Apple is already using Sharp's LCDs on their iPhones and is rumored to be their secondary supplier for the screens for the new ipad (after Apple's nemesis Samsung). If Apple starts making larger retina screens for TVs and displays for Macs they might announce a much larger investment into Sharp or an outright purchase of them which would give them huge manufacturing abilities they don't have. Sharp is also highly rated for their environmental standards and use of renewable energy which Apple needs.
I think this is the way to go. It gives long term stability to owning the stock. Allows those who want to invest their own money the freedom to do so. $20 per year to start with 40% income target for dividend. 3.3% yield to start, dividend reinvestment could drive returns in IRA's & 401k's to higher levels helping whole country get prepared to retire. 25% returns over next 10 years with reinvested dividends is very easily doable. That would be a $150 dividend per share after 10 years. $2000, the dividend from 100 shares would buy 3.33 shares. Not counting further reinvestment those first shares would be returning $500 in dividends after 10 years. I havn't tried to figure ou the compounding, but it would not be insignificant. Apples cash on hand would still rise, at a slower pace.
I own shares in my Roth as well, but what they do with the cash will not change Apple's value near term although trading may be volatile on Monday. My intention is to keep the shares until something fundamental changes.
I wouldn't have said that. In my opinion if they announce a regular ongoing dividend the stock could move from 585 to as high as 650 tomorrow. I've been holding shares since it was 30 and 60 bucks and I've got a bunch of LEAPs.
[QUOTE=AppleInsider;2075463]Apple will host a conference call on Monday at 9 a.m. Eastern, 6 a.m. Pacific to discuss what it plans to do with its $100 billion cash.
Regular dividend with voluntary dividend reinvestmnt
I think this is the way to go. It gives long term stability to owning the stock. Allows those who want to invest their own money the freedom to do so. $20 per year to start with 40% income target for dividend. 3.3% yield to start, dividend reinvestment could drive returns in IRA's & 401k's to higher levels helping whole country get prepared to retire. 25% returns over next 10 years with reinvested dividends is very easily doable. That would be a $150 dividend per share after 10 years. $2000, the dividend from 100 shares would buy 3.33 shares. Not counting further reinvestment those first shares would be returning $500 in dividends after 10 years. I havn't tried to figure ou the compounding, but it would not be insignificant. Apples cash on hand would still rise, at a slower pace
Not me. A dividend does not historically increase the share price of a growth stock. For example, look at the big Microsoft one-time dividend a year ago. The share price dropped by almost exactly the amount of the dividend.
And Microsoft's share price growth has been far lower than Apple's - and MS offers a dividend and Apple does not. There's no evidence that a dividend increases the share price of growth stocks - and people like Warren Buffet are staunchly opposed.
Those are bad examples as well. MS's stock has languished because investors don't see them as moving up the ladder anymore. Their growth has been modest for a growth stock and has been slowing over time. Their stock is up this year because there is unbounded hope that Win8 will change the way MS works and that growth will restart.
MS's big one time dividend was a way back. That was about $33 billion, and was given, not because the stock was doing well, but because it wasn't. It was a strong demand by investors. The situation with Apple is very different. With Apple, the cash is increasing at such a quick rate, that it's too much. I don't know how you feel about vast amounts of cash when the company can't really use it. But, it's sitting there doing little.
I would agree, if you're saying it that a dividend would more likely raise the share price than a one time disbursement. But I think that even a disbursement in this case would raise the share price. As many financial people are now saying, Apple is different from other companies. And it is. That's not fanboyism either. Apple is a cash generation machine like no other. As it grows, it will throw off cash at ever increasing rates.
It will affect the stock price positively, because investors will think that owning the stock will give them a good chance of getting more dividends, or another distribution. This distribution would only be a one time thing like the Great War was the war to end all wars—until the next one came.
The situation is that with Apple generating so much cash, another distribution would become necessary after some time, if a fairly large divident wasn't established, and increased on a regular basis.
Quote:
That's not at all true. A large one-time dividend causes a drop in share price roughly equal to the value of the dividend. If it's an ongoing dividend, there's no evidence that dividends are correlated with share price. Some of the fastest growing stocks (Berkshire Hathaway and AAPL, for example) do NOT pay dividends.
But feel free to provide evidence to support the claim that a dividend generally increases share price.
See the above, and I think that you should provide evidence that in the case of Apple, your statements would be true. MS is a very different company from Apple, and the lessons learned there, financially, needn't apply here. All the reasons would be different, and you must take that into account.
Quote:
Not quite true.
They pay taxes in local currency on money earned in other countries. If they repatriate the money, they pay taxes based on US tax rates - BUT they get to deduct the amount paid on foreign countries. So, in effect, if they want the money back in the U.S., the total tax rate they pay will be US tax rates, so there's no double taxation.
I'm not sure that's entirely true. I've read that the tax rate would be more than that for various reasons. But even if it were true, it's still complex. Apple and other companies rarely pay the full rate because of R&D, and other mediating reasons. How would this work out? The rate would still be higher than it would otherwise. We're talking about billions for any particular large company, possibly tens of billions.
Quote:
Actually, you have it backwards.
A split is shuffling deck chairs. It has absolutely no impact on the ratios or the split-adjusted share price. Evidence is pretty clear that while a split might have a very short term benefit, that goes away quickly.
OTOH, a buy-back has a very real effect. There are 930 M shares in circulation right now. The per-share earnings are $X divided by 930 M. If Apple buys back 30 M shares, then the per-share earnings are $X divided by only 900 M, so earnings per share are increased - permanently.
Whatever multiple the investor uses will be based on the new share price, so the price would increase proportionally. That is, if they buy back 5% of the shares, the share price will increase approximately 5%.
Well, I can agree with that. But, there's little evidence that it would raise the price of the shares, because it rarely ever does, and when it does, it often gets wiped out again as the market moves around. After all, buybacks don't actually increase anything real. It's just an illusion.
Heh! You should have used the example of MS again because they've done a lot of buybacks, and all during that time, their stock trended downwards. Include inflation, and even With the recent quick rise, it's less than it was ten years ago.
They're buying three states in northern Mexico, annexing them to the US, and setting up solar-powered, fully-robotic factories so that Apple products can be made locally.
If they buy Sonora... we get Nogo and some of the best Mexican food in existence -- read this Bobby Flay and perish with envy...
And, a big advantage is that they can use the distribution channels of the drug cartels which are the only distribution methods that are actually better than Apple's.
I think they're going to announce the purchase of an Eastern European country that will be turned into a factory. The name will be changed to the Apple Nation. Everybody there will work to produce all of the products needed for Europe and the Middle East.
I would prefer they purchase a Central American country because it would be more fun to go on vacation to a warm country to visit the newest Apple capital.
Not me. A dividend does not historically increase the share price of a growth stock. For example, look at the big Microsoft one-time dividend a year ago. The share price dropped by almost exactly the amount of the dividend.
And Microsoft's share price growth has been far lower than Apple's - and MS offers a dividend and Apple does not. There's no evidence that a dividend increases the share price of growth stocks - and people like Warren Buffet are staunchly opposed.
Both terrible examples. In both cases, Apple's success depends on having access to all content and carriers. Choosing only one puts them in competition with key partners.
That's not at all true. A large one-time dividend causes a drop in share price roughly equal to the value of the dividend. If it's an ongoing dividend, there's no evidence that dividends are correlated with share price. Some of the fastest growing stocks (Berkshire Hathaway and AAPL, for example) do NOT pay dividends.
But feel free to provide evidence to support the claim that a dividend generally increases share price.
Not quite true.
They pay taxes in local currency on money earned in other countries. If they repatriate the money, they pay taxes based on US tax rates - BUT they get to deduct the amount paid on foreign countries. So, in effect, if they want the money back in the U.S., the total tax rate they pay will be US tax rates, so there's no double taxation.
Actually, you have it backwards.
A split is shuffling deck chairs. It has absolutely no impact on the ratios or the split-adjusted share price. Evidence is pretty clear that while a split might have a very short term benefit, that goes away quickly.
OTOH, a buy-back has a very real effect. There are 930 M shares in circulation right now. The per-share earnings are $X divided by 930 M. If Apple buys back 30 M shares, then the per-share earnings are $X divided by only 900 M, so earnings per share are increased - permanently.
Whatever multiple the investor uses will be based on the new share price, so the price would increase proportionally. That is, if they buy back 5% of the shares, the share price will increase approximately 5%.
I disagree with your arguments regarding my post.
1). Is it not true that THE hottest topic in the analytical world is Apple is coming forward with a brand new connected device for the home by the end of the year. Is it not true that there has been a flood of information "claiming" Apple is having trouble getting content providers on board with "a new service" Apple plans to provide with this device? Notice I'm not using the word TV.
Just answer...True?
2). Content is King. Remember that statement. In certain circles here in LA it's pretty likely Apple itself is going to start if not already acquiring content. You don't have access to that information - I do.
3) Why o why would Apple NOT make a play into Netflix -- it's for the CONTENT deals Doh! It's not the subs their looking for...Gee. Apple got 300 million SUBS of it's own, duh.
4) If Apple can't get ANY major content companies to open up a totally new CONTENT delivery stream for their "new device" then WTF are they gonna offer? Only APP content? Yea right.
5) Um, they already ARE competitors in many revenue arenas against people like ATT and VERIZON, DirecTV, Dish and so on.... it's called iTunes and it involves CONTENT distribution.
Apple MUST make a move in this arena, and soon if it's gonna seriously launch a new device that is supposed to "remake the TV experience". You can't do that by adopting OLD strategies.
I wonder if they waited until after iPad sales started just to make sure numbers were as off-the-charts as they hoped. Seems like you could read this as a confirmation that things are going very well.
Those are bad examples as well. MS's stock has languished because investors don't see them as moving up the ladder anymore. Their growth has been modest for a growth stock and has been slowing over time. Their stock is up this year because there is unbounded hope that Win8 will change the way MS works and that growth will restart.
Then forget AAPL and MSFT. Provide evidence that a dividend increases share price. There is no such evidence.
Quote:
Originally Posted by melgross
MS's big one time dividend was a way back. That was about $33 billion, and was given, not because the stock was doing well, but because it wasn't. It was a strong demand by investors. The situation with Apple is very different. With Apple, the cash is increasing at such a quick rate, that it's too much. I don't know how you feel about vast amounts of cash when the company can't really use it. But, it's sitting there doing little.
Irrelevant-it doesn't matter why they did it. The fact is that Microsoft's large one-time dividend decreased share price by roughly the amount of the dividend and the same has historically been true.
For example, look at dividends issued for mutual finds. Invariably, the mutual fund drops by roughly the amount of the dividend on the ex-dividend date.
"On the ex-dividend date, the share price will open at the previous day closing price minus the amount of the dividend."
But feel free to provide evidence to support your claim that a dividend would raise the share price.
Quote:
Originally Posted by melgross
I would agree, if you're saying it that a dividend would more likely raise the share price than a one time disbursement. But I think that even a disbursement in this case would raise the share price. As many financial people are now saying, Apple is different from other companies. And it is. That's not fanboyism either. Apple is a cash generation machine like no other. As it grows, it will throw off cash at ever increasing rates.
Historically, you're wrong. Almost every time there has been a large one-time dividend (either mutual funds or stocks), the share price dropped by roughly the amount of the dividend -and that's exactly what basic principles would predict. Please show a single example where a large one-time dividend increased share price. There aren't any.
As for a steady dividend, there is also no evidence that it would increase dividends. In fact, if you look at historical values, dividend paying stocks tend to grow more slowly than non-dividend stocks because a company generally starts issuing a dividend when it is no longer growing. (There are exceptions. First, dividends tend to increase share value in emerging markets. There are studies in Pakistan and early in China's market history which confirm this. But the effect fails in developed markets. Second, if the company is a slow-growing, very mature stock, a dividend can have a positive effect, but that doesn't apply to Apple).
That's not to say that it would happen in this case, but there is absolutely no evidence that issuing a dividend would increase share price.
Quote:
Originally Posted by melgross
It will affect the stock price positively, because investors will think that owning the stock will give them a good chance of getting more dividends, or another distribution. This distribution would only be a one time thing like the Great War was the war to end all wars—until the next one came.
That hasn't happened historically. Investors (particularly institutional ones) are not so easily hoodwinked as you think.
Quote:
Originally Posted by melgross
The situation is that with Apple generating so much cash, another distribution would become necessary after some time, if a fairly large divident wasn't established, and increased on a regular basis.
Again, there's no historical evidence to support that claim.
Quote:
Originally Posted by melgross
See the above, and I think that you should provide evidence that in the case of Apple, your statements would be true. MS is a very different company from Apple, and the lessons learned there, financially, needn't apply here. All the reasons would be different, and you must take that into account.
I can't prove what would happen in the case of Apple. What I can show is that every time there's a large dividend, the share price drops on the ex-dividend date. That's true whether it's a stock or a mutual fund.
Quote:
Originally Posted by melgross
I'm not sure that's entirely true. I've read that the tax rate would be more than that for various reasons. But even if it were true, it's still complex. Apple and other companies rarely pay the full rate because of R&D, and other mediating reasons. How would this work out? The rate would still be higher than it would otherwise. We're talking about billions for any particular large company, possibly tens of billions.
Possibly, but the point is that the TOTAL tax Apple would pay on repatriating earnings would not be any greater than if the money were earned in the U.S.
Quote:
Originally Posted by melgross
Well, I can agree with that. But, there's little evidence that it would raise the price of the shares, because it rarely ever does, and when it does, it often gets wiped out again as the market moves around. After all, buybacks don't actually increase anything real. It's just an illusion.
Again, you're wrong. Share buybacks DO increase the average share price - because there are fewer shares in circulation. It's simple math.
Or perhaps you're arguing that the multiple that investors use would be LOWER if Apple buys back shares? That's completely illogical. You're arguing that the investors would pay a GREATER multiple of Apple pays a dividend, leaving the same number of shares in circulation, but a lower multiple if they're taking share out of circulation. That just isn't a rational argument.
Quote:
Originally Posted by melgross
Heh! You should have used the example of MS again because they've done a lot of buybacks, and all during that time, their stock trended downwards. Include inflation, and even With the recent quick rise, it's less than it was ten years ago.
Again, forget Microsoft. Look up any other company that did a large one-time distribution. Or look up any mutual fund which did a large distribution. The share price drops by the amount of the distribution on the ex-dividend date.
Quote:
Originally Posted by walshbj
I wouldn't have said that. In my opinion if they announce a regular ongoing dividend the stock could move from 585 to as high as 650 tomorrow. I've been holding shares since it was 30 and 60 bucks and I've got a bunch of LEAPs.
I think money would pour in for a dividend.
Good thing no one would be investing based solely on your opinion. That would be completely irrational. Why in the world would the share price go up 15% if they announce an on-going 2% dividend? Furthermore, as pointed out above, there's no evidence that initiating a dividend causes ANY long term share price effect. But feel free to try to support your claim.
And, a big advantage is that they can use the distribution channels of the drug cartels which are the only distribution methods that are actually better than Apple's.
Don't underestimate the desert mules... you coulda' gotcher new iPad on the 11th
It's tough to buy Asian and European companies. The governments there aren't happy about that. It's even difficult to learn what these companies are comprised of in Asia. They are part of groups that are very opaque. Their accounting is different from ours, and the laws in most Asian countries allow companies to hide a lot of cash, and debt.
One example. A lot of Japanese and Korean companies own banks. Those banks then make loans to the companies that own them, as well as to companies involved in the groups in which they are part of. But, they also make loans to banks owned by other groups, and receive loans from them. They are all interconnected. It's difficult to pry them apart.
Samsung, as an example, has numerous divisions, and sister companies, all of which issue their own stock. Very confusing as they use different accounting rules.
Apple wouldn't have to buy Samsung or Sharp, just buy enough stock in Samsung, for example, to make them back off copying Apple products, then move all their component purchases to Samsung, driving up its price. Rinse and repeat until Apple essentially controls Samsung.
Why buy a company when for a lot less you can control it.
1). Is it not true that THE hottest topic in the analytical world is Apple is coming forward with a brand new connected device for the home by the end of the year. Is it not true that there has been a flood of information "claiming" Apple is having trouble getting content providers on board with "a new service" Apple plans to provide with this device? Notice I'm not using the word TV.
Just answer...True?
2). Content is King. Remember that statement. In certain circles here in LA it's pretty likely Apple itself is going to start if not already acquiring content. You don't have access to that information - I do.
3) Why o why would Apple NOT make a play into Netflix -- it's for the CONTENT deals Doh! It's not the subs their looking for...Gee. Apple got 300 million SUBS of it's own, duh.
4) If Apple can't get ANY major content companies to open up a totally new CONTENT delivery stream for their "new device" then WTF are they gonna offer? Only APP content? Yea right.
5) Um, they already ARE competitors in many revenue arenas against people like ATT and VERIZON, DirecTV, Dish and so on.... it's called iTunes and it involves CONTENT distribution.
Apple MUST make a move in this arena, and soon if it's gonna seriously launch a new device that is supposed to "remake the TV experience". You can't do that by adopting OLD strategies.
So chill.
I agree with the thrust of your post, except...
I believe that NetFlix (and almost any other) content deals are non-transferrable.
I can see Apple cutting new content deals with owners and broadcasters -- I like the idea, but as others have said -- that's an announcement for another day...
Maybe the jaw dropper is that Apple FCP XI will be announced at NAB on April 14
You do realize that if a stock didn't drop the amount of the dividend after ex-date their would be an ARBITRAGE that would be exploited by hedge funds?
Come on guy stop being so pedantic, and STOP with the Microsoft comparisons.
I don't know, I feel like the current spike *is* the correction. P/E has only finally risen to halfway reasonable levels.
Exactly. There's no downside "correction" to be had with AAPL. What has been happening isn't even a rally as much as It's an upward correction, and there's still more room to go. AAPL is still very undervalued.
Quote:
Originally Posted by charlituna
they wouldn't be having a conference call for something like that. they would just do it.
If they are having this call it is likely that they are either going to pay a dividend or split the stock or some such. or commit part of it to some kind of grant program to help schools get iPads etc into the classroom.
Let's hope they're not dumb enough to hold this call JUST before the markets open, and announce something that investors won't like, like classroom or charity donations, etc. They should just do that and not get investors involved if that's the case. If they're gonna make a big song and dance out of this, they have a responsibility to us to at least make sure that it's something that will be perceived as favorable to investors.
Quote:
Originally Posted by Constable Odo
Ten cents per share dividend. That should shut up the whiners about not getting any dividend. I hope Apple decides to wait until the cash reserve grows to $150 billion and the share price reaches $700 before issuing a dividend and that's what the conference is all about.
Lol. I'm all for that.
Quote:
Originally Posted by melgross
To clear up some of the continuing confusion about tomorrow, this is directly from Apple's investor's page:
I read that as well. In the way Apple's sit officially states it, as funny as it sounds, it seems like Tim Cook saying that "we're just going to sit on it" isn't out of the question. HOWEVER, again, since they've committed to holding a show for it before the markets open, it better be favorable toward investors! Otherwise they could have done us a good service and just done whatever they're gonna do.
Comments
I own shares in my Roth as well, but what they do with the cash will not change Apple's value near term although trading may be volatile on Monday. My intention is to keep the shares until something fundamental changes.
I wouldn't have said that. In my opinion if they announce a regular ongoing dividend the stock could move from 585 to as high as 650 tomorrow. I've been holding shares since it was 30 and 60 bucks and I've got a bunch of LEAPs.
I think money would pour in for a dividend.
Regular dividend with voluntary dividend reinvestmnt
I think this is the way to go. It gives long term stability to owning the stock. Allows those who want to invest their own money the freedom to do so. $20 per year to start with 40% income target for dividend. 3.3% yield to start, dividend reinvestment could drive returns in IRA's & 401k's to higher levels helping whole country get prepared to retire. 25% returns over next 10 years with reinvested dividends is very easily doable. That would be a $150 dividend per share after 10 years. $2000, the dividend from 100 shares would buy 3.33 shares. Not counting further reinvestment those first shares would be returning $500 in dividends after 10 years. I havn't tried to figure ou the compounding, but it would not be insignificant. Apples cash on hand would still rise, at a slower pace
Not me. A dividend does not historically increase the share price of a growth stock. For example, look at the big Microsoft one-time dividend a year ago. The share price dropped by almost exactly the amount of the dividend.
And Microsoft's share price growth has been far lower than Apple's - and MS offers a dividend and Apple does not. There's no evidence that a dividend increases the share price of growth stocks - and people like Warren Buffet are staunchly opposed.
Those are bad examples as well. MS's stock has languished because investors don't see them as moving up the ladder anymore. Their growth has been modest for a growth stock and has been slowing over time. Their stock is up this year because there is unbounded hope that Win8 will change the way MS works and that growth will restart.
MS's big one time dividend was a way back. That was about $33 billion, and was given, not because the stock was doing well, but because it wasn't. It was a strong demand by investors. The situation with Apple is very different. With Apple, the cash is increasing at such a quick rate, that it's too much. I don't know how you feel about vast amounts of cash when the company can't really use it. But, it's sitting there doing little.
I would agree, if you're saying it that a dividend would more likely raise the share price than a one time disbursement. But I think that even a disbursement in this case would raise the share price. As many financial people are now saying, Apple is different from other companies. And it is. That's not fanboyism either. Apple is a cash generation machine like no other. As it grows, it will throw off cash at ever increasing rates.
It will affect the stock price positively, because investors will think that owning the stock will give them a good chance of getting more dividends, or another distribution. This distribution would only be a one time thing like the Great War was the war to end all wars—until the next one came.
The situation is that with Apple generating so much cash, another distribution would become necessary after some time, if a fairly large divident wasn't established, and increased on a regular basis.
That's not at all true. A large one-time dividend causes a drop in share price roughly equal to the value of the dividend. If it's an ongoing dividend, there's no evidence that dividends are correlated with share price. Some of the fastest growing stocks (Berkshire Hathaway and AAPL, for example) do NOT pay dividends.
But feel free to provide evidence to support the claim that a dividend generally increases share price.
See the above, and I think that you should provide evidence that in the case of Apple, your statements would be true. MS is a very different company from Apple, and the lessons learned there, financially, needn't apply here. All the reasons would be different, and you must take that into account.
Not quite true.
They pay taxes in local currency on money earned in other countries. If they repatriate the money, they pay taxes based on US tax rates - BUT they get to deduct the amount paid on foreign countries. So, in effect, if they want the money back in the U.S., the total tax rate they pay will be US tax rates, so there's no double taxation.
I'm not sure that's entirely true. I've read that the tax rate would be more than that for various reasons. But even if it were true, it's still complex. Apple and other companies rarely pay the full rate because of R&D, and other mediating reasons. How would this work out? The rate would still be higher than it would otherwise. We're talking about billions for any particular large company, possibly tens of billions.
Actually, you have it backwards.
A split is shuffling deck chairs. It has absolutely no impact on the ratios or the split-adjusted share price. Evidence is pretty clear that while a split might have a very short term benefit, that goes away quickly.
OTOH, a buy-back has a very real effect. There are 930 M shares in circulation right now. The per-share earnings are $X divided by 930 M. If Apple buys back 30 M shares, then the per-share earnings are $X divided by only 900 M, so earnings per share are increased - permanently.
Whatever multiple the investor uses will be based on the new share price, so the price would increase proportionally. That is, if they buy back 5% of the shares, the share price will increase approximately 5%.
Well, I can agree with that. But, there's little evidence that it would raise the price of the shares, because it rarely ever does, and when it does, it often gets wiped out again as the market moves around. After all, buybacks don't actually increase anything real. It's just an illusion.
Heh! You should have used the example of MS again because they've done a lot of buybacks, and all during that time, their stock trended downwards. Include inflation, and even With the recent quick rise, it's less than it was ten years ago.
They're buying three states in northern Mexico, annexing them to the US, and setting up solar-powered, fully-robotic factories so that Apple products can be made locally.
If they buy Sonora... we get Nogo and some of the best Mexican food in existence -- read this Bobby Flay and perish with envy...
Burritos, Chilles rellaños, sopapillas, chile verde...
Plus La Plaza del Toros...
If they buy Sonora... we get Nogo and some of the best Mexican food in existence -- read this Bobby Flay and perish with envy...
Burritos, Chilles rellaños, sopapillas, chile verde...
Plus La Plaza del Toros...
And, a big advantage is that they can use the distribution channels of the drug cartels which are the only distribution methods that are actually better than Apple's.
I would prefer they purchase a Central American country because it would be more fun to go on vacation to a warm country to visit the newest Apple capital.
Not me. A dividend does not historically increase the share price of a growth stock. For example, look at the big Microsoft one-time dividend a year ago. The share price dropped by almost exactly the amount of the dividend.
And Microsoft's share price growth has been far lower than Apple's - and MS offers a dividend and Apple does not. There's no evidence that a dividend increases the share price of growth stocks - and people like Warren Buffet are staunchly opposed.
Both terrible examples. In both cases, Apple's success depends on having access to all content and carriers. Choosing only one puts them in competition with key partners.
That's not at all true. A large one-time dividend causes a drop in share price roughly equal to the value of the dividend. If it's an ongoing dividend, there's no evidence that dividends are correlated with share price. Some of the fastest growing stocks (Berkshire Hathaway and AAPL, for example) do NOT pay dividends.
But feel free to provide evidence to support the claim that a dividend generally increases share price.
Not quite true.
They pay taxes in local currency on money earned in other countries. If they repatriate the money, they pay taxes based on US tax rates - BUT they get to deduct the amount paid on foreign countries. So, in effect, if they want the money back in the U.S., the total tax rate they pay will be US tax rates, so there's no double taxation.
Actually, you have it backwards.
A split is shuffling deck chairs. It has absolutely no impact on the ratios or the split-adjusted share price. Evidence is pretty clear that while a split might have a very short term benefit, that goes away quickly.
OTOH, a buy-back has a very real effect. There are 930 M shares in circulation right now. The per-share earnings are $X divided by 930 M. If Apple buys back 30 M shares, then the per-share earnings are $X divided by only 900 M, so earnings per share are increased - permanently.
Whatever multiple the investor uses will be based on the new share price, so the price would increase proportionally. That is, if they buy back 5% of the shares, the share price will increase approximately 5%.
I disagree with your arguments regarding my post.
1). Is it not true that THE hottest topic in the analytical world is Apple is coming forward with a brand new connected device for the home by the end of the year. Is it not true that there has been a flood of information "claiming" Apple is having trouble getting content providers on board with "a new service" Apple plans to provide with this device? Notice I'm not using the word TV.
Just answer...True?
2). Content is King. Remember that statement. In certain circles here in LA it's pretty likely Apple itself is going to start if not already acquiring content. You don't have access to that information - I do.
3) Why o why would Apple NOT make a play into Netflix -- it's for the CONTENT deals Doh! It's not the subs their looking for...Gee. Apple got 300 million SUBS of it's own, duh.
4) If Apple can't get ANY major content companies to open up a totally new CONTENT delivery stream for their "new device" then WTF are they gonna offer? Only APP content? Yea right.
5) Um, they already ARE competitors in many revenue arenas against people like ATT and VERIZON, DirecTV, Dish and so on.... it's called iTunes and it involves CONTENT distribution.
Apple MUST make a move in this arena, and soon if it's gonna seriously launch a new device that is supposed to "remake the TV experience". You can't do that by adopting OLD strategies.
So chill.
No Idea what they will do with the other $90B though.
Those are bad examples as well. MS's stock has languished because investors don't see them as moving up the ladder anymore. Their growth has been modest for a growth stock and has been slowing over time. Their stock is up this year because there is unbounded hope that Win8 will change the way MS works and that growth will restart.
Then forget AAPL and MSFT. Provide evidence that a dividend increases share price. There is no such evidence.
MS's big one time dividend was a way back. That was about $33 billion, and was given, not because the stock was doing well, but because it wasn't. It was a strong demand by investors. The situation with Apple is very different. With Apple, the cash is increasing at such a quick rate, that it's too much. I don't know how you feel about vast amounts of cash when the company can't really use it. But, it's sitting there doing little.
Irrelevant-it doesn't matter why they did it. The fact is that Microsoft's large one-time dividend decreased share price by roughly the amount of the dividend and the same has historically been true.
For example, look at dividends issued for mutual finds. Invariably, the mutual fund drops by roughly the amount of the dividend on the ex-dividend date.
It is explained here:
http://www.ehow.com/info_8159878_eff...are-price.html
"On the ex-dividend date, the share price will open at the previous day closing price minus the amount of the dividend."
But feel free to provide evidence to support your claim that a dividend would raise the share price.
I would agree, if you're saying it that a dividend would more likely raise the share price than a one time disbursement. But I think that even a disbursement in this case would raise the share price. As many financial people are now saying, Apple is different from other companies. And it is. That's not fanboyism either. Apple is a cash generation machine like no other. As it grows, it will throw off cash at ever increasing rates.
Historically, you're wrong. Almost every time there has been a large one-time dividend (either mutual funds or stocks), the share price dropped by roughly the amount of the dividend -and that's exactly what basic principles would predict. Please show a single example where a large one-time dividend increased share price. There aren't any.
As for a steady dividend, there is also no evidence that it would increase dividends. In fact, if you look at historical values, dividend paying stocks tend to grow more slowly than non-dividend stocks because a company generally starts issuing a dividend when it is no longer growing. (There are exceptions. First, dividends tend to increase share value in emerging markets. There are studies in Pakistan and early in China's market history which confirm this. But the effect fails in developed markets. Second, if the company is a slow-growing, very mature stock, a dividend can have a positive effect, but that doesn't apply to Apple).
That's not to say that it would happen in this case, but there is absolutely no evidence that issuing a dividend would increase share price.
It will affect the stock price positively, because investors will think that owning the stock will give them a good chance of getting more dividends, or another distribution. This distribution would only be a one time thing like the Great War was the war to end all wars—until the next one came.
That hasn't happened historically. Investors (particularly institutional ones) are not so easily hoodwinked as you think.
The situation is that with Apple generating so much cash, another distribution would become necessary after some time, if a fairly large divident wasn't established, and increased on a regular basis.
Again, there's no historical evidence to support that claim.
See the above, and I think that you should provide evidence that in the case of Apple, your statements would be true. MS is a very different company from Apple, and the lessons learned there, financially, needn't apply here. All the reasons would be different, and you must take that into account.
I can't prove what would happen in the case of Apple. What I can show is that every time there's a large dividend, the share price drops on the ex-dividend date. That's true whether it's a stock or a mutual fund.
I'm not sure that's entirely true. I've read that the tax rate would be more than that for various reasons. But even if it were true, it's still complex. Apple and other companies rarely pay the full rate because of R&D, and other mediating reasons. How would this work out? The rate would still be higher than it would otherwise. We're talking about billions for any particular large company, possibly tens of billions.
Possibly, but the point is that the TOTAL tax Apple would pay on repatriating earnings would not be any greater than if the money were earned in the U.S.
Well, I can agree with that. But, there's little evidence that it would raise the price of the shares, because it rarely ever does, and when it does, it often gets wiped out again as the market moves around. After all, buybacks don't actually increase anything real. It's just an illusion.
Again, you're wrong. Share buybacks DO increase the average share price - because there are fewer shares in circulation. It's simple math.
Or perhaps you're arguing that the multiple that investors use would be LOWER if Apple buys back shares? That's completely illogical. You're arguing that the investors would pay a GREATER multiple of Apple pays a dividend, leaving the same number of shares in circulation, but a lower multiple if they're taking share out of circulation. That just isn't a rational argument.
Heh! You should have used the example of MS again because they've done a lot of buybacks, and all during that time, their stock trended downwards. Include inflation, and even With the recent quick rise, it's less than it was ten years ago.
Again, forget Microsoft. Look up any other company that did a large one-time distribution. Or look up any mutual fund which did a large distribution. The share price drops by the amount of the distribution on the ex-dividend date.
I wouldn't have said that. In my opinion if they announce a regular ongoing dividend the stock could move from 585 to as high as 650 tomorrow. I've been holding shares since it was 30 and 60 bucks and I've got a bunch of LEAPs.
I think money would pour in for a dividend.
Good thing no one would be investing based solely on your opinion. That would be completely irrational. Why in the world would the share price go up 15% if they announce an on-going 2% dividend? Furthermore, as pointed out above, there's no evidence that initiating a dividend causes ANY long term share price effect. But feel free to try to support your claim.
And, a big advantage is that they can use the distribution channels of the drug cartels which are the only distribution methods that are actually better than Apple's.
Don't underestimate the desert mules... you coulda' gotcher new iPad on the 11th
It's tough to buy Asian and European companies. The governments there aren't happy about that. It's even difficult to learn what these companies are comprised of in Asia. They are part of groups that are very opaque. Their accounting is different from ours, and the laws in most Asian countries allow companies to hide a lot of cash, and debt.
One example. A lot of Japanese and Korean companies own banks. Those banks then make loans to the companies that own them, as well as to companies involved in the groups in which they are part of. But, they also make loans to banks owned by other groups, and receive loans from them. They are all interconnected. It's difficult to pry them apart.
Samsung, as an example, has numerous divisions, and sister companies, all of which issue their own stock. Very confusing as they use different accounting rules.
Apple wouldn't have to buy Samsung or Sharp, just buy enough stock in Samsung, for example, to make them back off copying Apple products, then move all their component purchases to Samsung, driving up its price. Rinse and repeat until Apple essentially controls Samsung.
Why buy a company when for a lot less you can control it.
They will buy Greece, Spain and Italy, installing Cook, Forstall and Ives as presidents.
No Idea what they will do with the other $90B though.
Spain and Italy have excellent product designs. Apple could then control "good taste."
I disagree with your arguments regarding my post.
1). Is it not true that THE hottest topic in the analytical world is Apple is coming forward with a brand new connected device for the home by the end of the year. Is it not true that there has been a flood of information "claiming" Apple is having trouble getting content providers on board with "a new service" Apple plans to provide with this device? Notice I'm not using the word TV.
Just answer...True?
2). Content is King. Remember that statement. In certain circles here in LA it's pretty likely Apple itself is going to start if not already acquiring content. You don't have access to that information - I do.
3) Why o why would Apple NOT make a play into Netflix -- it's for the CONTENT deals Doh! It's not the subs their looking for...Gee. Apple got 300 million SUBS of it's own, duh.
4) If Apple can't get ANY major content companies to open up a totally new CONTENT delivery stream for their "new device" then WTF are they gonna offer? Only APP content? Yea right.
5) Um, they already ARE competitors in many revenue arenas against people like ATT and VERIZON, DirecTV, Dish and so on.... it's called iTunes and it involves CONTENT distribution.
Apple MUST make a move in this arena, and soon if it's gonna seriously launch a new device that is supposed to "remake the TV experience". You can't do that by adopting OLD strategies.
So chill.
I agree with the thrust of your post, except...
I believe that NetFlix (and almost any other) content deals are non-transferrable.
I can see Apple cutting new content deals with owners and broadcasters -- I like the idea, but as others have said -- that's an announcement for another day...
Maybe the jaw dropper is that Apple FCP XI will be announced at NAB on April 14
Anyone here know how many shares are actually outstanding?
I mean come on, if they are going to declare a dividend ... What could it cost?
There are about 900 million shares of Apple outstanding.
You do realize that if a stock didn't drop the amount of the dividend after ex-date their would be an ARBITRAGE that would be exploited by hedge funds?
Come on guy stop being so pedantic, and STOP with the Microsoft comparisons.
APPLE IS NOT MICROSOFT
I don't know, I feel like the current spike *is* the correction. P/E has only finally risen to halfway reasonable levels.
Exactly. There's no downside "correction" to be had with AAPL. What has been happening isn't even a rally as much as It's an upward correction, and there's still more room to go. AAPL is still very undervalued.
they wouldn't be having a conference call for something like that. they would just do it.
If they are having this call it is likely that they are either going to pay a dividend or split the stock or some such. or commit part of it to some kind of grant program to help schools get iPads etc into the classroom.
Let's hope they're not dumb enough to hold this call JUST before the markets open, and announce something that investors won't like, like classroom or charity donations, etc. They should just do that and not get investors involved if that's the case. If they're gonna make a big song and dance out of this, they have a responsibility to us to at least make sure that it's something that will be perceived as favorable to investors.
Ten cents per share dividend. That should shut up the whiners about not getting any dividend. I hope Apple decides to wait until the cash reserve grows to $150 billion and the share price reaches $700 before issuing a dividend and that's what the conference is all about.
Lol. I'm all for that.
To clear up some of the continuing confusion about tomorrow, this is directly from Apple's investor's page:
I read that as well. In the way Apple's sit officially states it, as funny as it sounds, it seems like Tim Cook saying that "we're just going to sit on it" isn't out of the question. HOWEVER, again, since they've committed to holding a show for it before the markets open, it better be favorable toward investors! Otherwise they could have done us a good service and just done whatever they're gonna do.