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Apple, Inc. spent $18B to buy back 31.7 million shares of AAPL in March quarter

post #1 of 55
Thread Starter 
During its fiscal Q2 ending in March, Apple spent $18 billion to buy up its own stock off the market. More than three quarters of that total was used to snatch up discounted stock after investors panicked following Apple's Q1 earnings announcement in January.

AAPL capital return by shares


Speaking to analysts in its Q2 conference call this week, Apple's corporate controller Luca Maestri outlined that "in total, we executed almost $21 billion worth of capital return activities during the March quarter."

Included in that total amount were $2.7 billion in dividend payments the company distributed to its shareholders in February.

The $18 billion remainder funded two types of stock buybacks: first, $6 billion in "open market purchases," where the company simply bought its stock from existing investors at prevailing prices; and secondly, two rounds of "Accelerated Share Repurchase" programs.

Apple's Accelerated Share Repurchases



Under an ASR, a company like Apple buys its shares from an investment bank, which essentially shorts the stock by borrowing shares (typically from its clients) which it then delivers to the company for a fixed, upfront price. Over the term of the ASR agreement, the investment bank then seeks to buy shares to replace those it has borrowed.

Buying back shares via an ASR is usually more expensive because the bank wants to profit from the transaction. However, the premium price allows the company to spend a fixed amount of money rapidly and immediately reduce its outstanding share count.

Apple initially launched a $2 billion ASR at the end of 2012 (Q1 2013). In April (Q3) 2013, Apple initiated a second, much larger ASR for $12 billion. Apple fronted the money right away and retired the initial proceeds of borrowed stock.

However, Apple's banking partner continued to buy back shares over the year long term of the agreement, resulting in windfall of 1.1 million extra shares that were delivered to Apple for retirement over the past quarter when the second ASR was settled. The average share price under the second ASR was $486.82.

In January, Apple launched a third ASR funded by another $12 billion. Maestri noted that Apple "received an initial delivery of 19.2 million shares under this ASR." The third ASR will continue throughout the end of 2014, at which point Apple may receive an addition crop of shares.

Apple's aggressively opportunistic stock purchase



Apple's establishment of a third ASR in late January helped the company to rapidly spend an incredible $14 billion within a two week period, after industry analysts incited a stock panic that caused Apple's shares to plunge more than 8 percent after the company released its highest ever quarterly revenues and operating profits, results that the tech media depicted as "disappointing."

AAPL Q1 2013 stock plunge


Investors who sold as Apple's stock plunged in paper value overnight from $550 to $503 (and then continued to dip below $500 through the end of January) unwittingly found Apple itself to be a willing buyer of the shares they abandoned.

A week into February, the company's chief executive Tim Cook revealed that Apple's executive team had jumped at the rare opportunity and spent $14 billion of its remaining buyback budget to snatch up its shares at a discount.

Following the $14 billion share grab, which included the $12 billion ASR and an additional $2 billion in open market purchases, Apple spent an additional $4 billion in open market purchases throughout the rest of the quarter, resulting in the $18 billion total for the quarter.

AAPL Capital return by $


Apple subsequently announced during its Q2 earnings call both how much it bought back in the quarter and that it had authorized an additional $30 billion for future buybacks over the next two years. Along with the $14 billion remaining in its existing buyback authorization from last year ("shares that may yet be purchased under the plans for programs"), that allows the company $44 billion going forward to initiate new buybacks over the next year, were the opportunity to arise.

As it stands, Apple removed over 31.7 million shares in the March quarter; 11.4 million shares on the open market at a price per share of roughly $526, and the rest as part of its third ASR. Because an additional number of shares may be retired at the end of the third ASR, it isn't yet known what the average price per share will be for those shares.

However, looking just at the 12.5 million shares for which the per-share price is known, with Thursday's close at $567.77 it would now cost Apple an additional $561 million to repeat those stock purchases. Apple's decisive, quick thinking therefore resulted in a savings more 2.8 times as large as the $198 million that Google lost while operating its Motorola subsidiary in the same quarter.
post #2 of 55

Paging Constable Odo... Constable Odo, to the stock value thread...

;) 

Quality isn't expensive... it's priceless.

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Quality isn't expensive... it's priceless.

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post #3 of 55

Imagine if Apple's long, long term goal was to go private. Knowing Apple if that was possible they would do it. Will probably "never" happen though. It'd be interesting to see what the press would be like around Apple were they fully private right now.

Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #4 of 55

I find it highly ironic that Apple is making tens of billions of dollars in part due to Analysts' spreading hysteria, doom, and gloom.

 

That $18B is worth $25B and will be worth even more.

 

Buy low, sell high.  It's the secret of financial success lol.

post #5 of 55
Quote:
Originally Posted by Ireland View Post
 

Imagine if Apple's long, long term goal was to go private. Knowing Apple if that was possible they would do it. Will probably "never" happen though. It'd be interesting to see what the press would be like around Apple were they fully private right now.

 

It would probably be worse than it is now. Apple would no longer have to report its earnings and sales numbers which would give the tech media free reign to announce utter gloom and doom failure with no reality check like the recent Q2 report to counter it. I mean look at the run up to the Q2 report. Nothing but epic fail and ridicule. Then out comes the Q2 report, they wipe the egg off their faces and start over for the next quarter predicting downfall and failure. Imagine if they had no real numbers to make them look stupid.

post #6 of 55
Quote:
Originally Posted by 512ke View Post

I find it highly ironic that Apple is making tens of billions of dollars in part due to Analysts' spreading hysteria, doom, and gloom.

That $18B is worth $25B and will be worth even more.

Buy low, sell high.  It's the secret of financial success lol.

In my opinion this kind of buyback is largely at loss for stakeholders: Apple's stock at beginning of january was about 540$, and at end of march was about 540$, meanwhile 18B$ of profits (profits generated in about two whole quarters) were spent in buyback. At the end: 18B$ spent and no increased value for stakeholders.
post #7 of 55
For a financial play like this, you should look beyond March. Coz the stock price is higher today. Basically it depends on when you settle and what you use the earned $$$ for.
post #8 of 55
Quote:
Originally Posted by 512ke View Post
 

I find it highly ironic that Apple is making tens of billions of dollars in part due to Analysts' spreading hysteria, doom, and gloom.

 

That $18B is worth $25B and will be worth even more.

 

Buy low, sell high.  It's the secret of financial success lol.

You do understand that they reduce the outstanding number of stocks with that correct?

This is not for buy low, sell high.

 

Quote:
Originally Posted by bradipao View Post


In my opinion this kind of buyback is largely at loss for stakeholders: Apple's stock at beginning of january was about 540$, and at end of march was about 540$, meanwhile 18B$ of profits (profits generated in about two whole quarters) were spent in buyback. At the end: 18B$ spent and no increased value for stakeholders.

lol, Imagine if this 18B$ was not spent?

Then Stock would not have been at $540, Some of the gain in stock is due to that 18B$ spent on it. Imagine that 18B$ of stocks  are available for sell from investors, which Apple bought at X price and if not, they may have sold at lower price and resulted in lower Apple stock price.

post #9 of 55
Quote:
Originally Posted by bradipao View Post


In my opinion this kind of buyback is largely at loss for stakeholders: Apple's stock at beginning of january was about 540$, and at end of march was about 540$, meanwhile 18B$ of profits (profits generated in about two whole quarters) were spent in buyback. At the end: 18B$ spent and no increased value for stakeholders.

 

What a ridiculously short-sighted view. 

post #10 of 55
Quote:
Originally Posted by bradipao View Post

In my opinion this kind of buyback is largely at loss for stakeholders: Apple's stock at beginning of january was about 540$, and at end of march was about 540$, meanwhile 18B$ of profits (profits generated in about two whole quarters) were spent in buyback. At the end: 18B$ spent and no increased value for stakeholders.

I personally don't care if u make money off of apple stock. As an apple fan, I'm glad they were smart and made a good decision for their company.
post #11 of 55
So, how after spending billions over the last few years, how much of 'Apple' does Apple own? How many shares do they have, how many shares are available?...
post #12 of 55
Quote:
Originally Posted by bradipao View Post


In my opinion this kind of buyback is largely at loss for stakeholders: Apple's stock at beginning of january was about 540$, and at end of march was about 540$, meanwhile 18B$ of profits (profits generated in about two whole quarters) were spent in buyback. At the end: 18B$ spent and no increased value for stakeholders.

 

Ridiculous.

 

Apple has bought back about $45B in shares at about $485 per share. 

 

The stock is up 17% over their buyback cost. 

That means the buyback has already saved investors over $7,880,000,000.

Also the buyback means no dividends paid out for those shares.

That saves them another $1,000,000,000 in dividend payments.

 

Please dont say something Apple does is stupid until you understand all the facts.

Do you really believe some of the smartest financial guys in the world that work for Apple and consult with Apple would do a massive $90,000,000,000 buyback if it would hurt shareholders?

post #13 of 55
Quote:
Originally Posted by bradipao View Post

In my opinion this kind of buyback is largely at loss for stakeholders: Apple's stock at beginning of january was about 540$, and at end of march was about 540$, meanwhile 18B$ of profits (profits generated in about two whole quarters) were spent in buyback. At the end: 18B$ spent and no increased value for stakeholders.

Oh boy....

post #14 of 55
Quote:
Originally Posted by bradipao View Post

In my opinion this kind of buyback is largely at loss for stakeholders: Apple's stock at beginning of january was about 540$, and at end of march was about 540$, meanwhile 18B$ of profits (profits generated in about two whole quarters) were spent in buyback. At the end: 18B$ spent and no increased value for stakeholders.

But today it's at $463 and apple no longer needs to pay a dividend on those shares it purchased. Even if the share price remained constant they essentially earn the dividend yield.

I would much prefer they repurchase shares for future growth than issue huge dividends that I have to pay taxes on right now even if I reinvest those dividends.
post #15 of 55
Quote:
Originally Posted by PScooter63 View Post
 

Paging Constable Odo... Constable Odo, to the stock value thread...

;) 

I won't be complaining anymore about Apple being shareholder unfriendly.  How was I to know what Apple was going to do until I see the results?  I certainly thought Apple was going to botch another quarter but fortunately I was wrong.  I'm sure everyone must have been surprised about the 7 for 1 split.  As a shareholder, I'm being left clueless.  The only thing I was hopeful of was that Apple was buying back shares as the stock went down and down and down.  However, if I don't see any results I tend to get cranky and whiney.  I'm finally starting to see results and now I have no reason to complain.  Apple's stock movement seems out of kilter with the rest of the tech stocks and the stock market in general.  So, it's rather annoying to see all the other tech stocks moving upward while Apple is moving downward.  I personally don't have much confidence in Tim Cook because he seems too non-aggressive towards rival companies.  I'm sure Apple has some products in the pipeline and that should be a given since hardware is their bread and butter.

 

Apple is overflowing with cash and in my view, I'd prefer acquisitions to buybacks because I'm looking for additional revenue streams if the iPhone is unable to carry Apple forward.  I don't feel comfortable with Apple relying mainly on one product when that particular market appears saturated.  I won't be griping for the rest of the year as long as there's at least a little forward motion of Apple's share price.  I'm not even expecting a return to $700 a share but I would like to see Apple hit at least $600 with increased dividends and I'll be satisfied.  In other words, I'm only asking Apple's share price to perform at least as well as other tech stocks.  I don't see how that's too much to ask for.  I will sit back quietly and let Tim Cook have his chance and hopefully he will prove himself capable of being Apple's CEO.

post #16 of 55
Quote:
Originally Posted by 512ke View Post
 

I find it highly ironic that Apple is making tens of billions of dollars in part due to Analysts' spreading hysteria, doom, and gloom.

 

That $18B is worth $25B and will be worth even more.

 

Buy low, sell high.  It's the secret of financial success lol.

now....  playing this card out a bit... could you see a bit of stock manipulation based on the craziness of the analysts reacting to 'situation normal' information.

 

- Apple sees a more positive number cooking in the pipeline

- Apple sees the possibility to book revenues next quarter *

- takes action... backing off the performance numbers to fit in the lower guidance levels

- Analysts tank the stock after the public announcement

- Apple effectively covers it 'shorts'

- Next quarter's numbers are released... show bang up quarter, especially in growth markets where analysts were complaining about Apple's pricing and product range

- $$$$

 

* I've seen sales delayed by a day (in a manner to book the revenue for the sale men to the quarter sold, but the $$ booked to the next quarter), and I've been handed a 'blank check' (Like 'are you ready to buy next years hardware by the end of September?')a month before end of quarter to spend on infrastructure and/or R&D to balance a major revenue bump to keep earnings 'in line'.... Been there, done that.


Edited by TheOtherGeoff - 4/25/14 at 11:02am
post #17 of 55
Apple is not buying shares to accumulate a position of ownership in the company. As I understand it—and please correct me if I'm wrong, Apple's purchasing of shares simply removes them from the pool available to investors in general. It reduces the total number of outstanding shares.
post #18 of 55
Quote:
Originally Posted by daveinpublic View Post

So, how after spending billions over the last few years, how much of 'Apple' does Apple own? How many shares do they have, how many shares are available?...

Apple is not buying shares to accumulate a position of ownership in the company. As I understand it—and please correct me if I'm wrong, Apple's purchasing of shares simply removes them from the pool available to investors in general. It reduces the total number of outstanding shares.
post #19 of 55
Quote:
Originally Posted by CustomTB View Post


But today it's at $463 and apple no longer needs to pay a dividend on those shares it purchased. Even if the share price remained constant they essentially earn the dividend yield.

I would much prefer they repurchase shares for future growth than issue huge dividends that I have to pay taxes on right now even if I reinvest those dividends.

Being a Dividend stock makes it attractive to institutional funds  all those funds for 401Ks and IRAs.

 

That's why getting included in the Dow is important... massive exposure to index funds.

post #20 of 55
Quote:
Originally Posted by Dabe View Post


Apple is not buying shares to accumulate a position of ownership in the company. As I understand it—and please correct me if I'm wrong, Apple's purchasing of shares simply removes them from the pool available to investors in general. It reduces the total number of outstanding shares.

partially right... they also are using them for employee grants/warrants/options/ESOPs

 

But in general, if Apple had 900,000,000 shares outstanding and buys back 900,000 shares and 'destroys them' then the remaining 899,100,000 shares are roughly 0.11% more valuable.

post #21 of 55
Quote:
Originally Posted by lkrupp View Post
 

 

It would probably be worse than it is now. Apple would no longer have to report its earnings and sales numbers which would give the tech media free reign to announce utter gloom and doom failure with no reality check like the recent Q2 report to counter it. I mean look at the run up to the Q2 report. Nothing but epic fail and ridicule. Then out comes the Q2 report, they wipe the egg off their faces and start over for the next quarter predicting downfall and failure. Imagine if they had no real numbers to make them look stupid.

 

and who would these tech media be reporting to?   I think the days are long past (I could be wrong) that FUD of 'no one is buying their stuff' (IBM and MS used to do that a lot... and I'd hear people point at stock price as a measure of corporate viability).   

 

Financial analysts market to stock holders.  No stockholders, no analyst reports.

 

You don't hear anyone claiming Koch Industries is suffering due to 6 years of a Democrat in the WhiteHouse?   Why?  because no one cares, except for the Koch Family themselves.

post #22 of 55
Quote:
Originally Posted by TheOtherGeoff View Post

partially right... they also are using them for employee grants/warrants/options/ESOPs

I see. That certainly makes sense.
post #23 of 55
Quote:
Originally Posted by Ireland View Post

Imagine if Apple's long, long term goal was to go private. Knowing Apple if that was possible they would do it. Will probably "never" happen though. It'd be interesting to see what the press would be like around Apple were they fully private right now.

What is the benefit as somebody would have to be the owner? Apple can't own itself.
post #24 of 55
As a long term Apple share holder I was delighted when they started to pay a dividend, even more so as the dive send has been increased. So answer me this:
If the shares are about to be split to 7-1 does that mean that my dividend payment will be 7 times greater?

Or, will the dividend be reduced accordingly
post #25 of 55
Quote:
Originally Posted by Constable Odo View Post
 

I won't be complaining anymore about Apple being shareholder unfriendly.  How was I to know what Apple was going to do until I see the results?  I certainly thought Apple was going to botch another quarter but fortunately I was wrong.  I'm sure everyone must have been surprised about the 7 for 1 split.  As a shareholder, I'm being left clueless.  The only thing I was hopeful of was that Apple was buying back shares as the stock went down and down and down.  However, if I don't see any results I tend to get cranky and whiney.  I'm finally starting to see results and now I have no reason to complain.  Apple's stock movement seems out of kilter with the rest of the tech stocks and the stock market in general.  So, it's rather annoying to see all the other tech stocks moving upward while Apple is moving downward.  I personally don't have much confidence in Tim Cook because he seems too non-aggressive towards rival companies.  I'm sure Apple has some products in the pipeline and that should be a given since hardware is their bread and butter.

 

Apple is overflowing with cash and in my view, I'd prefer acquisitions to buybacks because I'm looking for additional revenue streams if the iPhone is unable to carry Apple forward.  I don't feel comfortable with Apple relying mainly on one product when that particular market appears saturated.  I won't be griping for the rest of the year as long as there's at least a little forward motion of Apple's share price.  I'm not even expecting a return to $700 a share but I would like to see Apple hit at least $600 with increased dividends and I'll be satisfied.  In other words, I'm only asking Apple's share price to perform at least as well as other tech stocks.  I don't see how that's too much to ask for.  I will sit back quietly and let Tim Cook have his chance and hopefully he will prove himself capable of being Apple's CEO.

 

GOOG, TSLA, AMZN, FB, are all 20-30% below their all time highs from the last 12 months.

 

Want to fire their CEO's also?

post #26 of 55
Quote:
Originally Posted by TBell View Post


What is the benefit as somebody would have to be the owner? Apple can't own itself.

 

The private owners benefit

post #27 of 55

It's hard to admit to an error, but I guess I had Tim all wrong, this 7-1 stock split is what I had been pleading for, for years. Maybe now the stock will get back to it's fast-growth era. Just maybe.


Edited by Potsie Webber - 4/25/14 at 3:39pm
post #28 of 55
If apple spent $18,000,000,000 to buy 31,700,000 shares, that comes out to $567.82/share. That seems high to me, what am I missing?
post #29 of 55
Wallstreet decided to not give Apple credit for 160b in cash as well as 40b dollar annual cash flow. I am so happy Apple is buying back stock. This way wallstreet has to give them credit. They are earning nearly 10% of their market cap each year and wallstreet drove this stock down to 395 last year???? Now they crying about financial engineering!
post #30 of 55
Quote:
Originally Posted by Constable Odo View Post
 

I won't be complaining anymore about Apple being shareholder unfriendly.  How was I to know what Apple was going to do until I see the results?  I certainly thought Apple was going to botch another quarter but fortunately I was wrong.  I'm sure everyone must have been surprised about the 7 for 1 split.  As a shareholder, I'm being left clueless.  The only thing I was hopeful of was that Apple was buying back shares as the stock went down and down and down.  However, if I don't see any results I tend to get cranky and whiney.  I'm finally starting to see results and now I have no reason to complain.  Apple's stock movement seems out of kilter with the rest of the tech stocks and the stock market in general.  So, it's rather annoying to see all the other tech stocks moving upward while Apple is moving downward.  I personally don't have much confidence in Tim Cook because he seems too non-aggressive towards rival companies.  I'm sure Apple has some products in the pipeline and that should be a given since hardware is their bread and butter.

 

Apple is overflowing with cash and in my view, I'd prefer acquisitions to buybacks because I'm looking for additional revenue streams if the iPhone is unable to carry Apple forward.  I don't feel comfortable with Apple relying mainly on one product when that particular market appears saturated.  I won't be griping for the rest of the year as long as there's at least a little forward motion of Apple's share price.  I'm not even expecting a return to $700 a share but I would like to see Apple hit at least $600 with increased dividends and I'll be satisfied.  In other words, I'm only asking Apple's share price to perform at least as well as other tech stocks.  I don't see how that's too much to ask for.  I will sit back quietly and let Tim Cook have his chance and hopefully he will prove himself capable of being Apple's CEO.


If you thought Apple was being shareholder-unfriendly despite buybacks and dividends, I'm afraid you have no idea what it means to be shareholder-unfriendly. The Googles and Facebooks hold the first-place trophy. Google split its stock a year ago in a weird way in which they created a new class of shares called Class C shares that carry no voting power. As it is, Class A shares don't have the same voting rights as Class B shares, which are held by the founders. Class C shares hold no voting power, whatsoever. There exists stock like that, called preferred stock. However, in exchange for giving up voting rights, preferred stockholders get priority with dividend payments and rank higher than common stockholders in event of bankruptcy. Class C shares give stockholders nothing whatsoever. Google basically wants their money for nothing. In fact, the shareholders had to sue the company to force them to put some token protections in the deal. Google even said that they were doing it to protect the company from outside influences in order to focus on the long-term health of the company. This was the language used in CEO Larry Page's letter outlining the plan. I am wracking my brains to think of a more condescending piece of communications to a group of people who are investing money in the company. Google basically wants the benefits of being public while retaining all the rights of a private corporation.

 

After seeing what Google did, I can't understand how anyone could think Apple is being shareholder-unfriendly in anyway. While Apple's peers have gone as far as painting their shareholders as villains, Apple has been far more friendly to shareholders.

post #31 of 55

"Apple's capital return program, focused on buying back stock, does appear to have had a favorable impact on Apple's share price. After spending $44 billion on stock buybacks over the past four quarters, Apple's stock has risen 29.2 percent or $129.28, a contribution that moved the company's market cap from $392 billion a year ago to $492 billion today, even as the company removed 80 million shares from circulation."

 

Apple spent:

 

$44 Billion cost of stock buybacks

 

Apple got:

 

$100 Billion rise in market cap

 

That is what I meant in my earlier post, buy low, sell high.  I did not literally mean Apple was selling the repurchased shares, I was alluding to the general principal of getting something for less, then having it be worth more.

 

Why was it worth less?  The Analysts and CNBC and Kramer et all are significantly responsible for creating the fear and panic that caused AAPL to dip.

 

Pick that apart and criticize it as you will, there may be some flaws, but the basic concept is truthful and correct.

post #32 of 55
Quote:
Originally Posted by PScooter63 View Post
 

Paging Constable Odo... Constable Odo, to the stock value thread...

;) 


HA! Sometimes you guys just kill me with your <sarcasm/>!

post #33 of 55
Quote:
Originally Posted by Constable Odo View Post

Apple is overflowing with cash and in my view

1) $18 billion in the US isn't overflowing.

2) It would take a very usual purchase in the US for Apple to want to bring a large chunk of their overseas holdings back to the states because of the insane taxation they'll have to pay despite having already paid the applicable taxes for that nation. As a shareholder do you really want that? Isn't that capital gains tax at a rate of 39.6% which means bringing back $100 billion to The States makes they lose $20 billion? TWENTY BILLION?! If that percentage is even close to being accurate I can't imagine a shareholder waning that to happen.
Quote:
 I don't feel comfortable with Apple relying mainly on one product when that particular market appears saturated.

You think Apple does? You do make it sounds like they don't care about any of their other products despite kicking ass across the board. You also seem to have this "if I am not aware of it it must not exist" attitude. By age 2 Object Permanance occurs so I think you should trust that Apple is looking out for its best interests and that there heavily increased R&D spending is because they have some ideas on the line they believe are truly going to be good for business.

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"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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post #34 of 55
Apple's huge buyback of outstanding shares is an outstandingly good use of their cash. It's a luxury that all companies would wish for. And it's a long-term play. If you have $150 billion languishing in a bank account earning 4% a year (to be generous), by buying back shares, you are betting that the shares will appreciate at more than 4% a year. Of course, Apple doesn't just keep all its cash in a bank account, but it's hardly much of a gamble to think that the shares will appreciate at more than 4% a year. And we all hope the shares will do far better than that. Apple have the potential to make a real killing simply on the buyback, quite separate to their current profits.
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post #35 of 55
Quote:
Originally Posted by Benjamin Frost View Post

Apple's huge buyback of outstanding shares is an outstandingly good use of their cash. It's a luxury that all companies would wish for. And it's a long-term play. If you have $150 billion languishing in a bank account earning 4% a year (to be generous), by buying back shares, you are betting that the shares will appreciate at more than 4% a year. Of course, Apple doesn't just keep all its cash in a bank account, but it's hardly much of a gamble to think that the shares will appreciate at more than 4% a year. And we all hope the shares will do far better than that. Apple have the potential to make a real killing simply on the buyback, quite separate to their current profits.

Most companies aren't so undervalued. Amazon wouldn't even consider this move. Apple gets to own more of itself and investors get a boost in value of their stock, although I'm sure some only see dividends as the only way for Apple to give them something back on their stock. And unlike dividends which a customer my use as cash or to even buy a competitor's stock buybacks directly increase the value of the remaining stock.

Something else to consider is Tim Cook set this up with what is essentially "insider trading" since he knows what's coming down the pipe and when. These changes sound like Tim is playing a brilliant game of chess and, IMO, all the pieces are now in position to win the game. All things considered I think Apple being a trillion dollar company could happen within a few years if they do release a new product category this year.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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post #36 of 55
Quote:
Originally Posted by SolipsismX View Post

Apple gets to own more of itself
That's not how it works. Apple doesn't own any of itself, it can't. Some shares may be held for award to staff as options, but that's not the same thing. If Apple buys and retires shares then that simply means the remaining shareholders own a slightly bigger piece of the Apple pie.

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post #37 of 55
Quote:
Originally Posted by Crowley View Post

That's not how it works. Apple doesn't own any of itself, it can't. Some shares may be held for award to staff as options, but that's not the same thing. If Apple buys and retires shares then that simply means the remaining shareholders own a slightly bigger piece of the Apple pie.

What do you think would effectively happen if a company were to buy back every outstanding share?

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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post #38 of 55
Quote:
Originally Posted by daveinpublic View Post

So, how after spending billions over the last few years, how much of 'Apple' does Apple own? How many shares do they have, how many shares are available?...

 

That depends on whether they were retired or held as treasury shares. The article says these shares were "retired", so Apple doesn't own them because they just no longer exist.

post #39 of 55
Quote:
Originally Posted by matthewmaurice View Post

That depends on whether they were retired or held as treasury shares. The article says these shares were "retired", so Apple doesn't own them because they just no longer exist.

When they first announced the buyback I had thought I had read they were going to retire most of them but keep a few for employees.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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post #40 of 55
Quote:
Originally Posted by SolipsismX View Post


What do you think would effectively happen if a company were to buy back every outstanding share?

 

Logically that's practically impossible.  How would a company be able to afford to buy back its entire value?  Where would the money come from?  It would never happen in the real world.

 

For example, if Apple did this, then that final share would be worth hundreds of billions of dollars; their complete market cap of asset value, brand value, future profit estimate value, plus any cash and minus debt.  Meanwhile Apple probably has little cash available, having used it all up, and no one would lend Apple money to buy back that share, because it's a ridiculous thing to do, a ridiculous amount of money, plus not legal under most company law.  In addition, what have Apple done?  They've effectively taken the company private but just put it in the hands of the one person who held on for the longest, since that remaining shareholder now has absolute ownership of the company (realistically this would have happened long before the final share).  Plus there's no way Apple could force that last holdout to sell the share.

 

People who talk about Apple taking the company private don't seem to realise that if the company went private it'd be due to an outside influence, not Apple, and would very possibly be a bad move for the company.  Someone has to own a company, and if you're talking about a $600bn company going private, that someone has to have $600bn dollars.  In the unlikelihood event of that ever happening, only a large coalition or a country could afford that.


Edited by Crowley - 4/28/14 at 2:48am

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