Originally Posted by sog35
By the end of the year they will have $180B in cash. In 3 years it will be $330B.
Bottom line is the stock is ridiculously cheap RIGHT NOW. They should take advantage of it. Personally I'd say a $100B buyback is more reasonable.
The cash they have is included with their valuation though. Given that they are valued at $480b right now with I think $123b in assets after liabilities, if they manage to build up another $150b assets, surely that increases their valuation a bit, even though future earnings will have been taken account of to an extent. They might still be valued at $480b if they have $273b in cash but I suspect it would be higher if their earnings kept up. They'd be able to buy back over 50% of their shares with that amount of money if the stock price didn't go up and whatever group of people they awarded the shares to would have complete control over the company.
Buying back the shares helps shareholders who don't sell but it's not much benefit to the company. The share price will go up the more assets they have. Doing a buyback depletes their assets and they have to earn that money back again or their value drops.
AAPL is not undervalued right now. Some people seem to think they should be valued at double the richest oil company despite their revenues coming in below them.
What would work best for Apple IMO is to have investors that are interested in Apple's long term future than short-term profit. Perhaps they could setup some sort of mutual fund and every time an Apple customer buys an Apple product above a certain value, they'd get the option to have an entry into the mutual fund. They wouldn't have to be awarded whole shares as those fluctuate in price but at the time of purchase, their allocation could be worth $100. If the mutual fund increased in value, the customers would benefit.
Apple has over 200 million unit sales per year and 50% of their shares are worth $240b. That's $1200 per unit. So $100 per purchase is enough for 12 purchases before half their shares are spread among customers. Someone who buys an iPhone, an iPad, and a Mac could get a $300 entry into the mutual fund. The actual value could depend on the product bought.
This mutual fund would be the majority shareholder and then the customers who love Apple products would be in control of the company. Not only that, the customers would get a financial reward as they'd get dividend payments that could come in the form of iTunes credit. There could be a condition that they can't sell the shares in a given time period e.g 10 years.