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Carl Icahn calls Apple a 'no brainer' investment as his stake grows to over $3B - Page 3

post #81 of 130
Quote:
Originally Posted by sog35 View Post read up on EPS and how effects share price.

Earnings per share in terms of Apple is not even worth considering. For 2013 Apple earned something like $39.5 per share. Amazon was something like zero dollars, and Google something like $9. If you follow those numbers, Apple's stock should be much higher.

post #82 of 130
Simple. Icahnn wants money. So he buys Apple, and tells everyone else to, so that his investment goes up. Then he complains that they should buy back shares, because that will also drive the value of his investment up. Then he wants them to give out their cash reserves as share dividends, so he gets even more money.

Then, when he's squeezed all the money he can out of the company, he dumps his stock at the new, higher price, which causes the stock price to collapse slightly. Or maybe, if he's done it right, completely.
post #83 of 130
Quote:
Originally Posted by dasanman69 View Post


That's why the word 'cost' is attached to it. It's purely a economic term. Btw I agree, spending time with family isn't a lost opportunity, it's always worth the income not gained.

I agree with both of your statements. I would only add that I'm not big on "economic terms" because, for me at least, they have been used all too often to obfuscate the issue for the "masses" who make up the smaller investor. I'll use the issue of the mid 2000s where the financial industry would bundle high risk mortgages, use their leverage over the ratings industry to "encourage" them to give the new "bundle" AAA ratings and a new name such as "credit swap" or such so they could turn around and sell/off load them to the uninformed consumer who, in a lot of cases had their money tied up in a pension fund that would ultimately lose their "investment"..... and in a lot of cases it was recognized as being an unworthy investment, so much so that a "new investment vehicle" was used to insure against the loss.  ... That thereby guaranteed  profits for everyone, except the final holder of the investment .... sort of a musical chairs game, played with real money . A black mark on the financial industry that already had a few black marks against it. When will we ever learn, when will we ever learn ?  ... (with apologies to Peter, Paul and Mary)

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post #84 of 130

1. Ever since Apple announced its buyback plan it has consistently accelerated it. People, including Mr. Icahn, need to read earnings reports. They re-accelerate their buyback on a regular basis. Announced an increased buyback several months ago. They will continue to accelerate. Icahn's problem isn't that Apple isn't buying back, his problem is that they're doing it on their own schedule and not some petulant nouveau investor, Mr. Icahn himself.

 

Sincerely,

Read actual information instead of vigor and vitriol.

post #85 of 130

2. Bitch all you want, but Mr. Icahn thinks this is an amazing buying opportunity. His additional $500 million purchase is more significant than his quibbles with Apple's board. And the board as we must remember have guided the company to be the most successful in the world and according to Icahn, an amazing investment.

 

Sincerely,

A little perspective.

post #86 of 130
Quote:
Originally Posted by newbee View Post

I agree with both of your statements. I would only add that I'm not big on "economic terms" because, for me at least, they have been used all too often to obfuscate the issue for the "masses" who make up the smaller investor. I'll use the issue of the mid 2000s where the financial industry would bundle high risk mortgages, use their leverage over the ratings industry to "encourage" them to give the new "bundle" AAA ratings and a new name such as "credit swap" or such so they could turn around and sell/off load them to the uninformed consumer who, in a lot of cases had their money tied up in a pension fund that would ultimately lose their "investment"..... and in a lot of cases it was recognized as being an unworthy investment, so much so that a "new investment vehicle" was used to insure against the loss.  ... That thereby guaranteed  profits for everyone, except the final holder of the investment .... sort of a musical chairs game, played with real money . A black mark on the financial industry that already had a few black marks against it. When will we ever learn, when will we ever learn ?  ... (with apologies to Peter, Paul and Mary)

You're going to enjoy reading this then.

http://www.fool.com/investing/general/2013/11/14/stupid-things-finance-people-say.aspx
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post #87 of 130
Quote:
Originally Posted by newbee View Post

Quote:
Originally Posted by sog35 View Post

I love the phrase "opportunity cost". Imagine if I had only bet the farm on the last 20 years of Super Bowl winners ... hell, I'd be a multi-millionair for sure. Just think of all that "opportunity cost" wasted. Shameful.

Hint for sog35 :     "opportunity cost" is Wall Street Jargon designed to fool investors  ..(read suckers) .. into "proving" that the "expert" knows what he is talking about. It's called "baffling with bullshit". 

That is, unfortunately, pure silliness.

Sog35's examples could have been better (e.g., his assertion that it 'could have put it into the market that gained 30% last year' makes no sense -- it could also have been put into a market that lost a half its value in 2008-09). But the concept of 'opportunity cost' is not some 'Wall Street' conspiracy.

It is simply an Econ 101 concept that says, 'if you put your investment in A, you're foregoing the opportunity to earn a return from putting it in a risk-equivalent investment, B -- i.e., there is an opportunity cost to the use of capital, sometimes just called a "cost of capital" in making any investment decision.'

Anyone who does not understand that is simply being obtuse. They're the types of people that the hucksters of the world -- like a Madoff -- love to do business with and profit from.

Add: The key phrase is 'risk-equivalent'.
Edited by anantksundaram - 1/22/14 at 5:00pm
post #88 of 130
Quote:
Originally Posted by dasanman69 View Post


You're going to enjoy reading this then.

http://www.fool.com/investing/general/2013/11/14/stupid-things-finance-people-say.aspx

Thanks for that. Good humour always is "worthwhile" reading. I give you 99 out of 100 ... one very small deduction for the  "a mortgage is renting money from a bank" which wasn't your quote, was still funny, but borrowing is more accurate. Still, you made my day. Peace and out ... supper beckons.

See, in the record business, you can show someone your song, and they don’t copy it. In the tech business, you show somebody your idea, and they steal it. (Jimmy Iovine)
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post #89 of 130
Quote:
Originally Posted by newbee View Post

Thanks for that. Good humour always is "worthwhile" reading. I give you 99 out of 100 ... one very small deduction for the  "a mortgage is renting money from a bank" which wasn't your quote, was still funny, but borrowing is more accurate. Still, you made my day. Peace and out ... supper beckons.

He worded it wrong but the bank is technically the owner of a house until the mortgage is paid off.
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"Just because something is deemed the law doesn't make it just" - SolipsismX
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"Just because something is deemed the law doesn't make it just" - SolipsismX
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post #90 of 130
Looks like a beer ad that needs the slogan%u2026

I don't always buy stock,

but when I do%u2026

I buy AAPL
post #91 of 130
Quote:
Originally Posted by TBell View Post
 

 

If Apple ever cannot afford to pay a dividend it will have larger issues, and might need some of that $150 billion. You also don't address how a buy back is good for long term investors, which Carl is not. Apple buying back the stock does very little for Apple and awards mostly short term investors like Carl who want to cash out when the stock gets an artificial bump. Further, Apple's responsibilities are not only to investors, but to the maintaining the health of the company. A stock buy back in which Apple retires the stock does little for Apple. If the stock goes up, Apple has nothing to sell. The only benefit Apple gets is it will have less dividends to pay out, but that amount is insignificant as the amount is tied to profit. In my view, it is a waste of money. Just expand my quarterly check. If Apple has problems where it can no longer give out a dividend, people can just sell. With Apple's financials that realistically will not happen in the next fifteen years.

 

It is strange nobody is crying for Google to disperse its 50 billion dollar plus cash reserve.

 

So you are telling me Warren Buffet doesn't know sheet?  He himself told Steve Jobs to buy back stock:

http://www.cnbc.com/id/46540227

 

When a company buys back stock it increases shareholder value because each share now has a larger stake or ownership in the company.  It is NOT a short-term strategy.  Lets say a company has 100 shares outstanding.  You own 20 shares.  So you own 20% of the company.  If the company buys back 50 of the shares you now own 40% of the company.  The same thing is happening with Apple.  Apple has bought back about 4% of its total shares.

 

I have no problems with dividends.  I'm just pointing out the benefits and drawbacks of dividends.  The reason no one is pushing Google to return their $50B to shareholders is because its only $50B compared to $150B for Apple.  Also Google has a history of large acquisitions.  They paid $13B for Motorola and $3B for Nest and they are spending billions every year on their BS projects like Google glass, google fiber, wifi ballons, driverless cars.

 

Not even Ichan is saying to spend the entire $150B.  All he said was spend $50B in 2014 which is about how much free cash flow Apple will generate in 2014.  At the end of 2014 the net cash balance should still be $150B.  Apple spend $26B in the buyback so far and the cash balance has actually gone UP since they announced it.  Apple has already authorized $34B more in buyback.  All Ichan wants is to accelerate the buyback and add $16B more.

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post #92 of 130
Quote:
Originally Posted by TBell View Post
 

Earnings per share in terms of Apple is not even worth considering. For 2013 Apple earned something like $39.5 per share. Amazon was something like zero dollars, and Google something like $9. If you follow those numbers, Apple's stock should be much higher.

 

Don't compare Amazon to Apple.  Amazon is purely a bubble that will pop eventually.

 

EPS growth is the fire that drives stock price.  It really is the bottom line.  Google may have a lower EPS but the EPS is growing at a faster rate (for 2013 at least).  By the way Google EPS is $36 vs $39 for Apple.  So basically Google is TWICE as expensive as Apple.    But Google grew earnings about 15% last year while Apple had a decline of 10%.

 

Just because some stocks have ridiculous EPS to price ratio's that does not mean the EPS metric is 'not even worth considering'.  Please pick up a book on finance or read on the internet for your own good.  The ignorance in this topic so far is really scary.  Now I can see why so many people were caught off guard with the 2000 tech bubble, the 2007 housing collapse and a multitude of ponzi schemes.  Read. Learn.  I'm being serious.

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post #93 of 130
Quote:
Originally Posted by sog35 View Post

When a company buys back stock it increases shareholder value because each share now has a larger stake or ownership in the company.

That's not right. You still own the same percentage in the company, but your stock become more valuable because there's less of them in circulation.
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post #94 of 130
Quote:
Originally Posted by Anome View Post

Simple. Icahnn wants money. So he buys Apple, and tells everyone else to, so that his investment goes up. Then he complains that they should buy back shares, because that will also drive the value of his investment up. Then he wants them to give out their cash reserves as share dividends, so he gets even more money.

Then, when he's squeezed all the money he can out of the company, he dumps his stock at the new, higher price, which causes the stock price to collapse slightly. Or maybe, if he's done it right, completely.

 

 

 


How the hell will Ichan selling less than 1% of total outstanding shares tank the stock?  Do you even read what you wrote?  Everyday over 10,000,000 shares of Apple gets traded.  Ichan selling his $3B won't even be a blimp on the radar.  It would be different if Ichan own a huge chunk of Apple like 15-20%.

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post #95 of 130
Quote:
Originally Posted by dasanman69 View Post


That's not right. You still own the same percentage in the company, but your stock become more valuable because there's less of them in circulation.


WTF.  You are wrong. YOu do own a larger % of the company.  Those shares are RETIRED!!!!  Jesus you guys know NOTHING about finance.  Just read and learn and stop spouting out ridiculous statements.

 

 

http://money.stackexchange.com/questions/18330/what-are-the-implications-of-a-corporate-stock-repurchase-or-share-buyback-progr

 

"Your shares after a share buyback represent ownership of a greater fraction of the company, since in effect the company is buying out other shareholders on your behalf."


Edited by sog35 - 1/22/14 at 6:49pm
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post #96 of 130
Quote:
Originally Posted by sog35 View Post


WTF.  You are wrong. YOu do own a larger % of the company.  Those shares are RETIRED!!!!  Jesus you guys know NOTHING about finance.  Just read and learn and stop spouting out ridiculous statements.


http://money.stackexchange.com/questions/18330/what-are-the-implications-of-a-corporate-stock-repurchase-or-share-buyback-progr

"Your shares after a share buyback represent ownership of a greater fraction of the company, since in effect the company is buying out other shareholders on your behalf."

Shares aren't always retired. During a buyback a company is increasing its ownership of its own shares, they're investing in themselves. With your method it would make it easy for someone to become a majority shareholder.
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post #97 of 130
Quote:
Originally Posted by dasanman69 View Post

Shares aren't always retired. During a buyback a company is increasing its ownership of its own shares, they're investing in themselves. With your method it would make it easy for someone to become a majority shareholder.

Do a search. Apple retired the shares they bought back
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post #98 of 130

I voted with Carl.  He is 100% correct.

post #99 of 130
I was at the Apple store and was told about the ability of the retail employees to buy Apple stock at a 15% discount at the lowest price during the quarter! up to 10% of their income. Where do these shares come from?
post #100 of 130
Should each investor have to promise to hold the stock for 10 years to be an investor? Why not buy stock in Berkshire Hanover and have Warren Buffent be your CFO?
post #101 of 130
Name one entrepreneur on the board of Apple, or in top management. Jeff Bezos spent 8 years on Wall Street
And Google has the founders and a VC on the board. Put Carl on the board. What is the downside?
post #102 of 130
Quote:
Originally Posted by sog35 View Post


When a company buys back stock it increases shareholder value because each share now has a larger stake or ownership in the company.  It is NOT a short-term strategy.  Lets say a company has 100 shares outstanding.  You own 20 shares.  So you own 20% of the company.  If the company buys back 50 of the shares you now own 40% of the company.  The same thing is happening with Apple.  Apple has bought back about 4% of its total shares.

The average stock holder owns <0.00001% of Apple. Even if Apple retires half its stock, the average share holder will still have <0.00001%. Basically this enriches Crazy Carl and hedge funds.
Quote:
Originally Posted by Flabingo View Post

I was at the Apple store and was told about the ability of the retail employees to buy Apple stock at a 15% discount at the lowest price during the quarter! up to 10% of their income. Where do these shares come from?

There are buyers and sellers all the time. Employees pay 85%, Apple pays the 15%.
Quote:
Originally Posted by Flabingo View Post

Name one entrepreneur on the board of Apple, or in top management. Jeff Bezos spent 8 years on Wall Street
And Google has the founders and a VC on the board. Put Carl on the board. What is the downside?

Flabby's at it again. Carl will suck Apple dry and leave nothing behind. He's the crystalline entity of investors.
post #103 of 130
Quote:
Originally Posted by jungmark View Post


The average stock holder owns <0.00001% of Apple. Even if Apple retires half its stock, the average share holder will still have <0.00001%. Basically this enriches Crazy Carl and hedge funds.
 

 

Your point is POINTLESS.  It does not matter what percentage of Apple you own.  If Apple buys back 10% of the outstanding shares your claim to Apple's assets go up 10%.  Even if its a small % its still a HUGE PIE.  $500B+.  What also goes up is your share of PROFITS (EPS) and your share of Dividends.  Instead of dividing dividends between 990,000,000 shares it gets divided into 890,000,000 shares.

 

If you own $10,000 of Apple stock and Apple has $600,000,000,000 of net assets you now have a 10% larger claim or ownership of those assets.  My whole point is that buy backs are NOT just a short-term benefit.  Buybacks benefit LONG TERM holders as long as the shares were bought when the stock was undervalued.  And that's why Carl is pushing to buyback NOW when the stock is still undervalued.  A year from that may not be the case and it would be a BAD time to buyback shares.


Edited by sog35 - 1/23/14 at 6:23am
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post #104 of 130

Jungmark,

 

You entirely missed sog35's point.  It doesn't matter what percentage of the shares one owns.  What matters is, regardless of the amount of shares, all share will enjoy an increase in earnings per share after a share reduction and should increase in price as a result.

 

Flabingo's question was a reasonable one.  Are employee shared bought on the open market or are they offered through Apples treasury department, thus putting shares that have been repurchased back into the float.

 

Flab is right about Icahn.  The Apple board needs someone with a financial background.  They need someone who knows how to build a company from the ground up.  Icahn was not born into money.  He came from virtually nothing and is now one of the richest men in the world. And, he did it in the public equity market.  I'd say he could teach the Apple board a thing or two about how to run a public company.

post #105 of 130

Do you wonder why Google and Amazon gets the benefit of the doubt with Wall Street and Apple doesn't?

 

Just look at the Board of Directors and Executive Committee.  None of them have much experience dealing with Wall Street.  What Apple needs is at least one member of the Board who knows the Wall Street game.  Look at Amazon and Google.  They both have boards and Execs who have dealt with Wall Street and know all the little tricks.  Same with the political arena and media.  Apple needs guys who know these areas.  Apple does an outstanding job with marketing to the public but they need better representation with Wall Street and DC.

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post #106 of 130
Quote:
Originally Posted by sog35 View Post

Buybacks benefit LONG TERM holders as long as the shares were bought when the stock was undervalued.  And that's why Carl is pushing to buyback NOW when the stock is still undervalued.

You need to have an idea of what it is worth to make the assessment that it's undervalued so what should Apple's market cap be and why? The value comes from traders looking for gains. What's in it for a trader to buy Apple stock at $700? If there's no incentive for someone to buy at $700, it's not going to reach $700. If they buy back shares, the price goes up but that's not raising the market cap on its own.

Buying back shares doesn't necessarily raise the value placed on the company by traders (the market cap). It might create some upward momentum but it might not.

Apple's net income fell in 2013 to $37b. I expect Q1 2014 might show some gains over the year ago quarter but if not, the expectation going forward should be that they'll bring in roughly $40b per year. Say this keeps up for 5 years and they make another $200b and this increases their ~$140b cash, does that increase their market cap at all? The current value has to already assume this is the case anyway.

What event is going to raise Apple's market cap? Growth is slowing down. There's no existing major hardware market left to tackle that would grow their income significantly.

I suppose if they keep hauling in $40b every year for the next 20 years and never spend it, their cash/securities would be crazy but I don't think they'll do that. It's possible though as they've not really indicated what they want to spend it on.

Here's the thing that I don't get about the buyback urgency. Assuming Apple is taking shares off the table, there's no missed opportunity for them if they don't speed up the buyback. The missed opportunity is for remaining investors. However, if the company is undervalued then the market will eventually correct itself at which point Apple still has the cash/securities AND the share price is up.

If the share price stays the same or goes down after a year, what difference does it make buying it now or in a year's time? If it goes up, they don't need to buy it back.
Quote:
Originally Posted by sog35 View Post

Do you wonder why Google and Amazon gets the benefit of the doubt with Wall Street and Apple doesn't?

They're valued lower than Apple.
post #107 of 130
Quote:
Originally Posted by anantksundaram View Post


That is, unfortunately, pure silliness.

Sog35's examples could have been better (e.g., his assertion that it 'could have put it into the market that gained 30% last year' makes no sense -- it could also have been put into a market that lost a half its value in 2008-09). But the concept of 'opportunity cost' is not some 'Wall Street' conspiracy.

It is simply an Econ 101 concept that says, 'if you put your investment in A, you're foregoing the opportunity to earn a return from putting it in a risk-equivalent investment, B -- i.e., there is an opportunity cost to the use of capital, sometimes just called a "cost of capital" in making any investment decision.'

Anyone who does not understand that is simply being obtuse. They're the types of people that the hucksters of the world -- like a Madoff -- love to do business with and profit from.

Add: The key phrase is 'risk-equivalent'.

My point was that, in spite of the actual meaning of the phrase "opportunity costs" .... in the real world, it is most often used to sway a decision involving someone else's capital and, more often than not, only in hindsight, so as to quantify it. Perhaps I should have used the sarcasm tag ... didn't think it was necessary, especially for you.

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post #108 of 130
Why not hire Warren Buffet, by buying stock in his company, with the cash. I have never heard anybody praising the talent of Apple's CFO, or the Chairman of the board who works full time for Google.
It is encouraging to me that Carl is still buying Apple stock at the current prices. He must still think it is undervalued.
post #109 of 130
Quote:
Originally Posted by sog35 View Post

Do you wonder why Google and Amazon gets the benefit of the doubt with Wall Street and Apple doesn't?


Because Wall Street doesn't understand Apple.
post #110 of 130
Quote:
Originally Posted by sog35 View Post
 

 

 


How the hell will Ichan selling less than 1% of total outstanding shares tank the stock?  Do you even read what you wrote?  Everyday over 10,000,000 shares of Apple gets traded.  Ichan selling his $3B won't even be a blimp on the radar.  It would be different if Ichan own a huge chunk of Apple like 15-20%.

 

If Carl sells huge chunks repeatedly for several days it will move the stock downward unless there is heavy upward pressure. If the momentum goes down, others could sell as well. Especially people who also want Apple to buy the stock back. Those people most likely will get out after Apple's price goes up and levels out. 

post #111 of 130
Quote:
Originally Posted by TBell View Post
 

 

If Carl sells huge chunks repeatedly for several days it will move the stock downward unless there is heavy upward pressure. If the momentum goes down, others could sell as well. Especially people who also want Apple to buy the stock back. Those people most likely will get out after Apple's price goes up and levels out. 

 

HUGE chunks!!! Carl only owns about 5,000,000 shares!  That's less than half the average number of shares that get traded a day!!  Only idiots bought Apple stock because Carl bought it.  Please bring facts to the table and stop spreading LIES and FEAR.

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post #112 of 130
Quote:
Originally Posted by jungmark View Post


Because Wall Street doesn't understand Apple.

 

That's why they need someone on the Board or Executive Committee that can help Wall Street understand Apple

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post #113 of 130
Quote:
Originally Posted by newbee View Post
 

My point was that, in spite of the actual meaning of the phrase "opportunity costs" .... in the real world, it is most often used to sway a decision involving someone else's capital and, more often than not, only in hindsight, so as to quantify it. Perhaps I should have used the sarcasm tag ... didn't think it was necessary, especially for you.

 

I use opportunity cost almost everyday in making decisions.  Should I eat here or eat here.  This place cost more but there food sucks.  Should i take this road to work or this road. ect. ect. ect.

 

Should I leave $150B in a bank that earns only 1% a year or should I distribute some of that money to investors and let them decide how to invest it.........

 

As an example (I'm not saying Apple should have done this):  if Apple decided to execute a special dividend at the end of 2012.  Lets say they distributed $50B special dividend.  I would have gotten about $15,000 in cash.  I could have taken that cash and put it into my 401k and have gotten 30% returns in 2013.  Instead its stuck in Apple bank losing literally BILLIONS of dollars every year because of inflation.

 

Was there risk in me putting $15k in a 401k?  Hell yes.  But I'm willing to take the risk.  So are millions of other investors.  Or they may have used the money to go on vacation, buy a house, ect.  The bottom line let the investor decide what to do with the distribution.  I'm pretty sure most would not want to stick the $15k in a bank earning less than 1% after taxes.

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post #114 of 130
Quote:
Originally Posted by Marvin View Post


You need to have an idea of what it is worth to make the assessment that it's undervalued so what should Apple's market cap be and why? The value comes from traders looking for gains. What's in it for a trader to buy Apple stock at $700? If there's no incentive for someone to buy at $700, it's not going to reach $700. If they buy back shares, the price goes up but that's not raising the market cap on its own.

Buying back shares doesn't necessarily raise the value placed on the company by traders (the market cap). It might create some upward momentum but it might not.

Apple's net income fell in 2013 to $37b. I expect Q1 2014 might show some gains over the year ago quarter but if not, the expectation going forward should be that they'll bring in roughly $40b per year. Say this keeps up for 5 years and they make another $200b and this increases their ~$140b cash, does that increase their market cap at all? The current value has to already assume this is the case anyway.

What event is going to raise Apple's market cap? Growth is slowing down. There's no existing major hardware market left to tackle that would grow their income significantly.

I suppose if they keep hauling in $40b every year for the next 20 years and never spend it, their cash/securities would be crazy but I don't think they'll do that. It's possible though as they've not really indicated what they want to spend it on.

Here's the thing that I don't get about the buyback urgency. Assuming Apple is taking shares off the table, there's no missed opportunity for them if they don't speed up the buyback. The missed opportunity is for remaining investors. However, if the company is undervalued then the market will eventually correct itself at which point Apple still has the cash/securities AND the share price is up.

If the share price stays the same or goes down after a year, what difference does it make buying it now or in a year's time? If it goes up, they don't need to buy it back.
They're valued lower than Apple.

 

So you really think Apple will never grow earnings again?  Ever? Wow.

 

Samsung sold about 100,000,000 high end phones last year.  Apple sold about 150,000,000.  You don't think Apple can steal away a big chunk of Samsung's share with releasing a bigger phone?  What about tablets?  We are just scratching the surface (no pun intended) at its true potential from being a consumption device to a device to replace laptops/desktops. 

 

It is estimated that in 5 years the middle class segment in China will be 200% greater than the USA.  Apple is going to experience massive growth in China now that ChinaMobile is on board.  You really don't realize how rich of a country China is becoming.  I have a few friends in China that are making $60k and have homes worth close to $1M.  These are ordinary people that are making nice wages in the big cities in China.  Don't let the stats fool you about average wages in China.  Those BS.  Sure there are millions that make only $6k a year and many that make $0.  But there are hundreds of millions that make over $40k and can easily afford an iPhone.

 

And what about new products?  Wearables, TV? Home automation?  Car?  iBeacon?  Digital transactions?  Apple has 500,000,000 itunes accounts, you don't think they can monitize that?  Your view of Apple grow is EXTREMELY NEGATIVE.

 

If Apple buys back 30% of the outstanding shares the stock will go up 30% if all things are equal.  It really is just basic math. 

 

I have a feeling that we may never see sub $600 shares after March 1st this year.  At that point the buy back won't make much sense and would be much more risky.

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post #115 of 130
Quote:
Originally Posted by sog35 View Post
 

 

I use opportunity cost almost everyday in making decisions.  Should I eat here or eat here.  This place cost more but there food sucks.  Should i take this road to work or this road. ect. ect. ect.

 

Should I leave $150B in a bank that earns only 1% a year or should I distribute some of that money to investors and let them decide how to invest it.........

 

As an example (I'm not saying Apple should have done this):  if Apple decided to execute a special dividend at the end of 2012.  Lets say they distributed $50B special dividend.  I would have gotten about $15,000 in cash.  I could have taken that cash and put it into my 401k and have gotten 30% returns in 2013.  Instead its stuck in Apple bank losing literally BILLIONS of dollars every year because of inflation.

 

Was there risk in me putting $15k in a 401k?  Hell yes.  But I'm willing to take the risk.  So are millions of other investors.  Or they may have used the money to go on vacation, buy a house, ect.  The bottom line let the investor decide what to do with the distribution.  I'm pretty sure most would not want to stick the $15k in a bank earning less than 1% after taxes.

You make some interesting points, however, here's the problem, as I see it. Apple got to be the most valuable tech company in the world, and perhaps the most valuable public company  .... by following it's core beliefs.  That is, put their customers, product buyers, not shareholders, first. By focusing on customers, not shareholders. .... Now all of a sudden these same shareholders, who presumably bought Apple shares because they valued Apple's past performance, are letting Apple's "war fund" burn a whole in their pocket. Shareholder's goals do not always align with a company's goals. Disappointed shareholders should, imho, shit or get off of the pot. Apple knows what they plan to do in the future ... we don't. They can price out their future needs .... we can't. All of us, if we allow ourselves to be realistic, can imagine the possibility of a very shaky financial future, based on the fact that most governments are spending "like a drunken sailor' and printing money like it's "going out of style", (and according to bitcoin, it already is).

 

To change Apple's thinking from a consumer focussed company to a shareholder focussed company would be, in my opinion, drastically wrong. Apple is performing wonderfully under Tim Cook's direction and to listen to "bombastic Carl" would not serve any of us well. You have your opinion and I have mine. We are both free to act on our respective opinions. Peace, out.

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post #116 of 130
Quote:
Originally Posted by newbee View Post
 

You make some interesting points, however, here's the problem, as I see it. Apple got to be the most valuable tech company in the world, and perhaps the most valuable public company  .... by following it's core beliefs.  That is, put their customers, product buyers, not shareholders, first. By focusing on customers, not shareholders. .... Now all of a sudden these same shareholders, who presumably bought Apple shares because they valued Apple's past performance, are letting Apple's "war fund" burn a whole in their pocket. Shareholder's goals do not always align with a company's goals. Disappointed shareholders should, imho, shit or get off of the pot. Apple knows what they plan to do in the future ... we don't. They can price out their future needs .... we can't. All of us, if we allow ourselves to be realistic, can imagine the possibility of a very shaky financial future, based on the fact that most governments are spending "like a drunken sailor' and printing money like it's "going out of style", (and according to bitcoin, it already is).

 

To change Apple's thinking from a consumer focussed company to a shareholder focussed company would be, in my opinion, drastically wrong. Apple is performing wonderfully under Tim Cook's direction and to listen to "bombastic Carl" would not serve any of us well. You have your opinion and I have mine. We are both free to act on our respective opinions. Peace, out.

 

I actually agree with everything you said.  I don't think our opinions are that far off.

 

Apple has already agreed to buyback $60B.  They have already bought (as of 9.30.13) about $26B.  About $34B remains.  All that Ichan wants is to spend the $34B plus an additional $16B in 2014.  He wants the buyback to be front loaded since the stock price is 'cheap' right now.  Ichan is no longer asking Apple to buyback $100B in 2014. 

 

I agree that Apple needs a War Chest just in case.  But how much is enough?  Here is what would happen if Apple said yes to Ichan's plan:

 

Cash 01.01.14 =  $170B (expect the balance to go up because of holiday Qtr)

Buyback $20B using US profits

Bond for $30B

Total buyback = $50B

Estimated free cash flows 2014 = $50B

 

Ending Cash Balance 12.31.14 ( 170 - 20 +50) = 200,000,000,000

Bonds - 30,000,000,000

Net Cash = 170,000,000,000

 

So the net cash balance will be the same from 01.01.14 to 12.31.14 with a $50B buyback. 

 

Since Apple generates $50B free cash flows they could pay off all the Bonds in 5 years or less EASILY.

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post #117 of 130
Quote:
Originally Posted by sog35 View Post

That's why they need someone on the Board or Executive Committee that can help Wall Street understand Apple

You think that would help? Wall Street is stuck in the "market share matter" game. Apple doesn't operate that way have always been different. If Wall Street hasn't figured that out in the last 15 years, nothing is going to change their mind.
post #118 of 130
Quote:
Originally Posted by sog35 View Post

If Apple buys back 30% of the outstanding shares the stock will go up 30% if all things are equal.  It really is just basic math.

The stock price goes up, not the market cap. Apple isn't valued more highly overall by doing this. They'd just be taking on debt to please stockholders who regret not selling at $700 and they'll sell and it'll fall.
Quote:
Originally Posted by sog35 View Post

I have a feeling that we may never see sub $600 shares after March 1st this year.  At that point the buy back won't make much sense and would be much more risky.

So what's the problem? If it reaches $600 without the buyback, they retain their cash, their stock price is up and their market cap is up.
post #119 of 130
Quote:
Originally Posted by Marvin View Post


The stock price goes up, not the market cap. Apple isn't valued more highly overall by doing this. They'd just be taking on debt to please stockholders who regret not selling at $700 and they'll sell and it'll fall.
So what's the problem? If it reaches $600 without the buyback, they retain their cash, their stock price is up and their market cap is up.

 

No one really cares about Market Cap.  i don't care if the market cap is the same but if the stock price goes up 30% I'd be really happy.

 

There are very few who bought at $700 that are still holding the stock.  Look at Google.  Everyone thought people would sell at $1000.  If Apple can grow EPS it will go to $700 and beyond.

 

The problem is it would have been a lost opportunity if it reaches $600 and the buyback is not complete.  Basic math.  Apple will reissue some of the shares that were bought back as stock options.  I think Tim Cooks plan is 1,000,000 options.  That alone would save Apple 50,000,000 if the stock jumps $50 before the buyback is complete.  If the stock reaches $700 that would be $150,000,000 lost.  If Apple wasn't so slow they would have bought back at $400 and could have saved $300,000,000 just on Tim Cooks option plan.  Now multiply that by all the other employee stock options and future employees.  In essence Apple is INVESTING in itself when they buyback stock.

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post #120 of 130
Quote:
Originally Posted by jungmark View Post


You think that would help? Wall Street is stuck in the "market share matter" game. Apple doesn't operate that way have always been different. If Wall Street hasn't figured that out in the last 15 years, nothing is going to change their mind.

 

There are many high-end and luxury brands that did well in 2013.  Tiffany & Co went up 50% in 2013.

 

You need to change the narrative if Wall Street is stuck in market share game.   You need guys in PR, Media relations, BOD, Exec Committee who know how to talk big things like the CEO of Amazon.  Its a game.  You need guys who know how to play it.

 

I'll give you an example: Earnings Calls.  Apple needs to innovate there.  Why the hell are we still stuck listening to an audio only presentation once a quarter?  Apple needs to have a video earnings call.  Show all those beautiful graphs that show Apple unit growth, web share, profits vs competitors, growth in China, ect.  It would be so much better for investors/analysis/media to see a video presentation.

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