True. At some point, given the amount to which it is piling up, they will have to do something with it.
At this stage, my (wild) guess is that a one-time, massive share repurchase would probably be their safest option. A lot of institutions might sell a small proportion to raise cash, it will not set the precedence of a dividend, and the repurchased stock could be left as treasury stock for future future option exercises so as to prevent dilution.
This is something that Dr.Millmoss and I will not agree on.
I totally disagree with share repurchasing. That is a total waste of money. It does nothing for the company, and doesn't result in a permanent share price increase.
I'm not on my real-time account now, but Forbes just reported that Apple was at $261.68 at the time of the report several minutes ago.
It's a rise of earnings of 93.8%.
I was hoping that someone would ask, among all the iPad related questions, for an updates sales number. The last official one was 500,000, but those tracking it think it could be over 900,000 by now.
[QUOTE=..... I'll take reinvestment in the company over a dividend any day.[/QUOTE]
Yep. Dividends are what happens to excess cash that a company is UNABLE to figure out how to use effectively. I'll leave it with Apple -- willing to bet they have one or two new ideas in mind.
MS gave back $33 billion because of demand, and the stock went down. That would happen here as well. I agree with that.
I agree with what he says about the cash pile as the reason for it. The cash is too great for it not to be factored into the stock price.
Again, a straw man argument since nobody is demanding that sort of dividend, not that I have heard. MSFT hasn't done much of anything for ten years, so I don't know how that comparison works anyway. My point remains, he talks in far too vague terms about what it means to pay a dividend for me to take his argument seriously. Is it really all or nothing? Is that what he's arguing? It is so difficult to tell when someone is being that vague.
How the cash is factored in is both impossible to know and not particularly relevant, unless we're talking about some sort of massive, one time payout. Which again, nobody is as far as I can tell.
FWIW, I do agree that the cash keeps accumulating because Apple isn't able to reinvest that much money in growth. I don't agree that this leads to Apple being stuck with socking away every last penny of it or suffer some terrible consequence at the hands of investors.
Yep. Dividends are what happens to excess cash that a company is UNABLE to figure out how to use effectively. I'll leave it with Apple -- willing to bet they have one or two new ideas in mind.
I agree 100% with your point about dividends.
The primary possible internal uses of cash to drive growth are R&D, capex, or acquisitions. None of them really rise to the challenge in Apple's case.
Apple's R&D does not cost that much, since they seem to be quite adept at "A&D" (ref. Soundjam, Quattro, PA Semi, etc. acquisitions). Their capex needs are quite low, since one of their biggest likely capex items - retail space - is probably leased to a large extent. As to a large acquisition, three strikes against it: one, they are often a waste of time, attention, and money; two, I can't think of a fairly priced synergy-creating large acquisition for Apple that will truly bring value to the existing product portfolio; three, Apple is not constrained (as most large companies are not) by having to use cash as the medium of exchange.
So, bottom line, what else could they possibly do with the cash, if they do not want to leave it lying around on the balance sheet? Give it back to the shareholders. There are only two choices there: dividends or share repurchases. Dividends would be a disaster, in my opinion: It would signal that Apple had become a staid, steady cash flow, 'income' business with no good ideas and not a 'growth' business. Moreover, once dividends are initiated, there is no turning back.
Which, logically, leaves Apple with share repurchases as the only option.
The primary possible internal uses of cash to drive growth are R&D, capex, or acquisitions. None of them really rise to the challenge in Apple's case.
Apple's R&D does not cost that much, since they seem to be quite adept at "A&D" (ref. Soundjam, Quattro, PA Semi, etc. acquisitions). Their capex needs are quite low, since one of their biggest likely capex items - retail space - is probably leased to a large extent. As to a large acquisition, three strikes against it: one, they are often a waste of time, attention, and money; two, I can't think of a fairly priced synergy-creating large acquisition for Apple that will truly bring value to the existing product portfolio; three, Apple is not constrained (as most large companies are not) by having to use cash as the medium of exchange.
So, bottom line, what else could they possibly do with the cash, if they do not want to leave it lying around on the balance sheet? Give it back to the shareholders. There are only two choices there: dividends or share repurchases. Dividends would be a disaster, in my opinion: It would signal that Apple had become a staid, steady cash flow, 'income' business with no good ideas and not a 'growth' business. Moreover, once dividends are initiated, there is no turning back.
Which, logically, leaves Apple with share repurchases as the only option.
Apple gets very long leases, as long as 50 years in some instances. The longer the lease, the higher the cost.
I'd rather Apple paid a dividend then did a stock buyback. Other than for the purpose of compensation, it's throwing the money away, with not guarantee of a continued stock price rise.
I've seen many companies do that, have the stock rise for a short while, and then drop back down again. So what was the point? It gives a few investors a quick chance to cash in, and then nothing for anyone else. Companies whose stock is stagnating do this, as do companies whose stock is dropping because of their own problems.
In looking at last quarter and the holiday quarter, I'm beginning to see the possibility for a $60 billion year. The lowest I'm thinking now is about $57 billion.
Are you kidding? I am a stock holder. I bought two hundred shares at about 14 dollars. It spilt three times, and is now worth over $240 a share. You do the math. As a stock holder, I am happy as can be.
Currently, Apple would be foolish to provide a dividend for three reasons. First, Apple can weather a storm with the money in the bank. A storm can take the form of lawsuits against it. Last I checked it has several going on. Nokia alone might cost Apple several billions of dollars (though I think Apple will win). It can also take the form of an economic downturn that effects it's earnings. Apple has experienced life where it owed money and had little in the bank. Second, paying the dividend may cause the overall value of the stock to stagnate or decline. For instance, Microsoft provided one when it's stock started to become stagnate. As far as I can tell the dividend provided short term payouts that cost the long term value of the stock. Third, it is nice to have cash when the economy stinks. Apple can go shopping and buy things on the cheap.
I could see a dividend making more sense after the economy improves and Apple resolves some of it's big lawsuits.
Quote:
Originally Posted by LouisTheXIV
Makes their price rises on the Macbook pro's that much more obscene. As well at the $120 ripoff for the iPad with a 3G chip.
And $50 billion in pure profit sitting in a bank, and not a penny going back to the stockholders.
The primary possible internal uses of cash to drive growth are R&D, capex, or acquisitions. None of them really rise to the challenge in Apple's case.
Apple's R&D does not cost that much, since they seem to be quite adept at "A&D" (ref. Soundjam, Quattro, PA Semi, etc. acquisitions). Their capex needs are quite low, since one of their biggest likely capex items - retail space - is probably leased to a large extent. As to a large acquisition, three strikes against it: one, they are often a waste of time, attention, and money; two, I can't think of a fairly priced synergy-creating large acquisition for Apple that will truly bring value to the existing product portfolio; three, Apple is not constrained (as most large companies are not) by having to use cash as the medium of exchange.
So, bottom line, what else could they possibly do with the cash, if they do not want to leave it lying around on the balance sheet? Give it back to the shareholders. There are only two choices there: dividends or share repurchases. Dividends would be a disaster, in my opinion: It would signal that Apple had become a staid, steady cash flow, 'income' business with no good ideas and not a 'growth' business. Moreover, once dividends are initiated, there is no turning back.
Which, logically, leaves Apple with share repurchases as the only option.
I'm sure you already know I won't see that as the only logical option, since your argument against dividends as a indicator of anything but having a lot of money on hand, is all wet. It is utterly arbitrary.
Whenever we revisit this discussion, which we seem to do every three months, I am always told by some reflexive anti-dividend person that we can talk again when Apple's cash load reaches $X billions. It's happened at $20, $30, $40 and now $50 billion. How much is enough now? Just curious, since no amount seems to be.
Are you kidding? I am a stock holder. I bought two hundred shares at about 14 dollars. It spilt three times, and is now worth over $240 a share. You do the math. As a stock holder, I am happy as can be.
Currently, Apple would be foolish to provide a dividend for two reasons. First, Apple can weather a storm with the money in the bank. A storm can take the form of lawsuits against it. Last I checked it has several going on. It can also take the form of an economic downturn that effects it's earnings. Apple has experienced life where it owed money and had little in the bank. Second, paying the dividend may cause the overall value of the stock to stagnate or decline. For instance, Microsoft provided one when it's stock started to become stagnate. As far as I can tell the dividend provided short term payouts that cost the long term value of the stock.
Your last statement is wrong. MSFT began to stagnate years before they declared the one-time dividend.
With $50 billion (and counting) Apple can do a hell of a lot more than weather a storm, they could withstand the End of Time.
Comments
Gee - there was the pippin...
We're talking about current management.
Even the Cube was extraordinary. Just too expensive and not marketed well.
True. At some point, given the amount to which it is piling up, they will have to do something with it.
At this stage, my (wild) guess is that a one-time, massive share repurchase would probably be their safest option. A lot of institutions might sell a small proportion to raise cash, it will not set the precedence of a dividend, and the repurchased stock could be left as treasury stock for future future option exercises so as to prevent dilution.
This is something that Dr.Millmoss and I will not agree on.
I totally disagree with share repurchasing. That is a total waste of money. It does nothing for the company, and doesn't result in a permanent share price increase.
Apple is very much in charge of their own destiny.
It's a rise of earnings of 93.8%.
I was hoping that someone would ask, among all the iPad related questions, for an updates sales number. The last official one was 500,000, but those tracking it think it could be over 900,000 by now.
They take some money off the table just to be safe.
Cowards!
Cowards!
I don't know where he's seeing that. They have to report actual numbers.
Phone growth in Asia overall was almost 500%. Almost 200% in Japan.
Woooooooow... I'm speechless.
Yep. Dividends are what happens to excess cash that a company is UNABLE to figure out how to use effectively. I'll leave it with Apple -- willing to bet they have one or two new ideas in mind.
MS gave back $33 billion because of demand, and the stock went down. That would happen here as well. I agree with that.
I agree with what he says about the cash pile as the reason for it. The cash is too great for it not to be factored into the stock price.
Again, a straw man argument since nobody is demanding that sort of dividend, not that I have heard. MSFT hasn't done much of anything for ten years, so I don't know how that comparison works anyway. My point remains, he talks in far too vague terms about what it means to pay a dividend for me to take his argument seriously. Is it really all or nothing? Is that what he's arguing? It is so difficult to tell when someone is being that vague.
How the cash is factored in is both impossible to know and not particularly relevant, unless we're talking about some sort of massive, one time payout. Which again, nobody is as far as I can tell.
FWIW, I do agree that the cash keeps accumulating because Apple isn't able to reinvest that much money in growth. I don't agree that this leads to Apple being stuck with socking away every last penny of it or suffer some terrible consequence at the hands of investors.
Woooooooow... I'm speechless.
It's a good thing then that you're typing.
Phone growth in Asia overall was almost 500%. Almost 200% in Japan.
And it's only just begun.
Now writing iPhone/iPad apps would seem to me I would need localization expertise to expand my market penetration.
Woooooooow... I'm speechless.
In case you missed these articles...
Yep. Dividends are what happens to excess cash that a company is UNABLE to figure out how to use effectively. I'll leave it with Apple -- willing to bet they have one or two new ideas in mind.
I agree 100% with your point about dividends.
The primary possible internal uses of cash to drive growth are R&D, capex, or acquisitions. None of them really rise to the challenge in Apple's case.
Apple's R&D does not cost that much, since they seem to be quite adept at "A&D" (ref. Soundjam, Quattro, PA Semi, etc. acquisitions). Their capex needs are quite low, since one of their biggest likely capex items - retail space - is probably leased to a large extent. As to a large acquisition, three strikes against it: one, they are often a waste of time, attention, and money; two, I can't think of a fairly priced synergy-creating large acquisition for Apple that will truly bring value to the existing product portfolio; three, Apple is not constrained (as most large companies are not) by having to use cash as the medium of exchange.
So, bottom line, what else could they possibly do with the cash, if they do not want to leave it lying around on the balance sheet? Give it back to the shareholders. There are only two choices there: dividends or share repurchases. Dividends would be a disaster, in my opinion: It would signal that Apple had become a staid, steady cash flow, 'income' business with no good ideas and not a 'growth' business. Moreover, once dividends are initiated, there is no turning back.
Which, logically, leaves Apple with share repurchases as the only option.
I agree 100% with your point about dividends.
The primary possible internal uses of cash to drive growth are R&D, capex, or acquisitions. None of them really rise to the challenge in Apple's case.
Apple's R&D does not cost that much, since they seem to be quite adept at "A&D" (ref. Soundjam, Quattro, PA Semi, etc. acquisitions). Their capex needs are quite low, since one of their biggest likely capex items - retail space - is probably leased to a large extent. As to a large acquisition, three strikes against it: one, they are often a waste of time, attention, and money; two, I can't think of a fairly priced synergy-creating large acquisition for Apple that will truly bring value to the existing product portfolio; three, Apple is not constrained (as most large companies are not) by having to use cash as the medium of exchange.
So, bottom line, what else could they possibly do with the cash, if they do not want to leave it lying around on the balance sheet? Give it back to the shareholders. There are only two choices there: dividends or share repurchases. Dividends would be a disaster, in my opinion: It would signal that Apple had become a staid, steady cash flow, 'income' business with no good ideas and not a 'growth' business. Moreover, once dividends are initiated, there is no turning back.
Which, logically, leaves Apple with share repurchases as the only option.
Apple gets very long leases, as long as 50 years in some instances. The longer the lease, the higher the cost.
I'd rather Apple paid a dividend then did a stock buyback. Other than for the purpose of compensation, it's throwing the money away, with not guarantee of a continued stock price rise.
I've seen many companies do that, have the stock rise for a short while, and then drop back down again. So what was the point? It gives a few investors a quick chance to cash in, and then nothing for anyone else. Companies whose stock is stagnating do this, as do companies whose stock is dropping because of their own problems.
Congratz!
I know this isn't the place for it but since this post will likely be seen by lots of readers...
- Anyone else wonder why Apple didn't issue an IMMEDIATE C&D Letter from its legal group the second Gizmodo posted the photos of the prototype?
- Anyone else wonder why those photos are STILL being shown?
Finally
- Does Apples inaction in anyway lessen their ability to go after Gizmodo?
PLEASE!!! Post any replies in the Gizmodo discussion thread... not here...
You're absolutely right...
This is not the place... post / troll elsewhere please.
Currently, Apple would be foolish to provide a dividend for three reasons. First, Apple can weather a storm with the money in the bank. A storm can take the form of lawsuits against it. Last I checked it has several going on. Nokia alone might cost Apple several billions of dollars (though I think Apple will win). It can also take the form of an economic downturn that effects it's earnings. Apple has experienced life where it owed money and had little in the bank. Second, paying the dividend may cause the overall value of the stock to stagnate or decline. For instance, Microsoft provided one when it's stock started to become stagnate. As far as I can tell the dividend provided short term payouts that cost the long term value of the stock. Third, it is nice to have cash when the economy stinks. Apple can go shopping and buy things on the cheap.
I could see a dividend making more sense after the economy improves and Apple resolves some of it's big lawsuits.
Makes their price rises on the Macbook pro's that much more obscene. As well at the $120 ripoff for the iPad with a 3G chip.
And $50 billion in pure profit sitting in a bank, and not a penny going back to the stockholders.
I agree 100% with your point about dividends.
The primary possible internal uses of cash to drive growth are R&D, capex, or acquisitions. None of them really rise to the challenge in Apple's case.
Apple's R&D does not cost that much, since they seem to be quite adept at "A&D" (ref. Soundjam, Quattro, PA Semi, etc. acquisitions). Their capex needs are quite low, since one of their biggest likely capex items - retail space - is probably leased to a large extent. As to a large acquisition, three strikes against it: one, they are often a waste of time, attention, and money; two, I can't think of a fairly priced synergy-creating large acquisition for Apple that will truly bring value to the existing product portfolio; three, Apple is not constrained (as most large companies are not) by having to use cash as the medium of exchange.
So, bottom line, what else could they possibly do with the cash, if they do not want to leave it lying around on the balance sheet? Give it back to the shareholders. There are only two choices there: dividends or share repurchases. Dividends would be a disaster, in my opinion: It would signal that Apple had become a staid, steady cash flow, 'income' business with no good ideas and not a 'growth' business. Moreover, once dividends are initiated, there is no turning back.
Which, logically, leaves Apple with share repurchases as the only option.
I'm sure you already know I won't see that as the only logical option, since your argument against dividends as a indicator of anything but having a lot of money on hand, is all wet. It is utterly arbitrary.
Whenever we revisit this discussion, which we seem to do every three months, I am always told by some reflexive anti-dividend person that we can talk again when Apple's cash load reaches $X billions. It's happened at $20, $30, $40 and now $50 billion. How much is enough now? Just curious, since no amount seems to be.
Are you kidding? I am a stock holder. I bought two hundred shares at about 14 dollars. It spilt three times, and is now worth over $240 a share. You do the math. As a stock holder, I am happy as can be.
Currently, Apple would be foolish to provide a dividend for two reasons. First, Apple can weather a storm with the money in the bank. A storm can take the form of lawsuits against it. Last I checked it has several going on. It can also take the form of an economic downturn that effects it's earnings. Apple has experienced life where it owed money and had little in the bank. Second, paying the dividend may cause the overall value of the stock to stagnate or decline. For instance, Microsoft provided one when it's stock started to become stagnate. As far as I can tell the dividend provided short term payouts that cost the long term value of the stock.
Your last statement is wrong. MSFT began to stagnate years before they declared the one-time dividend.
With $50 billion (and counting) Apple can do a hell of a lot more than weather a storm, they could withstand the End of Time.
How much is enough?