Which competition exactly are you talking about. Because there has been a lot of signs of whom you speak.
Quote:
the money can be invested in other great technology rather than paying dividends and buyback stocks. It is very disappointing to a long term investor and fan such as me.
THey still have $55 Billion dollars after this to play with and who knows how much they will earn over several months. they could be back up to $100 Billion within a couple of years. while still making great tech etc.
These kinds of decisions aren't made quickly or lightly, have a little faith
Yep. and they probably spent several months considering that issue, plus the legal issues and concerns before going forward on this.
And yet there will be folks that will talk of this as a Tim Cook decision, making it sound like he decided to do it the moment Steve was buried now that Steve wasn't around to say no. Because they don't understand the amount of back work that has to go into such things, same for things like charity match programs, new cash discounts for employees and so on.
I was just thinking about this. One has to wonder whether Steve knew that this was in Apple's future. My hunch and feeling, especially gauging how passionate and true to form Tim Cook is, is that he did.
I understand share repurchases just fine. You don't recognize what happens in the real world. Besides, I've already stated in other posts that shares are being repurchased here for the reason of taking them out of circulation because of share number increases over the years. Perhaps you should read all of my posts before you comment.
You can state the academic reasons for anything, but theory and practice usually have a disconnect. That's true here as well.
Sorry, but I live in the real world. For example, you were talking about how much dividends would increase share values - while Apple shareholders largely yawned (certainly not the 15% you and others were talking about).. That coincides with the real world evidence I provided.
Furthermore, you don't understand the scenario. Shares are NOT being taken out of circulation in this case. Apple has stated that they will be buying the shares to redistribute them to employees.
Quote:
Originally Posted by asdasd
Thats wrong because the company has lost it's cash, which would be a loss equivalent to the gain of the stocks purchased, and cash should be factored into the cost of the shares. Imagine a company which has no revenue but has lots of cash ( its a funny company for sure, but this is a thought experiment). The company has $80B in the bank and 1 billion outstanding shares. The shares should be worth $80 each. If the company buys back 500M stock for $40B, the cash on hand falls to $40B, the 500 million remaining stock should still be worth $80 reflecting the book value of the company.
Even if you add on revenue that calculus still holds barring market sentiment, which is a mugs game.
They could have sold the stock yesterday for the same price. The money has in effect disappeared.
Again, you're not paying attention.
Apple has 932 M in shares right now. They're going to buy back something like 20 M of them. You could pretend that the money has disappeared. But you have to look at the alternative. If they don't buy the shares back, they will issue 20 M shares to give away to employees - which dilutes the share value. So the $10 B is being spent to prevent issuance of 20 M in new shares - so there is value retained for individual shareholders.
You are double-counting your returns. The reason that the dividend yield - say, 2.5% - is so low is precisely because the capital gains is so high (i.e., (595 – 80)/80 – 1 = ~550%).
You can't, in your calculations, say that you got a 550% return over your holding period plus a 10% dividend. Your dividend yield is based on the current price. Period.
Your math does not make any sense.
It's a huge yield based on the book price of his stocks. So he's getting a 10+% yearly return AND the 500+% when he sells.
But yes, if you calculate yield based on current stock price and not book price of 80 dollar shares, then the yield is low.
But for the types who like to hold stock forever and got Apple very cheap, they will be making a lot of money from the dividend.
We are back to disagreeing: I don't agree with your math here!
But I'll stop there.
I don't agree with using the current stock price as a measure against your investment. Unless you are buying or selling the stock means nothing, but $2.65 per share can directly be compared by price(s) in which you purchased your stock.
Buyback is good, gives shares to hard-working employees who grow the business.
Dividend's are bad, gives rich 'investors' even more money; even though they don't contribute at all to the way Apple is run. It's like a sportsman paying the owner of the sports club, as opposed to the owner paying the sportsman.
Surely, going from $370 in October 2011 to $590 in March 2012 is enough money for these 'investors'. Dividends are for companies with no room for growth, like Microsoft.
Just because you have money, doesn't mean you have to spend money.
A lot of those rich investors are index funds and pension funds. Dividends are good. Although there are tax consequences to dividends.
I believe they were going to do the stock options for employees regardless, so a buyback helps current stockholders.
Actually, it's not true that they are destroyed. They can be kept as treasury stock. While they will not have voting rights or receive dividends, they can be reissued, kept forever, or simply canceled. While it's kept, it appears as "negative" equity on the balance sheet. It counts as "authorized" but not issued shares.
Yes, it can be, but if they buy them to retire them, then they usually will destroy them.
Sorry, but I live in the real world. For example, you were talking about how much dividends would increase share values - while Apple shareholders largely yawned (certainly not the 15% you and others were talking about).. That coincides with the real world evidence I provided.
Furthermore, you don't understand the scenario. Shares are NOT being taken out of circulation in this case. Apple has stated that they will be buying the shares to redistribute them to employees.
That's not what I read, or heard.
Did I say 15%? If so, I didn't mean right away. I meant over some time.
We are back to disagreeing: I don't agree with your math here!
But I'll stop there.
Its pretty simple. If you bought shares at $80, Apple will start paying over 10 per year in dividends per share. That's over 10%. An individual's dividend yield is calculated based on the purchase price not todays closing price.
Its pretty simple. If you bought shares at $80, Apple will start paying over 10 per year in dividends per share. That's over 10%. An individual's dividend yield is calculated based on the purchase price not todays closing price.
Where are you getting 10% from? All I see is $2.65 per share.
Didn't I read earlier, that much of Apple's ballyhooed $100 billion is actually tied up overseas - in the countries where the products were purchased? How will dividends be paid with this money? Will Chinese investors get paid by Apple's pile of money in China? US investors from Apple's profits made in the US? Etc? Or does paying dividends allow them to return foreign profits back to the US without paying taxes?
Where are you getting 10% from? All I see is $2.65 per share.
That's per share per quater. Multiple by 4 to get the yearly dividend and then use that to compute the yield. Thats over $10 per share per year in dividends.
That's $10.60 per share, not 10% per share. The value of the stock is irrelevant as it's a flat pay out per share, not a percentage.
Yeah, we know, we know. But dividends are always referred to in percentage. Thats not me, that's how it works. I don't know how he got 10%. It's actually more.
Apple has 932 M in shares right now. They're going to buy back something like 20 M of them. You could pretend that the money has disappeared. But you have to look at the alternative. If they don't buy the shares back, they will issue 20 M shares to give away to employees - which dilutes the share value. So the $10 B is being spent to prevent issuance of 20 M in new shares - so there is value retained for individual shareholders.
I am not pretending anything, and I most certainly am paying attention.
What I did was give a thought experiment about the standard share repurchase in a theoretical company- one with no revenue to make the point clear - , a reply to your claim that a buying X% of stock always increases the stock by X% in any company.
Here is your original quote.
If it is a true share repurchase (the shares are removed from circulation), the gain is that there are fewer shares in circulation. So if a company removes 10% of the shares from circulation, the per share income goes up by 10%. If the multiple remains the same, the share price would also go up by 10%.
Thats what I was responding to, because it is wrong. The supposed 10% increase should in theory be balanced by the drop in cash value, any actual increase depends on market sentiment.
Moving onto the fact that Apple are issuing shares to employees is to change the goalposts.
Comments
The competition in the future is tough,
Which competition exactly are you talking about. Because there has been a lot of signs of whom you speak.
the money can be invested in other great technology rather than paying dividends and buyback stocks. It is very disappointing to a long term investor and fan such as me.
THey still have $55 Billion dollars after this to play with and who knows how much they will earn over several months. they could be back up to $100 Billion within a couple of years. while still making great tech etc.
These kinds of decisions aren't made quickly or lightly, have a little faith
Yep. and they probably spent several months considering that issue, plus the legal issues and concerns before going forward on this.
And yet there will be folks that will talk of this as a Tim Cook decision, making it sound like he decided to do it the moment Steve was buried now that Steve wasn't around to say no. Because they don't understand the amount of back work that has to go into such things, same for things like charity match programs, new cash discounts for employees and so on.
I was just thinking about this. One has to wonder whether Steve knew that this was in Apple's future. My hunch and feeling, especially gauging how passionate and true to form Tim Cook is, is that he did.
I understand share repurchases just fine. You don't recognize what happens in the real world. Besides, I've already stated in other posts that shares are being repurchased here for the reason of taking them out of circulation because of share number increases over the years. Perhaps you should read all of my posts before you comment.
You can state the academic reasons for anything, but theory and practice usually have a disconnect. That's true here as well.
Sorry, but I live in the real world. For example, you were talking about how much dividends would increase share values - while Apple shareholders largely yawned (certainly not the 15% you and others were talking about).. That coincides with the real world evidence I provided.
Furthermore, you don't understand the scenario. Shares are NOT being taken out of circulation in this case. Apple has stated that they will be buying the shares to redistribute them to employees.
Thats wrong because the company has lost it's cash, which would be a loss equivalent to the gain of the stocks purchased, and cash should be factored into the cost of the shares. Imagine a company which has no revenue but has lots of cash ( its a funny company for sure, but this is a thought experiment). The company has $80B in the bank and 1 billion outstanding shares. The shares should be worth $80 each. If the company buys back 500M stock for $40B, the cash on hand falls to $40B, the 500 million remaining stock should still be worth $80 reflecting the book value of the company.
Even if you add on revenue that calculus still holds barring market sentiment, which is a mugs game.
They could have sold the stock yesterday for the same price. The money has in effect disappeared.
Again, you're not paying attention.
Apple has 932 M in shares right now. They're going to buy back something like 20 M of them. You could pretend that the money has disappeared. But you have to look at the alternative. If they don't buy the shares back, they will issue 20 M shares to give away to employees - which dilutes the share value. So the $10 B is being spent to prevent issuance of 20 M in new shares - so there is value retained for individual shareholders.
You are double-counting your returns. The reason that the dividend yield - say, 2.5% - is so low is precisely because the capital gains is so high (i.e., (595 – 80)/80 – 1 = ~550%).
You can't, in your calculations, say that you got a 550% return over your holding period plus a 10% dividend. Your dividend yield is based on the current price. Period.
Your math does not make any sense.
It's a huge yield based on the book price of his stocks. So he's getting a 10+% yearly return AND the 500+% when he sells.
But yes, if you calculate yield based on current stock price and not book price of 80 dollar shares, then the yield is low.
But for the types who like to hold stock forever and got Apple very cheap, they will be making a lot of money from the dividend.
We are back to disagreeing: I don't agree with your math here!
But I'll stop there.
I'm not disagreeing with you here. I'm just saying that he FEELS that way about it.
By the way, I'm sitting in the dentists chair while I'm posting. Great fun. You should all try it.
We are back to disagreeing: I don't agree with your math here!
But I'll stop there.
I don't agree with using the current stock price as a measure against your investment. Unless you are buying or selling the stock means nothing, but $2.65 per share can directly be compared by price(s) in which you purchased your stock.
By the way, I'm sitting in the dentists chair while I'm posting. Great fun. You should all try it.
Think about Apple's stock price.
Will make the dentist go away....
Buyback is good, gives shares to hard-working employees who grow the business.
Dividend's are bad, gives rich 'investors' even more money; even though they don't contribute at all to the way Apple is run. It's like a sportsman paying the owner of the sports club, as opposed to the owner paying the sportsman.
Surely, going from $370 in October 2011 to $590 in March 2012 is enough money for these 'investors'. Dividends are for companies with no room for growth, like Microsoft.
Just because you have money, doesn't mean you have to spend money.
A lot of those rich investors are index funds and pension funds. Dividends are good. Although there are tax consequences to dividends.
I believe they were going to do the stock options for employees regardless, so a buyback helps current stockholders.
Actually, it's not true that they are destroyed. They can be kept as treasury stock. While they will not have voting rights or receive dividends, they can be reissued, kept forever, or simply canceled. While it's kept, it appears as "negative" equity on the balance sheet. It counts as "authorized" but not issued shares.
Yes, it can be, but if they buy them to retire them, then they usually will destroy them.
Sorry, but I live in the real world. For example, you were talking about how much dividends would increase share values - while Apple shareholders largely yawned (certainly not the 15% you and others were talking about).. That coincides with the real world evidence I provided.
Furthermore, you don't understand the scenario. Shares are NOT being taken out of circulation in this case. Apple has stated that they will be buying the shares to redistribute them to employees.
That's not what I read, or heard.
Did I say 15%? If so, I didn't mean right away. I meant over some time.
We are back to disagreeing: I don't agree with your math here!
But I'll stop there.
Its pretty simple. If you bought shares at $80, Apple will start paying over 10 per year in dividends per share. That's over 10%. An individual's dividend yield is calculated based on the purchase price not todays closing price.
Its pretty simple. If you bought shares at $80, Apple will start paying over 10 per year in dividends per share. That's over 10%. An individual's dividend yield is calculated based on the purchase price not todays closing price.
Where are you getting 10% from? All I see is $2.65 per share.
Where are you getting 10% from? All I see is $2.65 per share.
That's per share per quater. Multiple by 4 to get the yearly dividend and then use that to compute the yield. Thats over $10 per share per year in dividends.
Where are you getting 10% from? All I see is $2.65 per share.
It's actually $10.60 per share per year. It's $2.65 per quarter.
It's actually $10.60 per share per year. It's $2.65 per quarter.
That's $10.60 per share, not 10% per share. The value of the stock is irrelevant as it's a flat pay out per share, not a percentage.
I'm not disagreeing with you here. I'm just saying that he FEELS that way about it.
By the way, I'm sitting in the dentists chair while I'm posting. Great fun. You should all try it.
...punch line to old joke -- said by woman in the chair to dentist: "Now, we aren't going to hurt each other... Are we?"
...you filli in the lead up story
That's $10.60 per share, not 10% per share. The value of the stock is irrelevant as it's a flat pay out per share, not a percentage.
Yeah, we know, we know. But dividends are always referred to in percentage. Thats not me, that's how it works. I don't know how he got 10%. It's actually more.
Apple has 932 M in shares right now. They're going to buy back something like 20 M of them. You could pretend that the money has disappeared. But you have to look at the alternative. If they don't buy the shares back, they will issue 20 M shares to give away to employees - which dilutes the share value. So the $10 B is being spent to prevent issuance of 20 M in new shares - so there is value retained for individual shareholders.
I am not pretending anything, and I most certainly am paying attention.
What I did was give a thought experiment about the standard share repurchase in a theoretical company- one with no revenue to make the point clear - , a reply to your claim that a buying X% of stock always increases the stock by X% in any company.
Here is your original quote.
If it is a true share repurchase (the shares are removed from circulation), the gain is that there are fewer shares in circulation. So if a company removes 10% of the shares from circulation, the per share income goes up by 10%. If the multiple remains the same, the share price would also go up by 10%.
Thats what I was responding to, because it is wrong. The supposed 10% increase should in theory be balanced by the drop in cash value, any actual increase depends on market sentiment.
Moving onto the fact that Apple are issuing shares to employees is to change the goalposts.