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Large stake investors clash over Apple cash ahead of shareholder meeting - Page 3

post #81 of 102

Good comment - but I would retain a reasonable reserve - say 75 Billion or so - for acquisitions, special production, et al. 

 

Current excess reserves should be used for buy backs as long as the price is "Cheap" - which it is under about a 14 PE multiple - at least

post #82 of 102
Quote:
Originally Posted by nyuestateplanninglawyer View Post
 

Repatriation cost / tax - can be avoided by securing generational incredibly low borrowing rates - 

 

Key here is you can buy shares CHEAP if you believe like I do that Apple has amazing product line coming.

 

Stock price is important - this keeps the good engineers happy and coming to Apple not going to Google.

 

So what Carl made money forcing companies to address screw ups.  He also has been long time investor in key companies.

 

For Apple - he has made it clear that he loves and believes in Apple, Cook and Team - his issue is that the share price is absurdly low - horrible return -- this should not be happening.   Current administrations refusal to lower rates to encourage BILLIONS from returning to employ Americans does not have to be the end all - since the monies can be borrowed - keeping the growth in Apple (by buy back at CHEAP PRICE)  

 

CARL HAS SAID HE BELIEVES FULLY IN APPLE - JUST NOT THERE LACK OF ACUMEN WITH CAPITAL HORD - WHICH IS WAY OVER THE TOP.

 

APPLE HAS BILLIONS TO FINANCE EVERYTHING THAT IT IS WORKING ON 10 TIMES OVER.  - THE STOCK PERFORMANCE FOR EMPLOYEES AND SHAREHOLDERS IS PATHETIC.

 

REMEMBER TO - SHAREHOLDERS "OWN" THE COMPANY.   MOST OF US LIKE ME ARE INTO THIS FOR THE LONG TERM. HOWEVER, EVERYONE IS ENTITLED TO GROWTH IN THEIR INVESTMENT, AND HAS THE RIGHT TO REQUEST THE COMPANY TO LOOK OUT FOR THEM.

 

COOK HAS DONE A FINE JOB ON VIRTUALLY ALL MATTERS OTHER THAN LOOKING OUT FOR THE SHAREHOLDERS/STOCK PRICE - WHICH WE HAVE A RIGHT TO EXPECT AND WHICH ALSO IS CRITICAL LONG TERM FOR EMPLOYEE RETENTION

 

Great points.

 

Floating a bond is so cheap in this interest free environment Apple acutally MADE MONEY floating the last bond to pay for buybacks.  The bonds are only netting 2% interest while they are saving OVER 2.5% from paying less dividends.  Also Apple gets to deduct the bond interest.

 

Bottom line is this:

 

This is a golden opportunity to accelerate the buyback because borrowing money is historically cheap (this could change in a year or two) and Apple's shares are historically cheap (PE ratio sans cash).  IMO anything under $600 is incredibly cheap and Apple should buy as much as they can.  I have been personally buying as much shares as I can.

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post #83 of 102

Is borrowing money bad?

Do any of you have mortgages?

What about a 2% mortgage? That's what Apple is paying for the money they are borrowing.

After taxes its about 1%.

After the savings from not paying dividends they are actually MAKING MONEY floating bonds.

 

Stick to the facts.

 

Current cash balance at 12.31.13 = $159,000,000,000

Cash generated from operations in FY2013 = $53,000,000,000

Current Dividend payments per year = $10,600,000,000

Net cash generated in 2013 after dividend = $42,400,000,000

Current long term debt (Bonds) = 16,000,000,000

 

Now lets move this forward 5 years assuming flat earnings/cash flow:

 

12.31.13 balance = $159B

5 years of cash flow @ $42.4B = $212B

Cash balance = $371B

If Apple borrows $50B additional for 2014, total bonds = $66B

 

Net cash after paying off bonds = $305,000,000,000

 

Does Apple really need more than $305 Billion? WTF man.

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post #84 of 102

You are 100% correct - breath of fresh air to hear people speak common sense.  

 

Having Carl on our (shareholder) side is a golden opportunity. I love the man - so do my kids - "Uncle Carl".    Carl has bent over backwards to show that he fully believes in management, the Apple employees, the direction - just not the retention of so much over the top cash when there is such a screaming opportunity to buy back shares CHEAP.

 

Before Carl, the stock was being manipulated by disgusting shorts and the press that love to say idiotic things because they make $$$ trading/shorting - or getting people to listen to their rubberish (NY Times is great at this).   Apple is on the right direction - Carl is assisting us getting Apple management to move from the SJ position to hold onto cash forever .. SJ was correct when he didi it - he had a history of nightmares at Apple early on - but SJ would not do this with Apple sitting on 200Billion.

 

Your points are good - PE screams BUY - Interest rates are HISTORIC - Opportunity exists NOW for buy back - maybe not in 6 months.  

post #85 of 102

You are so right - 

 

Numbers say it all - thanks for posting - they are conservative numbers too !!  

 

I like SJ selection of Cook - he is the right buy - but Cook needs to modify SJ retention obsession.   

 

I have around 6000 shares (actual options and in the money options) - way over allocated - you are so smart buying at this price.  With over the top allocation to Apple, not directly buying (although I believe I will  have around $5K more stock shortly since I reinvest all Apple dividends!).

post #86 of 102
Quote:
Originally Posted by sog35 View Post
 

Is borrowing money bad?

Do any of you have mortgages?

What about a 2% mortgage? That's what Apple is paying for the money they are borrowing.

After taxes its about 1%.

After the savings from not paying dividends they are actually MAKING MONEY floating bonds.

 

Stick to the facts.

 

Current cash balance at 12.31.13 = $159,000,000,000

Cash generated from operations in FY2013 = $53,000,000,000

Current Dividend payments per year = $10,600,000,000

Net cash generated in 2013 after dividend = $42,400,000,000

Current long term debt (Bonds) = 16,000,000,000

 

Now lets move this forward 5 years assuming flat earnings/cash flow:

 

12.31.13 balance = $159B

5 years of cash flow @ $42.4B = $212B

Cash balance = $371B

If Apple borrows $50B additional for 2014, total bonds = $66B

 

Net cash after paying off bonds = $305,000,000,000

 

Does Apple really need more than $305 Billion? WTF man.

 

Your assumptions are flawed.

post #87 of 102
Assumptions are always flawed, you'll need to be more specific.

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post #88 of 102
Quote:
Originally Posted by mdriftmeyer View Post
 

 

Your assumptions are flawed.

 

Explain.

Do I need to pull up the SEC filings?

 

Or is my assumption that Apple won't be able to generate at least flat earnings the next 5 years?  If you don't think Apple can generate flat earnings you should SELL RIGHT NOW.  At no growth this stock is worth less than $500.

 

So what assumptions are flawed?

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post #89 of 102
Quote:
Originally Posted by nyuestateplanninglawyer View Post
 

You are 100% correct - breath of fresh air to hear people speak common sense.  

 

Having Carl on our (shareholder) side is a golden opportunity. I love the man - so do my kids - "Uncle Carl".    Carl has bent over backwards to show that he fully believes in management, the Apple employees, the direction - just not the retention of so much over the top cash when there is such a screaming opportunity to buy back shares CHEAP.

 

Before Carl, the stock was being manipulated by disgusting shorts and the press that love to say idiotic things because they make $$$ trading/shorting - or getting people to listen to their rubberish (NY Times is great at this).   Apple is on the right direction - Carl is assisting us getting Apple management to move from the SJ position to hold onto cash forever .. SJ was correct when he didi it - he had a history of nightmares at Apple early on - but SJ would not do this with Apple sitting on 200Billion.

 

Your points are good - PE screams BUY - Interest rates are HISTORIC - Opportunity exists NOW for buy back - maybe not in 6 months.  

 

I agree with some of what you write, specifically that the cost of debt is presently very low compared to the cost of equity.   However, much of what you've written gives me every indication that you are not thinking long term and that you, like Carl are in this for a quick buck.  

 

Rushing into this to make Carl Icahn more wealthy is unlikely to be on the wish list of many here.  If you know what interest rates are going to be like in 6 months, you can make a great deal of money with that knowledge without involving Apple.

 

I think for many here, the longer term considerations of Apple's future are more important.  I for one would also like to see Apple make some larger acquisitions to bolster a portfolio of products that are looking somewhat vulnerable.  I would also like to see them take some risk; at present, the company is being run very conservatively.  I'd much rather they spent some of the money on revenue growth, not just improving the way the company is capitalized.

post #90 of 102
Quote:
Originally Posted by JamesMac View Post
 

 

I agree with some of what you write, specifically that the cost of debt is presently very low compared to the cost of equity.   However, much of what you've written gives me every indication that you are not thinking long term and that you, like Carl are in this for a quick buck.  

 

Rushing into this to make Carl Icahn more wealthy is unlikely to be on the wish list of many here.  If you know what interest rates are going to be like in 6 months, you can make a great deal of money with that knowledge without involving Apple.

 

I think for many here, the longer term considerations of Apple's future are more important.  I for one would also like to see Apple make some larger acquisitions to bolster a portfolio of products that are looking somewhat vulnerable.  I would also like to see them take some risk; at present, the company is being run very conservatively.  I'd much rather they spent some of the money on revenue growth, not just improving the way the company is capitalized.

 

Interest rates are going up, just a matter of time.  The Fed is cutting down on its stimulus and QE.

 

Apple has been spending a bunch on growing revenue.  Their R&D expenses was up like 70% last year.

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post #91 of 102
Quote:
Originally Posted by sog35 View Post
 

 

Interest rates are going up, just a matter of time.  The Fed is cutting down on its stimulus and QE.

 

Apple has been spending a bunch on growing revenue.  Their R&D expenses was up like 70% last year.

 

Apple's R&D intensity is still far lower than their peer group.  The point I was making however, is that Apple has ample money to make some significant acquisitions to dramatically change the company.  I'm not knocking what Apple has done, their own R&D and the acquisitions they've made have been well done, I happen to believe they can think larger!

post #92 of 102
Quote:
Originally Posted by JamesMac View Post
 

 

Apple's R&D intensity is still far lower than their peer group.  The point I was making however, is that Apple has ample money to make some significant acquisitions to dramatically change the company.  I'm not knocking what Apple has done, their own R&D and the acquisitions they've made have been well done, I happen to believe they can think larger!

 

Think larger like buying Motorolla for $12B and then selling it for $3B?

Or buying a thermostat company for $3B?

 

Very large acquisitions rarely ever work and its not Apple's style to do so anyway.  At this point they have way too much money than they could ever spend smartly in acquistions.  Some of the best possible acquisitions would be shutdown by the Dept of Justice for anti trust anyway.

 

Apple will have $200B at the end of this year.

Do they really need more than $150B (after $50B Ichan buyback)?

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post #93 of 102

We think alike - smart - perfect points.

 

This is the point of this - way too much cash - boost up the stock - helps the employees/engineers recruitment.  Makes long time shareholders like me happy.

 

Here is my first purchase to the smart-a who said I was "short term" "quick buck" kind of guy:  

01/30/2007 $85.64 price per share
post #94 of 102

You are naive or not educated in finance/clueless.

 

P/E, pushing $200 billion in the bank, historic low interest rates SCREAM FOR BUY BACK N O W.

 

Who is long term and who is short term thinking?

 

Here is my first purchase .. .keep in mind my positions exploded about 2 years before SJ died - since I had 100% faith in the company and what he was doing (long term) - and I rolled over options that were out of the money until they were deep in the money for years - have around 60 right this second - and a lot of stock.  I am a long term thinker and I agree with the guy that you are arguing with and Carl … Carl is thinking long term with this investment, its not a take over or quick buck you can clearly see from his statements to Mr. Cook (who we both admire)

01/30/2007

$85.64

 

 

 

 

 

post #95 of 102
Quote:
Originally Posted by sog35 View Post

Think larger like buying Motorolla for $12B and then selling it for $3B?
Or buying a thermostat company for $3B?

Very large acquisitions rarely ever work and its not Apple's style to do so anyway.  At this point they have way too much money than they could ever spend smartly in acquistions.  Some of the best possible acquisitions would be shutdown by the Dept of Justice for anti trust anyway.

Apple will have $200B at the end of this year.
Do they really need more than $150B (after $50B Ichan buyback)?
This is conventional thinking. Do you think Apple got where it is by conventional thinking?

I'm sure there are better ways to finagle cash than what they are currently doing,but perhaps they are at a crossroads?

Suppose they wanted to do something entirely on their own?again? Things that cost 80B to set up?

Lots of things come to mind.

<<< space left for your imagination. >>>


Will they do robotic gaming or medical equipment...or cars? We don't know. And they don't want to tip their hand.

Perhaps they know what comes next but the time isn't right,regulations, deals, tech...

Point is, I trust the company. BTW I own actual shares not options.

The wait is frustrating for many, especially for us. At some point we have to start using our own profit, but I think this is one company that knows how to make money. I trust them to make money with PRODUCTS AND SERVICES in addition to fiddling with their accounting and substitution of collateral ideas.
What is really factored into the price is a kind of perpetual sense of disbelief that any company could be as good as Apple is. ~Retrogusto
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post #96 of 102

By the way - in addition to owning about $800K of Apple shares, I own around $300K in Disney Shares (you know, the company that SJ sold Pixar to? - brilliantly to - which now makes Disney movies like Frozen with the SJ Pixar talent?).

 

I posted my first purchase hours ago - I bet you I have owned Apple years before you.

 

I was one of the first to embrace Steve Jobs and Apple - and to be LIVID when he was forced out.

 

If you had some degree of financial education, experience and smarts - you would not do "black white" comparisons.  There is no one size fits all analysis - that is what differentiates the mediocre from the great - such as Steve Jobs - Tim Cook - and Carl.

 

With an account approaching $200 Billion "Mr. Smarts", Apple is no longer the company run on a shoe string that SJ started.  That $200B to be number ignores the positive cash flow.  

 

Apple has plenty of cash to buy whatever business it wants, start whatever production it wants, and deal with whatever event comes up.   Why?  $200 Billion is a lot more than $50 Billion.  If Apple were to pile up $500 Billion you would have the same ignorant nonsensical remark!  make it a Trillion - 10 Trillion ……… just stupid.

 

The point is genius - a company is what its team is.   In addition to owning a ton of stock bought under $100, I bought options out of the money and kept rolling them as they became deep in the money calls - on and on.    The only thing that could hurt Apple (since Jobs did a great job picking Mr. Cook, Ives, and the team -and setting the mindset_ .. is Apple not investing in the future "team".  The young engineers coming out of school.  I guarantee you that if Apple does not take care of its stock price, that talent will not go to Apple.  Last year was a crummy year - and it was entirely because Apple unfortunately did not take care of its shareholders (and employees) by doing buy-backs.

 

You think this is BS ???? Just walk into an Apple Store and ask employees.  Just call the Apple care center (like I have as a major an interested life long shareholder) - ask the employees how they felt like myself.    

 

Key shareholders (like me on "small" $1 million level, Carl et al) count big time.  Employees and their stock, options et al count because it is key to their portfolio.

 

What does not matter is idiotic statements from morons at CalPers who have lost their members HUNDREDS OF MILLIONS:

http://articles.latimes.com/2009/jul/21/business/fi-calpers21

post #97 of 102

That is a joke - are you for real????

 

CalPers is a horrible organization - that is messing up the retirement for likely millions in my great state.     They are horrible.  They blew a fortune of retirees (and taxpayers) -  there is no excuse for ignorance today when you an spend 1 minute literally and see how inept an organization is - just do a search for "CalPers" and ""CalPers" and "huge losses" - see what comes up!!!!

 

If you are too lazy here's one:

 

http://articles.latimes.com/2009/jul/21/business/fi-calpers21

 

When you speak of great things in America, don't think of CalPers, and government, think entrepreneurs, Steve Jobs, Walt Disney, Engineers, working parents - 

 

Use your brain, a pencil.   $200 Billion and a P/E under 12 for a great growth company like apple - is STUPID if you want to retain Engineers and key employees of the future. Sure you can keep the old ones who have millions in stock, but we (me included - I am long term Apple big time) shareholders want Apple to continue with the youth/brains of the future!!!!!!!! You don't do it with a stock that goes up a couple percent a year!!

 

All for no reason - Cook and company are doing a great job except for managing the $200Billion stock pile - and the stock price (which should be split - to let the Apple product buyers own the stock like Disney did with its youth/buyers of the future with its $30-80 price range stock).

post #98 of 102

Buying back shares does decrease dilution and raise EPS and Revenue Per Share, but there are two problems. 

 

The important problem is: a share buyback requires constant buyback (i.e. consistently maintaining number of shares bought back each year). The immediate growth in EPS after buyback is only temporary on a year-on-year basis. The removal of shares increases EPS as compared to the prior year, but if there is no buyback, at a higher or equal level, the EPS growth the next year will drop, unless organic earnings growth next year meets or exceeds the year-on-year change in the buyback rate. So if Apple does not also increase their dollar value in buyback next year (assuming stock price rises), Apple should not currently buyback shares at a rate (year-on-year % change in share count) faster than they can increase their organic earnings growth next year at the rate that makes up for the decline in buyback rate next year. 

 

For example, if Apple wants to buyback 60B in shares (on average at 512.51) this year (decreasing share count by 13.12% to 775m shares assuming 457.15B Market Cap. [892m shares] at the beginning of the year), and 40B in shares (on average at 637.72) next year (decreasing share count by 8.09% to 707m shares assuming shares rise 24.43% (13.12%*10% [10%=organic growth rate]) by next year [494.23 Market Cap.]), then Apple will have to increase their organic earnings growth rate by 38.3% (100-100*8.09/13.12), since Apple will be decreasing their artificial [buyback] earnings growth rate by 38.3%. [I assume shareholders want to warrant a higher PE multiple with higher net earnings growth]

 

Second, a share buyback uses cash and as a result, dilute Apple’s Cash Per Share and Book Value. 

 


Edited by AICow - 2/6/14 at 5:51pm
post #99 of 102
Quote:
Originally Posted by nyuestateplanninglawyer View Post


Having Carl on our (shareholder) side is a golden opportunity. I love the man - so do my kids - "Uncle Carl".    Carl has bent over backwards to show that he fully believes in <<snip>>.

Before Carl, the stock was being manipulated by disgusting shorts and the press that love to say idiotic things because <<snip>>

YES!! Dear Uncle Carlpants!!
Ahahahaha! What a coincidence you are related to him..1tongue.gif

BTW, just curious, who is 'Mr. Smarts' that you keep replying to? lol.gif
What is really factored into the price is a kind of perpetual sense of disbelief that any company could be as good as Apple is. ~Retrogusto
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post #100 of 102
Quote:
Originally Posted by sog35 View Post


Saying that all buy backs are a gimmick shows your absolute ignorance about finance.

I'm absolutely shocked how many people in this forum have close to zero knowledge about finance. And the worst part is there are a bunch of finance professionals here, yet people refuse to listen to us. As a finance professional I advise all the Ichan haters to separate the man from the plan.

 

Stock buybacks are a gimmick.

post #101 of 102
Of course they aren't. They increase individual shareholders proportional ownership and earnings per share, and reduce the dividend liability. Neither of those results are gimmicky.

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