Originally Posted by sog35
So far Apple has bought back about $30B in shares and the stock has gone up about 15% since then. That's about $5B they saved right there.
You're weighing up assured assets in the bank against market values determined by traders. If traders decide that Apple isn't innovating enough, they are the ones that lower the value of the company and yet they turn round and blame the people at Apple for not making them have more confidence in Apple.
Let's say that Apple spends $100b and they manage to get the stock price above $700. What's to stop the market from trading back down to $500 if Apple has a few product releases that don't go over too well or numbers aren't growing fast enough? Traders can wipe out that $100b spend in a matter of months - look at what happened September-November 2012; 3 months and people moaned about how Apple/Tim wiped 1/4 off their value. There was nothing Apple did differently, traders just changed their valuation of Apple.
I think Apple needs to come up with some solid plans for spending their cash but in ways that sustain or grow revenue. The same way you buy a house to rent it out. They need to buy a house of content. They can do things like commission software/game ports to the Mac and iOS because these add value to their platform and encourage hardware sales. Instead of waiting for Autodesk to port 3DS Max, pay Autodesk to hire a team to port it to the Mac. Allocate $100m to pay games developers to port major AAA titles to iOS and OS X. Get into media distribution in a bigger way than the iTunes store. Offer cloud computing services for researchers and artists. Commission development of Thunderbolt peripherals. They can get royalties on everything for years into the future. A massive buyback gives them no direct way to grow revenue and if they don't grow revenue, they are just exchanging assets for a volatile market valuation.
Originally Posted by Eric Swinson
by being very dependent on their stock price, companies are very sensitive to Wall street's whims and influence. This opens them up to be manipulated by analysts trying to swing the price. Apple doesn't play that game and that is why they are being punished.
It looks very much like a bid to exert more influence. If they are going to sustain their revenue anyway, the stock price will go up and they won't need to do a buyback. If they do build up a reserve of over $300b and the stock is undervalued, that would be a better time to spend more. Depleting reserves before it's obvious they can be rebuilt is not a good idea. There are probably a lot of desperate people right now who stuck with it all the way up to $700 and didn't sell before it dropped. They'll want to get it back up there so they can sell above $700 and all those sales will drop it back down.