then being Indian-owned, Saab dead with parts Chinese-owned, etc. In tech - well, I'm scared to see what happens to Apple longer-term. Lawsuits about management being willing to cannibalize their own products and take risks are surely next, which would turn it into the next Microsoft-like innovator eventually. :/

This has to be the most naive thing I've read here in a while.

Its tantamount to: The 'devil made me do it, so it's his fault' or 'the junkie sold me the drugs, so it's his fault.'

These companies can also grow a pair, and say 'no' to Wall Street. Stop the nonsense of earnings guidance (as companies such as Google, McDonalds, Berkshire Hathaway, GE, etc do). Do a massive share repurchase with a stock split (the latter for purely psychological reasons). And tell the analysts to take a hike.
post #17 of 78
Quote:
Originally Posted by drobforever View Post

 

Yeap and then next year if the Congress decided to close this loophole and the company would've paid both interest and tax for nothing. 

the interest...maybe... but you're not taxed on something you didn't do.

 

This is the key thread... Apple's a US company, but a lot of it's liquid assets (and profit growth) is overseas.   Congress may close this loophole, but until then, how do these captured profits work for Apple?  Best way is to borrow against them, not necessarily for paying dividends, but for long term US CapEx (factories).  The interest is deductible, and you establish more local expense (us payroll, depreciation of buildings/machinery) to,  lower your US 'profits', as you increase your US revenues.

 

I still think Apple should just become/buy a Bank instead of acting as it's own investment house (it's Nevada hedge fund is underperforming the market).   Issue an Apple Credit Card that is linked to your ITMS account, establish banks in all countries you have a ITMS/App Store, and bypass the merchant fees it's currently paying to Visa/Mastercard, which are likely in the 2-3% range as well, and start collecting 7-20% in interest on the payments (the full payment, not the 30% it makes).  In the end, it likely returns better than it's LT investments.   If Citi and BoA can make money doing credit cards, just think of Apple closing that loop.  And you can see a pretty simple marketing on this...  discounts on those lock in services ('pay with your AppleCard, and you get 10% off your purchase of an iPhone').

post #18 of 78
Quote:
Originally Posted by Squeak View Post

 

Cheaper to pay the interest to borrow it (2-3%), than to pay the taxes on it (35%).

 

Assuming they don't have to pay any kind of taxes on the loans. Such taxes could destroy any benefits of such a scheme

A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

Reply
post #19 of 78
Quote:
Originally Posted by AppleInsider View Post
...
To pay out that higher dividend, Apple could borrow cash. She noted that the amount of Apple's cash overseas has limited the company's flexibility, but this could be addressed by raising low-interest debt.
...

 

So she really suggests that Apple should get a loan to pay a higher dividend?

Does she dislike companies with no debt?

post #20 of 78
Quote:
Originally Posted by rob53 View Post

I agree. My father-in-law is a retired stock broker, practicing back in the days when investors actually invested in companies. At that time, I believe the invested money was actually available and used by the company but that doesn't happen anymore, except at an IPO and especially with a company like Apple that has a ton of cash. I'm trying to remember a time when stock investments actually helped Apple or kept them alive. There might have been a few times but not many and none in the last decade. Apple survives because of its products and in spite of all the manipulation by crazy analysts and investors. The stock market has nothing positive to do with Apple's corporate growth, it's all product acceptance that increases Apple's cash stockpile. All this garbage about about where their stock price will be in a year has nothing to do with how many products it sells. History has taught us that. Apple can have a banner year but some idiot will say it wasn't enough so their stock price goes down. Samsung pumps out tons of garbage, which analysts believe hurts Apple's bottom line, but we all know companies like Samsung that produce throw-away devices will never make any money. Why can't analysts see that? Apple is making money and great products. Analysts need to get out of Apple's way and quit messing around with them. Just get a real job and participate in the re-growth of the US instead of being yet another me-to excuse for an analyst who isn't providing anything valid to this country or world.

 

Yeah, I'm no business major, but I think a lot of the business concepts we lived by in the 20th Century just aren't applicable to today's world.  

 

I would bet money that in future business classes Apple will be taught/used as an example of exactly that.  A company that by it's very existence and history disproves some of the most fondly held notions of the business class.

 

An example for the next century as it were.  

post #21 of 78
"The company's approach to product decisions and innovation has not changed in the past several years despite the CEO transition"

no sh|t.
post #22 of 78

My opinion... Morgan Stanley is sitting on a ton of 'cheap' AAPL stock in its own coffers and/or slightly undervalued Call options, and wants to sell them.  Katy 'heard' what she wanted to here, and then it's a 'BUY BUY BUY message' except on the MS trading floor which is quietly in 'SELL SELL SELL' to their 'clients'.

 

Its a Pump and Dump, only using a widely traded company by a 'respected' trading firm.  Nothing New Here, Move Along.

post #23 of 78
I don't see a doubling of dividend. MS is attempting to make news when there is no evidence of it.
post #24 of 78

Why does AppleInsider devote so much ink to the Jim Cramers of the world?

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #25 of 78
Quote:
Originally Posted by stelligent View Post

"Making great products remains Apple's core strategy"

 

Hmmm ... I wonder if any company has ever stated: "Our core strategy is to stop making great products."

 

It only becomes a 'great product' first, after Apple announces it and second, we have that video of Jony Ives, Craig Federighi and Bob Mansfield telling about the product and what they did that made it great.

Ten years ago, we had Steve Jobs, Bob Hope and Johnny Cash.  Today we have no Jobs, no Hope and no Cash.

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Ten years ago, we had Steve Jobs, Bob Hope and Johnny Cash.  Today we have no Jobs, no Hope and no Cash.

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post #26 of 78

I'm just pleased this person's outlook still has Apple topping out in the $900+ per share range. No other stupidity spewed matters.

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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post #27 of 78
Quote:
Originally Posted by Gazoobee View Post

I'm slowly becoming a firm believer in the theory that being a public company and having shares and shareholders has no benefits beyond the initial raising of capital when a firm first starts out.

I've been believing that for years.   Going public ultimately removes focus from making a great product and shifts it to making money.  The only thing that can prevent this shift is having a visionary founder who still runs the company.  If that founder is out of the picture, then all bets are off.  Look at HP - once the dynamic duo were no longer involved it jumped off the rails.  Look at Apple after they forced Steve out.  Cook et al will be able to hold the line for some time, but when they are gone the real degradation of Apple's products will begin in earnest.

post #28 of 78
Quote:
Originally Posted by charlituna View Post

 

Assuming they don't have to pay any kind of taxes on the loans. Such taxes could destroy any benefits of such a scheme

 

Huh? Interest expense is a cost of doing business, and helps to reduce NOI. Taking a loan out would actually have the opposite impact: they would pay less taxes. 

post #29 of 78
Quote:
Originally Posted by charlituna View Post

 

Assuming they don't have to pay any kind of taxes on the loans. Such taxes could destroy any benefits of such a scheme

There are no 'taxes' to be paid on loans. If anything, interest payments on loans being tax-deductible means that there is a 'tax shield benefit from debt' for equity holders. (This is, for example, an important source of gains to shareholders from an LBO).

post #30 of 78
Quote:
Originally Posted by TheOtherGeoff View Post

Quote:
Originally Posted by drobforever View Post

Yeap and then next year if the Congress decided to close this loophole and the company would've paid both interest and tax for nothing. 
the interest...maybe... but you're not taxed on something you didn't do.

This is the key thread... Apple's a US company, but a lot of it's liquid assets (and profit growth) is overseas.   Congress may close this loophole, but until then, how do these captured profits work for Apple?  Best way is to borrow against them, not necessarily for paying dividends, but for long term US CapEx (factories).  The interest is deductible, and you establish more local expense (us payroll, depreciation of buildings/machinery) to,  lower your US 'profits', as you increase your US revenues.

I still think Apple should just become/buy a Bank instead of acting as it's own investment house (it's Nevada hedge fund is underperforming the market).   Issue an Apple Credit Card that is linked to your ITMS account, establish banks in all countries you have a ITMS/App Store, and bypass the merchant fees it's currently paying to Visa/Mastercard, which are likely in the 2-3% range as well, and start collecting 7-20% in interest on the payments (the full payment, not the 30% it makes).  In the end, it likely returns better than it's LT investments.   If Citi and BoA can make money doing credit cards, just think of Apple closing that loop.  And you can see a pretty simple marketing on this...  discounts on those lock in services ('pay with your AppleCard, and you get 10% off your purchase of an iPhone').

I like those suggestions way better than Einhorn's magical permanent leech securities.
post #31 of 78
Quote:
Originally Posted by anantksundaram View Post

Quote:
Originally Posted by charlituna View Post

Assuming they don't have to pay any kind of taxes on the loans. Such taxes could destroy any benefits of such a scheme
There are no 'taxes' to be paid on loans. If anything, interest payments on loans being tax-deductible means that there is a 'tax shield benefit from debt' for equity holders. (This is, for example, an important source of gains to shareholders from an LBO).

Are you warming up to the idea of borrowing to do a share repurchase?
post #32 of 78

I like Einhorn's plan but I'd go a step further:

1. Issue $250 preferred stock for each common.
2. Pref will pay 4% a year
3. The total Pref dividend would be $10 Bil a year
4. Stop the dividend on the Common which is $10 Bil a year.
5. EPS will stay the same (EPS will decrease with Einhorn's plan)
6. Common shares will go down based on the loss of the 2% dividend
7. No change to cash flow, Apple will still have $140 Bil and no debt

Calculation

Common Stock: $450
Common Stock after adjustment w/out dividend (-10%): $405
Value of Preferred Stock: $250
Total Value: $655

That's what I call unlocking value. Basically all you are doing is dividing the Common Stock into two marketable securities. A growth stock (Common) and a dividend/income stock (Preferred). Apple is a tweener in its current state. Its a growth stock but not a hyper growth stock. It pays a dividend but not a big enough dividend to be a true Value/Income stock. By dividing the stock you can serve BOTH markets.

Growth investors will no longer need to pay a premium for dividends and will receive a quick cash infusion (if they choose to sell the Pref shares). Value/Income investors can get an excellent rate of 4% without the risk of the Pref stock being crushed in the open market. The 4% Pref stock will easily sell over face value because of Apple's ridiculously great balance sheet.

So the real question is this: Will stopping the dividend on the common shares drop the price more than $250? I say no way.

 

post #33 of 78

I like the idea of an Apple bank card. I think that only shareholders should get one though. It would definitely be the coolest card in my wallet, and it would fit in perfectly with my previous idea of shareholders getting a discount on Apple products. Screw students and government employees, I would like a discount when I go to pick something up at the Apple store, just out of principle, even if the discount rate is not huge. There are not many shareholders around and it would have no impact on Apple at all.

 

And also, bring on the higher dividend! And bring on a cheap iPhone, if it's going to make the stock rise. I don't even care if it's plastic.

 

I wouldn't be surprised if AAPL is making new all time highs in 2013 sometime, we'll see. Things can change pretty quickly, and the year has barely started. 

 

Apple should also surprise us with some new product soon, IMO, a product that nobody here is expecting or knows about.

post #34 of 78

The iPhone costs are premised on its primary US market, where the carriers pay Apple about $450 per unit out of their own pockets and obviously profits. Carriers are tired of this subsidized model and are slowly replacing it. Wonder why? Once the user must pay full price in the US, it's much more likely Apple will put out a lower cost phone, concentric with the iPhone and iOS ecosystem, but with reduced feature and materials spex. We certainly owe the carriers a thanks for underwriting the development of the first superb smart phone; remember what cell phones used to be? But why not soak the carriers as long as possible? Hate your carrier? Buy an iPhone.1wink.gif

post #35 of 78
They wont do more than a 100% div increase, so maybe 4% yield tops
post #36 of 78
Quote:
Originally Posted by sog35 View Post

I like Einhorn's plan but I'd go a step further:


1. Issue $250 preferred stock for each common.

2. Pref will pay 4% a year

3. The total Pref dividend would be $10 Bil a year

4. Stop the dividend on the Common which is $10 Bil a year.

5. EPS will stay the same (EPS will decrease with Einhorn's plan)

6. Common shares will go down based on the loss of the 2% dividend

7. No change to cash flow, Apple will still have $140 Bil and no debt


Calculation


Common Stock: $450

Common Stock after adjustment w/out dividend (-10%): $405

Value of Preferred Stock: $250

Total Value: $655


That's what I call unlocking value. Basically all you are doing is dividing the Common Stock into two marketable securities. A growth stock (Common) and a dividend/income stock (Preferred). Apple is a tweener in its current state. Its a growth stock but not a hyper growth stock. It pays a dividend but not a big enough dividend to be a true Value/Income stock. By dividing the stock you can serve BOTH markets.


Growth investors will no longer need to pay a premium for dividends and will receive a quick cash infusion (if they choose to sell the Pref shares). Value/Income investors can get an excellent rate of 4% without the risk of the Pref stock being crushed in the open market. The 4% Pref stock will easily sell over face value because of Apple's ridiculously great balance sheet.


So the real question is this: Will stopping the dividend on the common shares drop the price more than $250? I say no way.


 

6.1 Common shares will tank when they are massively dumped by value investors and institutions.
7.1 Apple will have a perpetual $10 Billion per year leech attached to its neck.
8 When interest rates inevitably rise from their current historical lows, the preferred shares (not being convertible or pegged to anything) will decrease in market value
8.1 Some Wall Street dipshit, holding millions of shares of preferred, will sue Apple try to force them to repurchase the preferred at face value.
post #37 of 78
Quote:
Originally Posted by igriv View Post

Quote:
Originally Posted by quinney View Post

6.1 Common shares will tank when they are massively dumped by value investors and institutions.

7.1 Apple will have a perpetual $10 Billion per year leech attached to its neck.

8 When interest rates inevitably rise from their current historical lows, the preferred shares (not being convertible or pegged to anything) will decrease in market value

8.1 Some Wall Street dipshit, holding millions of shares of preferred, will sue Apple try to force them to repurchase the preferred at face value.

6.1 the poster told you exactly how much they would tank, and the price of the preferred would far outweigh this.
7.1 Given the inflation rate, in ten years this will be around $7bn, while (God willing) Apple profits will keep going up in real terms, so this will be about how much Apple loses by not investing its current cash.
8. Yes, and eventually the Sun will go nova, so we are all doomed! Doomed!
8.1 No, preferred shares are bonds, and if they are not callable, they are not callable.

I think your response to the original post is "I don't understand it, so it must be bad". 
6.1 The poster is guessing, just like Einhorn
7.1 I would not make investment decisions based upon imaginary supernatural entities and I would not remove financial flexibility by making an open-ended commitment for a company in a consumer discretionary industry which is often influenced by volatile fashions.
8. Interest rates will rise significantly before the Sun goes nova. Fixed income securities will decrease in price when that happens.
8.1 Preferred shares are not bonds. Bonds have a maturity date and get paid off. These preferred shares are described as perpetual. In the pecking order of corporate obligations bonds get paid first, preferred dividends after, and common dividends after that. A shareholder
can try to force a company to repurchase preferred shares, just as they can (and are) trying to force a company to repurchase common
shares. It would be a tender offer to repurchase, not a "call", since preferred shares are equity, not debt.

Clearly someone doesn't understand something.
Edited by quinney - 2/22/13 at 10:17am
post #38 of 78

Not a prayer for 6% dividend.

 

Apple will NEVER borrow to pay  money to shareholders (quite frankly it doesn't give a rats ass about shareholders).  Apple is there as a playground for Apple execs and board.  They can milk the stock and cash any way they want. Stock goes down?  Double the grants.  Increase bonuses. Increase salaries. Bottom line is those holding the stock certificates don't matter to them.

 

They won't be paying 6% without borrowing either.  That would burn through their cash in 2 years.  They want that rainy day fund to be huge to keep the playground going.  Make no mistake.  3% is most likely.  13/share tops.  Buyback increase?  Maybe another 2 billion.  They have to keep the cash.

 

They will NEVER bring that money back and pay taxes on it.  Doesn't matter what shareholders say or want.  No hedge fund guy is going to force them to do this either. 

 

Apple is uninvestable. The company is great but it is no different from having a share in the best pizza place in your town but the company is not an LLC and therefore the money never flows to your ownership stake.  The owners take it all out for themselves.  You are stuck holding shares and hope somebody will buy them for more someday.  Well you can see how that works out.

 

For disclosure I am actually long about 140 shares still.  Sold the bulk of my position and closed out the bulk of my short PUT options (which were bullish - i.e short puts).  I own 6 ipads and 4 iphones and macs too.  Why so negative on the stock?  Because that is reality.  When I say apple does not care about shareholders I mean it.  You can either wake up to it or put on blinders to it.  Why do I still hold any of the stock?  For me it is a bond now. Better than interest in the bank but never going to beat the S&P index.   It is basically a bond for me, period.  If that is what you want than apple is good for at least 5 years as a bond holding.

 

The company itself is fine. the cash protects them well.  they will sell product and make money.  They won't be growing the bottom line much if at all in this year and the coming years so I see them range bound from 400 to 500.

 

They won't do Einhorns insane iPref deal either.  That is just financial gymnastics. Adds no value.  Ten dimes is still a buck, period. 

post #39 of 78
Quote:
Originally Posted by quinney View Post


6.1 Common shares will tank when they are massively dumped by value investors and institutions.
7.1 Apple will have a perpetual $10 Billion per year leech attached to its neck.
8 When interest rates inevitably rise from their current historical lows, the preferred shares (not being convertible or pegged to anything) will decrease in market value
8.1 Some Wall Street dipshit, holding millions of shares of preferred, will sue Apple try to force them to repurchase the preferred at face value.


6.1 Common shares may drop but not close to $250.  Even after taking out the $10 Bil in Preferred Div the Net Income to common shares would be over $30 Bil.  Do you seriously think the stock will drop to $200 per share if they stop doing the div to common and move it to preferred?  Seriously?  They will have close to $200 per share in cash a year from now. Seriously!

 

7.1 Same leach as the common dividend now.  Apple has the right to lower the dividend rate at any time just like with common.  Only restriction is that they need to pay the pref shares first.

 

8 If it decreases in value who cares.  If it goes to $230 big deal.  You still are netting over $200 in shareholder value

 

8.1 They can try all they want but they won't win that case against Apple.  Its been proven a million times in court.

post #40 of 78
Quote:
Originally Posted by mvigod View Post

...

For disclosure I am actually long about 140 shares still.  Sold the bulk of my position and closed out the bulk of my short PUT options (which were bullish - i.e short puts).  I own 6 ipads and 4 iphones and macs too.  Why so negative on the stock?  Because that is reality.  When I say apple does not care about shareholders I mean it.  You can either wake up to it or put on blinders to it.  Why do I still hold any of the stock?  For me it is a bond now. Better than interest in the bank but never going to beat the S&P index.   It is basically a bond for me, period.  If that is what you want than apple is good for at least 5 years as a bond holding.

...

People around here don't seem to know what a bond is.
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