Originally Posted by AppleInsider
Apple's efforts to take advantage of irrational stock dips in order to buy back its own shares at a discount has transferred billions of dollars from panicked speculators to its long term investors.
The stock sellers were paid for their stock by Apple so the value transfer is really from Apple's cash to remaining investors, not from panicked sellers to the remaining investors. They have also been buying back from what they describe as a financial institution with only a small amount from the open market. I'm not sure if that happened on this occasion though but if it did, it was more likely an agreement of some sort rather than a panic sell. If it was on the open market then it would be more panic selling but again, they were paid for the shares. Unless the market cap increases, the sellers haven't lost anything.
Originally Posted by Crowley
If it's Apple buying them then theoretically it shouldn't do, except as a temporary fluctuation because of the trade volume.
The share price should rise on buying back the shares and retiring them if the market cap stays the same. If not, the market cap would drop without reason.
Originally Posted by mvigod
Apple's weak buyback stance makes me constantly wonder if they are not as confident in their future as we would hope they are.
It depends on what you mean. They can remain as the most valuable company in the world and not grow any more. Microsoft's stock has been almost flat for 14 years yet they make billions every year in income.
It's not that they'd lack confidence in their future, they'd lack confidence in growth. Lacking growth is not particularly important if you remain highly profitable.
Originally Posted by Richard Getz
Apple is retiring these shares? I thought they were just buying them back?
They are retiring them, which is why suggestions that they are buying them back cheap are not as meaningful as if they were to sell them later on or offer them to staff. Retiring them is equivalent to giving the cash used for the buyback to the remaining stockholders, most of which are institutions: index funds, banks, insurance companies etc but it also benefits staff holding stock.
Originally Posted by asdasd
Far from showing confidence it shows an inability to do anything else with the money.
Especially when they do such a large buyback so quickly. That was a pretty irrational move for Tim, who authorized it. Not that it was the wrong thing but it's a distraction for them and clearly they are making decisions outside of their comfort zone.
Originally Posted by AndreiD
Oooh so it was not exactly the growth "the market" expected (shoot straight from the market's ass)
Stockholders and analysts are like film critics. They don't make the films, they wouldn't even know how, they just express their own reaction to the performance and assume it's indicative of who they try to represent.
The problem with the market is not stockholders, it's second-hand stockholders. It's people who buy into a company from the outside. At the beginning, when it was the 3 founders, the shares were split between them. The 3rd guy who you don't hear about much bailed out early because he had assets that could have been taken from him if the company went into debt:
These people (the two Steves) were the essence of the company, they had the drive to turn it into something of value. Over the years, the shares become valuable to other people and when they are split out to the public, it's these second-hand stockholders that are the problem because they are removed from the motive of the company founders to create value and the motive is to create profit. Value and profit are not the same thing. Traders seem to believe this at times but not always. Tesla and Amazon create value but almost no profit. Google creates profit with advertising but advertising is hated by almost everyone. Where they are seen as creating value by some is with the likes of Chrome, Android, even search where they don't make profit directly, the profit all comes from the ads and tracking - the valueless pursuit.
With Apple, I think they've struggled the whole way to get people to believe that it's not just about profit. There's a cynicism and resentment towards what Apple does but it's strange because they're one of the companies that creates both value and profit from the same pursuit. Maybe that's why traders think that if the profit goes down, it means they aren't as valuable a company.
Still, traders place more value on Apple than every other company just now and I'd say the uncertainty causing the fluctuations is from not having a reliable enough reference point to determine the intrinsic value easily. Now that the smart device market is saturating, it's becoming more clear.
Originally Posted by Eric Swinson
The first steps in taking a company private is to reduce the number of outstanding shares / shareholders over time to avoid it looking like a tender. Then the board and majority shareholders can vote to delist the company.
This kind of thing might be best for Apple but their shares are worth so much that I don't think they can narrow down the interested parties enough without those parties individually being extremely wealthy. Tim said before that they weren't interested in doing this. He mentioned something about it being less appealing to leadership candidates and that it's best for the stock to be spread widely. It avoids the possibility of having few individuals (like Carl Icahn) getting too much control. You can imagine if Tim took so many shares off the table that Carl could pull another TWA. If he could get enough of his Wall Street cronies to loan him enough to buy up a controlling interest, he could replace the board, drain all their cash and make his exit.