Too bad apple wasn't buying their stock hand over fist when it was 400 bucks. Epic fail for management. If they had any visibility they should have dove in earlier and with a much bigger buyback over a shorter time period. At 400 they knew ex-cash the stock was 250. If they internally knew they could hit about 40/share in EPS that was just 6 times earnings. A number beyond absurdly cheap. Over 16% earnings yield versus the almost zero they got on their short term investments. A 16 percent earnings yield doubles your investment every 4.5 years.
Instead apple sat on their you know what watching the stock crater and doing nothing. Yes the current buyback and the first buyback were both not significant especially after you take into account all the employee stock option dilution.
Apple from the financial side has been woefully mismanaged. Carl Icahn knows this as do many people who understand shareholder value WHILE running your company. Apple could have done the 150B buyback when the stock was 400 bucks and still had enough juice to run the company and pay back the loan (against offshore cash reserves) in 5 to 7 years. Meanwhile the float would have been reduced by almost 40%.
Did apple management just have no faith in the future? You might think so if you looked at all the top board members and top executives sale history. Whenever options vested they almost all got blown out. Top execs were holding a few hundred shares to zero shares. Smaller private retail investors were holding more stock than the top brass.
Will they get smart and listen to Icahn? Probably not.
I think Apple will at some point face even more margin pressure and share loss. I just bought an ipad mini retina. I'm a big apple fan with 4 ipad 3's, 3 iphone 5's, an ipad mini retina now, imac and macbook pro. This was the first time I looked at the price and started looking at alternatives like the nexus 7. I didn't switch teams yet but the fact I even looked scares me. I feel like I would pay less for an Android tablet and certainly get less than the ipad mini gives me. However the gap is much less than it ever was in terms of product but the pricing gap feels even bigger. Not a good trend.
I hope apple doesn't sacrifice quality ever but I can't see them holding these prices over the coming years. I also don't think they need to. Maybe price a bit more competitive and make up some of the margin erosion in the volume of sales increasing as a result of the more competitive pricing. Time will tell