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Apple, Inc. spent $18B to buy back 31.7 million shares of AAPL in March quarter - Page 2

post #41 of 55
Quote:
Originally Posted by Crowley View Post

Logically that's practically impossible.

You're saying it's impossible for a company to ever have enough money to repurchase it's market value? You're saying it's impossible for a company to go from being public to private?

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

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

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post #42 of 55

That's not what going from public to private means.  People buy a company and take it private.  Companies don't buy themselves.  Buying shares to retire them is not the same as buying them for ownership.

 

 

And the idea of a company having free cash that exceeds its market value is a bit weird.  Market value includes free cash, so the remaining assets of the company would have to be zero, or negative.  It wouldn't be completely impossible, because the company may have taken on debt to raise the free cash, but it's pretty damn unlikely for most companies.


Edited by Crowley - 4/28/14 at 8:12am

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post #43 of 55
Originally Posted by Crowley View Post
People buy a company and take it private.  Companies don't buy themselves.

 

Why? A company isn’t made of people? Tim Cook, then, couldn’t buy Apple and take it private?

 
Buying shares to retire them is not the same as buying them for ownership.

 

What about buying ALL the shares to retire ALL the shares?

 
And the idea of a company having free cash that exceeds its market value is a bit weird.

 

Wouldn’t need to, would it? Just equal:p 

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post #44 of 55
Quote:
Originally Posted by Crowley View Post

That's not what going from public to private means.  People buy a company and take it private.  Companies don't buy themselves.  Buying shares to retire them is not the same as buying them for ownership.

And the idea of a company having free cash that exceeds its market value is a bit weird.  Market value includes free cash, so the remaining assets of the company would have to be zero, or negative.  It wouldn't be completely impossible, because the company may have taken on debt to raise the free cash, but it's pretty damn unlikely for most companies.

So who controls the money in Apple's coffers if it's not Apple? How can Apple buy anything if, by your words, it doesn't own anything? How can Apple do a buyback of shares if it's impossible for it to buy anything because it has nothing? The terms are pretty simple: buy + back. The former refers to a purchase and the latter refers to re-obtaining. What do you think actually happens to that $90 billion Apple uses for the buyback? Do you really think Apple gets nothing in return? And if Apple can't own anything how they can possibly be in control of the stock to either retire it or distribute it to employee and board members?
Edited by SolipsismX - 4/28/14 at 9:12am

"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

Reply

"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 #45 of 55
Quote:
Originally Posted by SolipsismX View Post

So who controls the money in Apple's coffers if it's not Apple? How can Apple buy anything if, by your words, it doesn't own anything? 

In my words?  I didn't say that at all.  Apple controls the money in Apple's coffers.  Apple owns all of Apple's assets.  But they do not own the company as a legal institution.  A company cannot own itself.

 

Quote:
Originally Posted by SolipsismX View Post

The terms are pretty simple: buy + back. The former refers to a purchase and the latter refers to re-obtaining. What do you think actually happens to that $90 billion Apple uses for the buyback? Do you really think Apple gets nothing in return?
 

The $90 billion obviously goes into the trading accounts of the shareholders that Apple buys the shares from.  Where else would it go?

 

In terms of Apple, they get one of two things, depending on what they do with the shares bought back:

 

  1. If they retain them then they get a pool of stock to award to staff as bonus incentives.  They don't retain stock for any other reason.
  2. If they retire them then they reduce the outstanding share pool, which reduces Apple's dividend burden, and increases proprtionate ownership for the remaining shareholders.

 

Other than that, I'm not sure what you're getting at; what do you think they get, beyond these two things?

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post #46 of 55
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Originally Posted by Crowley View Post

They don't retain stock for any other reason.

No one said they did. That's your invention.
Quote:
If they retire them then they reduce the outstanding share pool, which reduces Apple's dividend burden, and increases proprtionate ownership for the remaining shareholders.

Right, as has been explained.

Now back on point, you suggested Apple doesn't own anything. I'm curious why you believe that. You also skated my hypothetical about a company repurchasing all outstanding shares which you claimed was "impossible."

Overall you are still failing to understand that a buyback is a reacquisition by a company of its own stock by distributing cash to existing shareholders in exchange for a fraction of the company's outstanding equity. Again, if Apple doesn't own anything how can they possibly do any of this?

"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 #47 of 55
Quote:
Originally Posted by Tallest Skil View Post
 

Why? A company isn’t made of people? Tim Cook, then, couldn’t buy Apple and take it private?

 

Tim Cook the legal entity is not the same as Apple the legal entity.  And he definitely doesn't have enough money.

 

Quote:
Originally Posted by Tallest Skil View Post
 

What about buying ALL the shares to retire ALL the shares?

 

Pretty much a nonsensical statement.  if all the shares get retired then ownership gets retired and the company ceases to exist.  You don't need to retire all the shares to take a company private, you centralise enough of them under single ownership.

 

Quote:
Originally Posted by Tallest Skil View Post
 

Wouldn’t need to, would it? Just equal:p 

 

Yeah, sure, ok.  But even as a theoretical exercise when we're talking on the scale of $600 billion dollars then having exactly the right amount of free cash is rather a delicate balancing act.  Plus, spending all your free cash on a bizarre ownership push would be reckless in the extreme.  In practice you'd need to exceed the market cap (well technically I think 80% is the mark for when a single owner can delist a company from the stock exchange, so you'd need to exceed 80%).

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post #48 of 55
Originally Posted by Crowley View Post

Tim Cook the legal entity is not the same as Apple the legal entity.  And he definitely doesn't have enough money.

 

Yeah, I know. That’s why they’d give it to him and the other executives. Because if a company can’t privatize itself and only people can…

 
if all the shares get retired then ownership gets retired and the company ceases to exist.

 

Wh… :lol::???:

 

I’m just picturing someone pressing a button, confirming the repurchase of the last share, and then suddenly this happens:

 

 
You don't need to retire all the shares to take a company private, you centralise enough of them under single ownership.

 

And so the people with outstanding shares are just supposed to… what? Go along with it? Even when they don’t want to?

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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post #49 of 55
Quote:
Originally Posted by SolipsismX View Post

No one said they did. That's your invention.

 

You implied there was some reason for Apple buying back share that I wasn't aware of.  I was just being clear about what I was saying.

 

Quote:
Originally Posted by SolipsismX View Post

Right, as has been explained.

Now back on point, you suggested Apple doesn't own anything. I'm curious why you believe that. You also skated my hypothetical about a company repurchasing all outstanding shares which you claimed was "impossible."

Overall you are still failing to understand that a buyback is a reacquisition by a company of its own stock by distributing cash to existing shareholders in exchange for a fraction of the company's outstanding equity. Again, if Apple doesn't own anything how can they possibly do any of this?
 

When did I suggest Apple doesn't own anything?  I suggested that Apple the legal entity cannot own itself as a legal entity, it has to have shareholders (public or private), and they cannot themselves be a shareholder (except for in the temporary instance of retaining shares for award to staff as bonuses and incentives).  Sure Apple the legal entity can own other things, cash, plant, other companies, contracts etc.  

 

I'm pretty sure in the past few pages I've explained the notion of the buyback to drblank myself, and hopefully quite well, so I'm not sure why you're claiming that I don't understand this.  But the reacquisition of stock by Apple is not for self ownership purposes on any drive towards taking the company private, it is for one of the two reasons I highlighted above, for staff incentives, or to retire the stock and increase proportional ownership amongst the remaining shareholders.  Neither of which in any way increases Apple's ownership of itself, because it doesn't own itself, not at all.

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post #50 of 55

Quote:

Originally Posted by Tallest Skil View Post
 

 

Yeah, I know. That’s why they’d give it to him and the other executives. Because if a company can’t privatize itself and only people can…

 

It's conceivable that Apple would issue the stock they buy back to Tim Cook and the other executives.  But if that happens at any significant volume then the remaining shareholders are going to have a pretty major problem with it.

 

Quote:

Originally Posted by Tallest Skil View Post
 

Wh… :lol::???:

 

I’m just picturing someone pressing a button, confirming the repurchase of the last share, and then suddenly this happens:

 

Nothing quite so dramatic, but sure.  A company is a legal construct and needs to have an owner (or owners).  No owner, no company.

 

Quote:

Originally Posted by Tallest Skil View Post

 

 

And so the people with outstanding shares are just supposed to… what? Go along with it? Even when they don’t want to?

Pretty much yeah.  If you own 20% of something and someone else owns 80% you pretty much have to go along with what they want; they can even force you to sell to them if they want.  Not my rules.

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post #51 of 55
Originally Posted by Crowley View Post

they can even force you to sell to them if they want.

 

No.

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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post #52 of 55
Quote:
Originally Posted by Tallest Skil View Post
 

 

No.

Yes.

 

http://www.investorwords.com/6930/squeeze_out.html

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post #53 of 55
Originally Posted by Crowley View Post
Yes.

 

Lawsuit.

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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post #54 of 55

Nope.  Squeeze outs are legal in most jurisdictions, including most Western economies and most (maybe all, I don't know every state law) US states.  They depend on a high ownership of the majority shareholder, 90% normally, and sometimes have other conditions too, but are an established and entirely legal part of company ownership, so a lawsuit would go precisely nowhere.

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post #55 of 55
Originally Posted by Crowley View Post
Squeeze outs are legal in most jurisdictions, including most Western economies and most (maybe all, I don't know every state law) US states. They depend on a high ownership of the majority shareholder, 90% normally, and sometimes have other conditions too, but are an established and entirely legal part of company ownership, so a lawsuit would go precisely nowhere.

 

That really bothers me. Thanks for the info, though.

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
Reply

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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