The 2nd questions could Apple theoretically buyback itself? Say that Apple somehow secure a loan of $150B, a total of $300+ cash along with a few partnership, they could spread themselves out with many small company and basically buyback all of its stock using those money?
I don't know if it's theoretically possible, but it has never happened AFAIK for several reasons:
1. The company would have to buy all the shares at once. If it buys shares in the market, as more shares are purchased, the value of the remaining shares increases (since the true intrinsic value of the company doesn't change - other than cash/debt). In the case of AAPL, they could buy a few million shares (maybe tens of millions) for $500 or so. But then the price would start climbing. When you get to the extreme, let's say that they had purchased all the shares but one. That share would be worth in excess of $300 Billion.
2. If a company has no future but has cash worth more than the share values, liquidation might make sense.
3. If the company has a future but the cash value is higher than the market cap, a cash distribution or buyback is the most common practice. In some cases, a private equity group might buy up all the shares (usually at a premium over market price, though).
4. There's no mechanism for the returns to be distributed. If the company owned itself, who gets the profits? Eventually, the management team would presumably want some share of the profits - which might lead to shareholder suits from the previous shareholders (who would claim that the stock was artificially under-valued).
Wall Street has openly said that Samsung is going to practically destroy Apple's iPhone by being able to flood the smartphone market with better and cheaper smartphones thanks to exceptionally fast manufacturing techniques which Apple can't possibly match.
Wall Street also lied and said that Apple had an extra week last quarter (instead of having one fewer week as in reality).
I'm pretty sure you can't trust a single thing said by any analyst anywhere for any reason. Trust the numbers that Apple puts up every quarter. Nothing is happening to them any time soon, regardless of how many phones Samsung lies (because they do, and have, and have been caught) about shipping (not selling).
Check out this quote from an investment email I received today:
[SIZE=4]9:15 AM 1/28/2013 - StreetInsider Will Apple (Nasdaq: AAPL) trading to annual lows be a boon for dividend investors?
The latest data out of Cupertino, CA-based Apple had the company adding about $16 billion in cash through the quarter, bringing its war chest up to $137 billion, or $145 per share. When cash is taken into consideration, shares trade for seven times FY13 earnings expectations, or 10 times ex-cash.
Apple initiated a dividend program last year, paying out $2.65 per share every quarter. The good news is that the yield on that payout has improved to 2.4 percent; the better news is that that yield might move even higher.
One analyst from Bernstein thinks that apple should "significantly" increase its dividend to three percent or more, though the best number might be a four percent yield, or annual dividend of $18 per share. The increase would put Apple with a payout ratio of 40 percent projected FY13 EPS, from about 25 percent now. Other biggies like Pfizer (NYSE: PFE) and General Electric (NYSE: GE).
Apple gets about 30 percent of profits from U.S. sales, notes Barron's this morning. That means Apple might need to repatriate foreign earnings and pay taxes, and/or tap its $43 billion of domestic cash reserves. [B]The Bernstein analyst thinks Apple should mull selling about $50 billion in debt, enough to take its outstanding share count down by 10 percent or increase its dividend for the next five years.[/B] He thinks Apple could garner a rate under 2 percent for 5- and 10-year bonds.
Given the trouble Apple had through the 1990s, the company has become and remained cash-conservative. Plans to payout about $45 billion the next three-years isn't a lot for a company netting $40 billion annually. Some speculation still surrounds Apple losing market share in key areas like the U.S. and China, while international growth opportunities are becoming scarce without a lower-cost device. There are positives for Apple too, including the possibility of a new TV set sometime in 2013.
With shares dropping 38 percent over the last few months, investors might be looking for more than just promises when it comes to getting back behind Apple. The company could induce more confidence with a larger payout, something its share prices is desperately longing for.
The stock is down about 0.5 percent early.[/SIZE]
If an analyst has the same wacky idea I had, it is creepy and I take it back.:p
Comments
I don't know if it's theoretically possible, but it has never happened AFAIK for several reasons:
1. The company would have to buy all the shares at once. If it buys shares in the market, as more shares are purchased, the value of the remaining shares increases (since the true intrinsic value of the company doesn't change - other than cash/debt). In the case of AAPL, they could buy a few million shares (maybe tens of millions) for $500 or so. But then the price would start climbing. When you get to the extreme, let's say that they had purchased all the shares but one. That share would be worth in excess of $300 Billion.
2. If a company has no future but has cash worth more than the share values, liquidation might make sense.
3. If the company has a future but the cash value is higher than the market cap, a cash distribution or buyback is the most common practice. In some cases, a private equity group might buy up all the shares (usually at a premium over market price, though).
4. There's no mechanism for the returns to be distributed. If the company owned itself, who gets the profits? Eventually, the management team would presumably want some share of the profits - which might lead to shareholder suits from the previous shareholders (who would claim that the stock was artificially under-valued).
Originally Posted by Constable Odo
Wall Street has openly said that Samsung is going to practically destroy Apple's iPhone by being able to flood the smartphone market with better and cheaper smartphones thanks to exceptionally fast manufacturing techniques which Apple can't possibly match.
Wall Street also lied and said that Apple had an extra week last quarter (instead of having one fewer week as in reality).
I'm pretty sure you can't trust a single thing said by any analyst anywhere for any reason. Trust the numbers that Apple puts up every quarter. Nothing is happening to them any time soon, regardless of how many phones Samsung lies (because they do, and have, and have been caught) about shipping (not selling).
[SIZE=4]9:15 AM 1/28/2013 - StreetInsider
Will Apple (Nasdaq: AAPL) trading to annual lows be a boon for dividend investors?
The latest data out of Cupertino, CA-based Apple had the company adding about $16 billion in cash through the quarter, bringing its war chest up to $137 billion, or $145 per share. When cash is taken into consideration, shares trade for seven times FY13 earnings expectations, or 10 times ex-cash.
Apple initiated a dividend program last year, paying out $2.65 per share every quarter. The good news is that the yield on that payout has improved to 2.4 percent; the better news is that that yield might move even higher.
One analyst from Bernstein thinks that apple should "significantly" increase its dividend to three percent or more, though the best number might be a four percent yield, or annual dividend of $18 per share. The increase would put Apple with a payout ratio of 40 percent projected FY13 EPS, from about 25 percent now. Other biggies like Pfizer (NYSE: PFE) and General Electric (NYSE: GE).
Apple gets about 30 percent of profits from U.S. sales, notes Barron's this morning. That means Apple might need to repatriate foreign earnings and pay taxes, and/or tap its $43 billion of domestic cash reserves. [B]The Bernstein analyst thinks Apple should mull selling about $50 billion in debt, enough to take its outstanding share count down by 10 percent or increase its dividend for the next five years.[/B] He thinks Apple could garner a rate under 2 percent for 5- and 10-year bonds.
Given the trouble Apple had through the 1990s, the company has become and remained cash-conservative. Plans to payout about $45 billion the next three-years isn't a lot for a company netting $40 billion annually. Some speculation still surrounds Apple losing market share in key areas like the U.S. and China, while international growth opportunities are becoming scarce without a lower-cost device. There are positives for Apple too, including the possibility of a new TV set sometime in 2013.
With shares dropping 38 percent over the last few months, investors might be looking for more than just promises when it comes to getting back behind Apple. The company could induce more confidence with a larger payout, something its share prices is desperately longing for.
The stock is down about 0.5 percent early.[/SIZE]
If an analyst has the same wacky idea I had, it is creepy and I take it back.:p