Higher dividend viewed as 'safety net' that could help turn around Apple stock - Page 2

You don't even the see the circularity I referred to, do you? 

 

'Nuff said.

Sorry about that. Here's another one, with the same story: http://www.reuters.com/article/2013/03/11/us-dell-icahn-idUSBRE92A0FV20130311

 

(If that does not work either, just search for "Dell Icahn").

 

Your second point still makes no sense whatsoever.

A stock buyback has no effect unless the company cancels the shares. Apple stated its intent with the buyback was to obtain shares for employee compensation, not to cancel them. The opposite is also true: a company can always issue new shares, which dilutes the value of current shares.

 

 

I hope that margins will improve. The problem is Apple did'nt guide an improvement in margins, Apple actually guided even lower margins in fiscal Q2.

http://www.apple.com/pr/library/2013/01/23Apple-Reports-Record-Results.html

 

 

Lower revenue on top of lower margins = negative YoY EPS growth in Q2.

This is not true. Treasury stock cannot be counted as part of the calculation number of shares outstanding. A company cannot "own itself." If and when the shares are given to employees, that would be like a new share "issue."

Anantksundaram is correct. Treasury shares do not affect outstanding shares or P/E. So if they buy back 10% of the shares, the EPS immediately goes up by 11.1%.

They could, of course, give some shares out later and reduce the EPS, but they can do that anyway, so that doesn't count against the buyback.

Lower revenue!? That is clueless.

 

No pun intended, but I truly wish you'd have the basic knowledge to compare apples to apples. In other words, guidance for 2nd fiscal quarter to guidance for 2nd fiscal quarter (not silly, pointless comparisons like 2nd quarter to 1st quarter, or guidance to actuals).

 

Apple's guidance in January 2012 for its 2Q12 was $32.5B in revenue (they did not provide gross margin or operating margin guidance last year, only revenue and EPS; http://www.apple.com/pr/library/2012/01/24Apple-Reports-First-Quarter-Results.html). That is a 26% - 32% increase for 2013 over last year's (2012) guidance.

 

Stop the FUD. Please.

Edited by anantksundaram - 3/19/13 at 12:33pm

I'm an AAPL long and while I am grateful for the quarterly cash, I'd much rather Apple sink the money into some blue-sky, long-range technology projects. Where's my flying car or personal robot? Why is home automation still so complicated and unpopular?

Here is why a larger dividend will help Apple stock in the long run.  It will attract value/income investors if the return is 3.5%-4.0%.  These types of investors will not bail out on Apple after a few rumors like growth investors.  If they can sell 100-200M shares to value investors at 450-475 that will provide a stable base so the stock does not fluctuate so much.
 

Your evidence?

Oh, and btw, perhaps you'd like to explain why the stock has dropped 40% since they started offering dividends. How is that "attract value/income investors" working out for you?

A smart investor knows that the dividend doesn't change the value of the company. Well, technically, it reduces the value of the company because it has less cash after paying a dividend. Plus, you have to pay taxes on the dividends you receive.

A share buyback makes far more sense - Apple should never have caved in to the people whining for a dividend. At least they stood up to the ones demanding preferred shares.

This has to be a decision made by Apple though so what does Apple gain by doing this? Is Apple in need of more people telling them how to run the company? After everything that's happened, wouldn't they have a stronger incentive to get rid of as many outside investors as possible?

They don't need cash, they don't need more armchair management, they don't need to maintain the constant barrage of criticism so it seems like staying the course and buying back shares would be their best plan of action (edit: as noted above). If outside investors and staff are genuinely long term, it won't matter because it will right itself in due time.

It might slowly put an end to the purposefully negative reports but they seem to be running out of FUD anyway.

I think some people might assume you mean the maid is the shareholder. I gather you are suggesting Tim is the maid looking after the house that shareholders have paid for. The trouble with that analogy is that the house owner has to make a sacrifice too and take responsibility for the upkeep of the home. Financial investment is a very euphemistic term for what is effectively a button press to transfer a money sequence with the intention of other people raising its value. In that respect it's closer to gambling because there's a disconnect between the value generation and the investment and the term 'investing in' can be replaced with 'betting on'.

The other major factor in that is the proportion of ownership. People who own 0.0001% of the company often use analogies that equate to 100% ownership and express opinions under the assumption of the latter. Tim Cook himself is one of the largest individual shareholders in Apple so by all rights his decisions should outweigh those of minority stockholders.

It goes beyond what you are stating.

If one wants to use this analogy (as bad as it is), one would have to say that the homeowner told the maid that she has full authority to redecorate the house any way she wishes and that they will remove her if they don't like it.

Shareholders do NOT have decision making authority for a company. They give that authority to the board of directors - which delegates much of it to the management team. The shareholder's sole rights are to remove the BOD if they don't like them or to vote on some very specific proxies that management chooses to present to them (or as are required by the bylaws).

In another thread, someone cited a Supreme Court case that said that the BOD is obligated to do what is best for the company, not individual shareholders. While the goals are shared 99% of the time, the board does not have to follow shareholder wishes in the cases where the goals diverge (again, unless required by the bylaws and or decided by a proxy vote).

Would made sense if Apple didnt said they are doing guidance diffently now. No more lowballing it. We will see how they do in Q2, but according to them they will be in that range.

Why don't you look up -- idiotic as it may be, but even accepting your silly argument -- look up the actual 2Q12, compare it against the "no-more-lowballing" range for 2Q13 and come back to let us know if that is a projected revenue increase?

The pity with guys like you is you are relentless, and don't really don't care much that you continue to wallow in your ignorance.

Which is why I've been suggesting that they need to do a stock split to encourage individual ownership.

Brian white sounds like he became an expert in corporate strategy While not all his ideas are bad, some just don't make sense.

This has been explained repeatedly.

First, if you have $1,000 to invest, a lot of people shy away from buying 2 shares of anything for $500 each. They're more likely to buy 20 shares at $50.

Second, a lot of people invest in small increments. They may have a plan set up to invest $400 per month. At $500 per share, they can't buy even one share per month - and have to start skipping months. At $50 per share, they can easily fit it into their plan.

While there's no real difference, the psychological difference is huge.

In the last six months, Apple has lost more value than the total market cap of 490 of the 500 companies in the S&P index.  Yet, management has said very little to reassure investors and has done nothing to bolster the stock price.  I realize that Tim Cook seems to be following the super secret operating method established by Steve Jobs.  But that gets old when the stock is falling like a rock for no good reason.  Call me silly, but I become concerned when the value of my portfolio bleeds away on a daily basis for six months and management says nothing.  Sure, I can sit on my stock because I do believe in Apple products; but that won't work for the options I hold that have an expiration date.  I just feel that the management could do a lot more to reassure people that the company is on solid footing and will continue to increase in value.  

 

They sell more product every single quarter and make almost 100 billion a year. Revenue.

 

What else could they POSSIBLY need to do?

Apple has increased by 70 since cook took over. Remember when Apple dropped by 40 points in 2008 in two weeks? Why no fuss then?

Free Appletinis!

 

… They have a plan. This has been evident for a decade. That some choose not to see it is their problem and their fault.

 

I was speaking nothing of their cash holdings.

One thing that immediately comes to mind is that Tim and the rest of the team could buy for stock for their own accounts.  Also, they could give some indication of the kinds of things they are working on.  They could do a much better job on PR in general.   

Edited by insider7 - 3/20/13 at 10:50am

 

So you've never followed Apple, then?

 

This is you.

 

Nothing. That's the point. 

That's ridiculous.

Jobs, more than anyone, kept his mouth shut about future products. If anything, they're talking more now than they used to.

It's at 450 now. 30 points is nothing to sneeze at.

 

I see you've completely missed the point of what I was saying. That's fine.

Ah the perils of being an Apple investor... information-wise we live in the dark most of the time and in times like these when the stock is in the tank we just have to trust that Apple will continue to innovate and execute in amazing ways. The problem is that since Steve Jobs has been gone, we have not really seen that. It's harder to trust. 

 

Tim Cook has talked about how the product pipeline is "chock full" for 2013, but he also said that 2012 was an incredible year of innovation for the company. Apple has definitely slipped in my opinion, but I am still hopeful they will regain their footing - both as an investor and as a fan. With that said, I wouldn't be betting the farm on them. Things change too fast in the mobile space. 

 

As far as dividends and buybacks... revenue growth takes care of lots of problems. People will not be having these conversations if sales start back in the right direction again! 

How?

Jobs has been gone 20 months.

Not in the least. You said that Apple was screwing up in recent days by not disclosing what they're working on.

Since that was standard behavior under Jobs - and appears to be loosening up, your statement was just plain wrong.

Yes, I follow Apple, but I'm not sure what you are asking. What I'm saying is I can't understand why Apple has to be so secretive about what they are doing. There were many portable players before the iPod, there were cell phones before the iPhone, there were tablet computers before the iPad. And there are TVs before the iTV and computer wrist devices before the iWatch. What Apple does is make things better than anyone else. So unless they have some brand new product that no one ever imagined, I don't see why they can't let us know what's in the pipeline and what the target date is.

Easy, competitive advantage. Also they still need to sell what they make now. They rarely announce a product unless it'll be shipping within weeks.

I guess my bottom line is that Apple's management should do and say SOMETHING more to reassure investors when the company is losing so much market value. It seems to me that they see their stockholders with very little regard. They have a lot of very smart people working at Apple. Some of them should be involved with PR.

 

http://en.wikipedia.org/wiki/Osborne_effect

 

That's meaningless. They all sucked. Know why they all sucked? Because Apple didn't give them a head start. NOTHING like what Apple releases existed before they released it, and that's partially because Apple didn't give anyone a heads up that they were about to release them.

Telling people about a product before release lets competitors make said product and steal sales.

 

Like a music player with a wheel, a smartphone without a keyboard, and a tablet without a desktop OS, you mean? 

 

"We have more actual cash than most countries. We make higher profits YoY every year. We sell more product YoY every year. Keep whining and we'll go private." 

 

You're right that they don't care much about their shareholders. It's because they don't need them as anything but customers (and even then, not at all).

Imagine if Apple announced the iPad 6-9 months in advance. Google wouldn't have been scrambling to release Android 3.0. And maybe they would have a competent tablet OS for cheap tablets and steal Apple's thunder. Or the critics would have had 6-9 months to crap on the iPad, driving customer interest down and setting the iPad as a failure.

Not sure how you read that. Apple reinvented those markets. You can't deny that. MP3 players were difficult to use prior. Tablets sucked prior. Smartphones too.

 

Well, you're just full of nonsense today, aren't you?

You still say that as though Apple should care. If people sell the stock, that's their choice (and your choice). It gets sold to someone else. The suggestions about what Apple should be doing are from people who want Apple to do something that convinces potential investors that the value of the stock is high so they can sell in future at a profit. Why not do that yourself instead of adding to the negative press? If people want the stock value to go up, don't go around proclaiming that the sky is falling unless there's a change of leadership or that Apple starts doing business contrary to how they've always done business. Instead go around saying that under the current leadership, they are hitting record numbers time and time again and their sales, revenue and profits are higher than anyone in the history of the world - they are outselling products sold at lower (sometimes zero) profit margins running an OS given away for free. If you repeat it often enough, you might even convince yourself.

If the decision is that they won't keep growing, that's ok. If people want to invest for growth, invest in startups. If people want to invest for the long term, invest in Apple, Google, Amazon etc.