Don't disagree with your observations but I held my AAPL stock. I may even buy more this week. Agree Tim Cook needs to look in the mirror and take a reality-gut check. Apple has been executing on a par with Gateway 2000 since its ill advised mass product dump after the iP 5 intro but the stock's free fall has little to do with it IMO. As this article infers I think we're witnessing the most concerted stock manipulation in Wall Street history and what goes down also goes up. We shall see.
First rule of investing. Never lose principal. Second rule is don't fall in love with a stock. First rule of fight club is don't talk about fight club (Tyler Durden).
I was a 5 year holder of apple stock. Sold not on the earnings release as I thought that was actually fine although the trend is starting to show rapid deceleration. That aside once I heard management state that no dividend boost or additional buyback was on the table I hit the sell button. Got out in the 475 range.
I believe, as does the street, that apple is never going to do anything with that money for shareholders. It burns 2% net after investment income each year to inflation. Apple is not a large acquisition machine and maybe should not be. When companies get this much cash they tend to overpay and burn through it in bad purchases. What they should do is give it to the owners but it has been made clear this won't happen.
The current 10B buyback over 3 years (about $3/share per year) goes to offset stock option grant dilution. Doesn't shrink the float. No benefit to shareholders. The buyback in context is meaningless. At this pace it would take 25 years to get you back to 700 if the stock stays flat.
Cook and the board are intent on the continued hoarding of the cash to save for a rainy day. They know in tech those days come and they may start burning that cash pile to stay in business. It will keep them in business for quite some time but the upshot is that shareholders aren't going to get it, period.
As such and for that reason only I sold. I only invest in companies who are very shareholder friendly. The tell for me should have been when they did no special dividend but even more so the refusal like half the S&P 500 companies to simply move Q1 dividend ahead so it was paid to shareholders before the end of 2012 to avoid tax hike. They could not even do this. Message received loud and clear Tim.
Money has been deployed to other stocks that will make back the 50% plus necessary that it will take now for apple to reach the old high. Less downside risk and way more upside in other companies now. Large numbers and competition do matter. I thought I'd get some breaks with simple market sentiment and expanding PE but that has no chance and the stock remains broken across the board.
Cook blew it completely. Let the stock go and decided to ignore it. Would have been fine if they had total blowout numbers but they didn't. He could have done a 50B to 100B buyback along with a 20/share dividend and a 10 for 1 split. When the stock cratered 20% he should have been all over that. He can only blame himself and the board now. This is the team to make great products maybe but not one that is financially savvy (money sits in bank forever losing to inflation) nor one that understands or even wants to play in the stock game.
Great companies with years of growth and 5 or 10 bagger potential ahead of them with little downside. Take a look around. I was in love with Apple stock for 5 years until the conference call. I realized as an owner of Apple I was not going to share in the spoils. That is reserved for the board and management only.
What you're saying is Apple is not doing enough distributions, making it a shareholder unfriendly company. I understand your reasoning but I disagree with the conclusion.
The stock buyback was always about offsetting dilution from stock option grants. Companies have to be very careful about the message they send when they do distributions. Look at this way. Companies have two choices when it comes to their cash. They can give it back to shareholders or they can reinvest it in the company.
When companies make a distribution, they are trying to show their confidence in future earning power by reducing the amount of cash they have on hand in case things go south. They're trying to show that they're confident that things will be just fine going forward. However, there is a risk of sending another message-that management doesn't see any opportunities for growth, so they've decided to give the cash back to shareholders. The same danger is there with buybacks. A colleague at work told me that you should never try to catch a falling knife in connection with buying stocks. He said to watch for signs of the price bottoming out.
Also, you're saying that Apple is hoarding cash for a rainy day rather than giving it back to shareholders. If Apple goes bankrupt, is that a good thing for shareholders? Apple has the financial resources to weather a major product failure. They can afford to make mistakes because it won't destroy them for good. They might miss out on a major breakthrough, but they've got the resources to go back to the drawing board and come up with something else. That is downside protection.
And also, a lot of Apple's $137 billion is overseas. Only about $40 billion of it is in the US, so they can't just plunk down $100B for a stock buyback.
And also, a lot of Apple's $137 billion is overseas. Only about $40 billion of it is in the US, so they can't just plunk down $100B for a stock buyback.
Actually, as one of the articles cited above states, for some time they've been reserving the taxes that would be due if they repatriated the money, so if they bring it back to the US, the tax has already been reserved - and would not affect net income.
OTOH, if they buy a company overseas in a country where they have cash, then they could reverse that reserve - and get an additional boost to net income.
I was a 5 year holder of apple stock. Sold not on the earnings release as I thought that was actually fine although the trend is starting to show rapid deceleration. That aside once I heard management state that no dividend boost or additional buyback was on the table I hit the sell button. Got out in the 475 range.
The current 10B buyback over 3 years (about $3/share per year) goes to offset stock option grant dilution. Doesn't shrink the float. No benefit to shareholders. The buyback in context is meaningless. At this pace it would take 25 years to get you back to 700 if the stock stays flat.
As such and for that reason only I sold. I only invest in companies who are very shareholder friendly. The tell for me should have been when they did no special dividend but even more so the refusal like half the S&P 500 companies to simply move Q1 dividend ahead so it was paid to shareholders before the end of 2012 to avoid tax hike. They could not even do this. Message received loud and clear Tim.
Money has been deployed to other stocks that will make back the 50% plus necessary that it will take now for apple to reach the old high. Less downside risk and way more upside in other companies now. Large numbers and competition do matter. I thought I'd get some breaks with simple market sentiment and expanding PE but that has no chance and the stock remains broken across the board.
Cook blew it completely. Let the stock go and decided to ignore it. Would have been fine if they had total blowout numbers but they didn't. He could have done a 50B to 100B buyback along with a 20/share dividend and a 10 for 1 split. When the stock cratered 20% he should have been all over that. He can only blame himself and the board now. This is the team to make great products maybe but not one that is financially savvy (money sits in bank forever losing to inflation) nor one that understands or even wants to play in the stock game.
Great companies with years of growth and 5 or 10 bagger potential ahead of them with little downside. Take a look around. I was in love with Apple stock for 5 years until the conference call. I realized as an owner of Apple I was not going to share in the spoils. That is reserved for the board and management only.
I dont think your first point is accurate. The indicated $45 billion would be returned to shareholders over 3 years included in that was a 10 billion share buyback. The dividend is 10 billion a year right now, so where is the other 5 billion going? I actually assumed it was for budgeted dividend increases. If it isn't where is it going? they made it a point to talk about that figure and I cant believe they arent going to raise the dividend in March. I hope the inflation of the dividend as a percentage because of the price drop doesn make them consider postponing the increase or reducing the size of it. They really should get it to 3% to appeal to more income and value investors.
I believe the 3.3 a year will shrink the float but not by much. I believe it shrunk by 1 million last quarter and typical stock compensation is about half a billion a quarter. Either way it's a pretty small number in the big picture and if keeps the share count from expanding further I dont see it as a bad thing. Certainly buying back more than last quarter since the price has dropped so much.
I do agree about the special and everything else. Cook sold all his shares when they vested. I think he might have kept like 10k. Ties into your last point, management does not seem too concerned with how they are perceived. Granted, when you've had a run like they've had until the last four months there isnt much to complain about.
Lol, now you are taking a trip to crazy town population you. Buyback 100 billion dollars worth of shares? First of all the share price is dropping. If you are going to be responsible about a dramatic move like that why wouldnt you wait until it bottomed out? Buy back far more shares and better for everyone.
Please name a great company with little downside that is going to be 5 or 10 bagger. Frankly, if they are so easy to identify why would you bother with Apple?
You're confusing profits and revenues. Revenues actually continued to increase at double digit rates.
I'm referring to the projections for the next quarter where they place revenue growth at 4-8% down from 83% in 2011 and 60% in 2012. I'm still not clear why they have such a low projection because combined with the drop in margins it paints a relatively bleak picture for the second quarter. I say relative because while they will still be doing 41-43 billion in revenue, EPS will certainly drop significantly...which of course will cause concern that will probably get reflected in the share price depending on guidance for the third quarter.
Of course if they beat guidance it might be a non-issue, but I'm sure you read/heard they are giving more accurate guidance or perhaps a better way to say it, guidance they will actually hit versus beat.
Samsung: (phones, tablets, computers, CPUs, screens, heavy industry, dozens of other products)
Revenues - $52.9 B
Net income - $6.6 B
Warns of slowdown for 2013
Apple: (phones, tablets, computers)
Revenues - $54.5 B
Net Income - $13.1 B
Forecast is for continued growth, albeit somewhat slower.
Yep. Samsung is really kicking the crap out of Apple. /s
And the figure that is often ignored is that Apple's cash flow increased by 33% last quarter.
Um, Exactly...
To add to that....Samsung's TV division reported sales for the quarter were FLAT Y/Y.. Um if Apple is so behind then why o why would they be getting into a space that is flatlining? Um, OPPORTUNITY. GO STEVE!
Further....It was reported in Samsungs earnings that it's Smartphone sales for the quarter were 60 Million plus...But...But... But ONLY 1/3 of those were GALAXY'S, NOTES, etc. If I believe that report, then that means the $200 mil anti Apple ad campaign was realistically more of a failure to spur it's own sales than it was to win praise from fellow marketers...anal-ysts....ugh. From Samsung's OWN mouth -- prepare for a slowdown...
Apple's biggest mistake this quarter was not having enough supply, period. Whether there was trouble in China with assembly, supply was just not there...
Finally --- the deal with one less week in the quarter also clearly dinged them big time... It's reported Apple was selling 4 MILLION iPhones a week/4 Billion in sales..last quarter....Loose a week and.... Do the math... Doh!=
Yeah I read about it in the WSJ. Its a shame what that publication has come to now...
Yea, the same publication that precipitated the "supposed" "massive cut" story just in time -- before earnings -- in part orders from "unnamed sources" at several of Apple's suppliers.... You mean that WSJ? Rupert Murdoch's WSJ? The same WSJ that launched the "first iPad Magazine" The Daily that recently (December 2012) shut down operating? The same Rupert Murdoch whose employees hacked into everything and anything to gain an edge on it's competitors?? Gotta love and "trust" the good ol WSJ....?? Keep lovin' em.
I'm referring to the projections for the next quarter where they place revenue growth at 4-8% down from 83% in 2011 and 60% in 2012. I'm still not clear why they have such a low projection because combined with the drop in margins it paints a relatively bleak picture for the second quarter. I say relative because while they will still be doing 41-43 billion in revenue, EPS will certainly drop significantly...which of course will cause concern that will probably get reflected in the share price depending on guidance for the third quarter.
Of course if they beat guidance it might be a non-issue, but I'm sure you read/heard they are giving more accurate guidance or perhaps a better way to say it, guidance they will actually hit versus beat.
I don't think they said "more accurate guidance"...On the contrary...they said a broader guidance so Wall Streeters don't take a dump when they miss RECORD earnings by $200 mil....Ugh.
Another day, another apologist article from AI. Guess we will find out tomorrow whether or not the sell off was premature, now that the market has had the weekend to think about it.
Yea, the same publication that precipitated the "supposed" "massive cut" story just in time -- before earnings -- in part orders from "unnamed sources" at several of Apple's suppliers.... You mean that WSJ? Rupert Murdoch's WSJ? The same WSJ that launched the "first iPad Magazine" The Daily that recently (December 2012) shut down operating? The same Rupert Murdoch whose employees hacked into everything and anything to gain an edge on it's competitors?? Gotta love and "trust" the good ol WSJ....?? Keep lovin' em.
Murdoch had nothing to do with the hacking scandal, which is why no charges have been filed against him.
And it wasn't just the WSJ that reported those numbers, and that's a matter of record.
I'm not surprised. There's a lot of BS and manipulation taking place. AAPL is huge, and is bound to attract all sorts of shady characters.
Having said that, I think that any investor in Apple (not the big firms and the crooks, but the average small time investor), selling their shares of AAPL now is dumb.
Anyone investing any amount of money in the Stock Market should read The Snowball.
We may construe this as an organized attack on AAPL. But look at the bigger picture.
Maybe this is only a testbed for nanosecond tradingalgorithms to see what would happen during an all-out attack on US stocks.
These trading algorithms are not even called targeted viruses, like the ones that public utilities, the banking world, server farms, even the pentagon, recently have recognized as digital threats.
It is time that the SEC work out some rules to prevent catastrophic collapse of the stock market, if those nanosecond trading algorithms were to come under the control of REALLY maliscious people.
What those armchair CEOs on Wall Street say is meaningless because in the grand scheme of things, it's cash flow that's going to keep your business in good shape, not a trophy signed by the Wall Street bigwigs. The first-place trophy isn't going to pay employees' salaries, fund R&D on the next product, or pay component suppliers. A business needs cash flow in order to to these things.
Market share doesn't automatically translate into strong profitability and cash-flow generating potential. The dot-com bubble proved that this model doesn't work. The list of companies that tried to chase market share at the expense of profits, hoping that they would be able to work on making more money after getting the dominant market position would fill several books. If you keep spending more than what you take in, you will eventually run out of money.
Trader says to self: It would be more profitable for me to sell my AAPL shares at a loss in order to save an even greater amount of money on the bonds. It's not clear that any laws were broken-especially since they didn't publicize their dumping of the stock.
Unless there's evidence of collusion between brokerages or some sort of insider trading, it's not illegal. As per the current rules, you can use your own trades to drive the price of a stock up or down as much as you want, although I wouldn't call it a great strategy (it can easily backfire).
"Apple's earnings for the winter quarter of 2012... involved an extra, 14th week."
I watched a Bloomberg video where the talking head got it backwards. He said the current quarter had an extra week which made Apple's current quarter earnings worse than reported. I guess it is probably extreme incompetence, but combined with the WSJ's mysterious and now retracted 65 million iPhone expectation for the next quarter in their supply chain rumor article it sure looks like deliberate misinformation.
Unless there's evidence of collusion between brokerages or some sort of insider trading, it's not illegal. As per the current rules, you can use your own trades to drive the price of a stock up or down as much as you want, although I wouldn't call it a great strategy (it can easily backfire).
That was my point. In this case, it looks like a valid trading strategy for them to make more money (because they'd pay out less on the bonds and more than make up for the loss on the stock).
Your first statement is wrong, though. You don't have to prove collusion or insider trading for something to be illegal. One can be charge (and convicted) for posting fales information about a company to drive the stock up or down - even if there's no collusion.
<span style="font-family:'HelveticaNeue-Light', 'Helvetica Neue Light', 'Helvetica Neue', 'Segoe UI', Helvetica, Arial, 'Sans Serif';font-size:15px;line-height:22.796875px;">"Apple's earnings for the winter quarter of 2012... involved an extra, 14th week."</span>
<span style="font-family:'HelveticaNeue-Light', 'Helvetica Neue Light', 'Helvetica Neue', 'Segoe UI', Helvetica, Arial, 'Sans Serif';font-size:15px;line-height:22.796875px;">I watched a Bloomberg video where the talking head got it backwards. He said the current quarter had an extra week which made Apple's current quarter earnings worse than reported. I guess it is probably extreme incompetence, but combined with the WSJ's mysterious and now retracted 65 million iPhone expectation for the next quarter in their supply chain rumor article it sure looks like deliberate misinformation.</span>
I cam across another interesting article today. It highlights the press' efforts to minimize Apple's accomplishments and maximize its weaknesses. The headline reads:
"Apple is Among the Companies in the Computer Hardware Industry With the Highest Free Cash Flow Per Share"
From that, you'd conclude that they're not #1 - and that there are other companies that are comparable. When you read clear to the bottom of the article, you learn:
AAPL $45.53
HP $3.48
DELL $2.64
Apple isn't just "among the companies with the highest fcf", but they're miles ahead of the competition.
Now, Free Cash Flow is not a very useful metric (share price as a multiple of free cash flow is a much better one), but the article is choosing to talk about FCF, so they should discuss it in an unbiased manner.
BTW, a great article to read
Reasons to buy Apple now
32 minutes ago - Dow Jones News
By Brett Arends
If you Google my name, you will see blog posts which accuse me of being part of an elaborate worldwide conspiracy to undermine Apple (AAPL) .
Like most things you read on blogs, the accusations, of course, are completely true. It was me, Jim Cramer and Henry Kissinger. We met in the Texas School Book Depository in Dallas to cook the whole thing up. The Bilderberg Group, the Davos World Forum and SPECTRE put up the money.
We'd have gotten away with it, too, if it weren't for those pesky bloggers -- and their dog, Scooby. Drat!
Yet today, I find myself in the unusual position of defending Apple stock from the sudden deluge of sellers.
If you haven't been living in a cave for the past week, you'll know Apple's stock price recently collapsed to $445, from a peak of $700 last year. Wall Street suddenly discovered that Apple faces competition from companies such as Samsung. And Apple didn't give a confident outlook for the year ahead.
But this is still a fantastically successful company, and the stock is dirt cheap by almost any measure.
No wonder the smart folks at Boston-based money manager GMO had Apple in the top 15 holdings in the portfolio of top-quality U.S. stocks. GMO has a long and excellent reputation of going against Wall Street fashion and buying value stocks. That Apple met its criteria, even at the higher prices seen a few weeks ago, is no guarantee of success, but it is reassuring.
Let's start with the basic numbers. Apple's latest quarterly earnings show the company has $169 billion in cash and liquid assets, and just $69 billion in total liabilities. So the company is basically sitting on $100 billion in cash or equivalents -- about $105 per share. (It has another $24 billion in commitments to buy components and pay leases on retail stores. Including those would change the numbers a bit, but not much.)
In short, Apple isn't really a $445 stock. Net of cash, it's a $330 stock.
That's just seven times forecast earnings of $45 per share for the current fiscal year, which runs through Sept. 30. That's half the rating of the rest of the stock market, which has historically traded at about 14 times forecast per-share earnings.
At current prices, Apple, net of cash, is less than six times forecast cashflow per share.
And that isn't just because margins are currently elevated. Apple, net of cash, is valued at less than twice forecast revenues. Apart from a brief period during the depths of the financial crisis, this is the lowest such rating seen since 2004.
Apple is simply gushing cash each month. The company's operating cashflow was $23 billion -- or $24 per share -- last quarter alone.
Tim Cook, the company CEO, doesn't seem to have the panache (or ability at spin) of his legendary predecessor, the late Steve Jobs. But none of that really matters. What matters is how well the business performs.
Last quarter, net sales were up 18%. Sales in China were up 67%. Revenues from selling iPhones rose 28%, those from selling iPads, 22%.
Apple shouldn't be viewed as a simple technology company. It should mainly be viewed as a luxury goods company -- the LVMH or Tiffany of tech. People pay extra to own an Apple product. Sometimes they pay a lot more. The company's gross margins were 39% last quarter.
It is certainly true that the company faces surging competition for its iPhones, iPads, computers and so on. If Apple stock were expensive, I wouldn't buy it in these circumstances, because that competition will inevitably pressure margins. But it isn't expensive; it's cheap.
Everyone I know who owns an iPhone loves it. Apple customers are fanatics. I know people who have dumped their smartphones from competing platforms and moved to Apple, but I know very few who have gone the other way. What seems to distinguish Apple is their execution. The products seem to be more reliable, and better, than the competition. This is why customers stick around.
For work purposes, I recently bought a tablet on a competing platform. It's been trouble. The software's buggy. I had to wipe the hard drive and reboot twice. The store won't take it back because it's outside the return period. The manufacturer will take it back, but I'll have to ship it off for six weeks. I wasted hours online with their overseas help desk.
There were sound reasons why, in the circumstances, an iPad wouldn't have suited my needs, but I did reflect that if I had purchased one, I'd have found it very easy to get my problem fixed, by going into my local Apple store.
This is a quality company with an amazing brand name, and the stock is cheap. Make of it what you will.
-Brett Arends; 415-439-6400; [email protected]
(END) Dow Jones Newswires
January 28, 2013 11:10 ET (16:10 GMT)
Copyright (c) 2013 Dow Jones & Company, Inc.
Comments
Don't disagree with your observations but I held my AAPL stock. I may even buy more this week. Agree Tim Cook needs to look in the mirror and take a reality-gut check. Apple has been executing on a par with Gateway 2000 since its ill advised mass product dump after the iP 5 intro but the stock's free fall has little to do with it IMO. As this article infers I think we're witnessing the most concerted stock manipulation in Wall Street history and what goes down also goes up. We shall see.
Quote:
Originally Posted by mvigod
First rule of investing. Never lose principal. Second rule is don't fall in love with a stock. First rule of fight club is don't talk about fight club (Tyler Durden).
I was a 5 year holder of apple stock. Sold not on the earnings release as I thought that was actually fine although the trend is starting to show rapid deceleration. That aside once I heard management state that no dividend boost or additional buyback was on the table I hit the sell button. Got out in the 475 range.
I believe, as does the street, that apple is never going to do anything with that money for shareholders. It burns 2% net after investment income each year to inflation. Apple is not a large acquisition machine and maybe should not be. When companies get this much cash they tend to overpay and burn through it in bad purchases. What they should do is give it to the owners but it has been made clear this won't happen.
The current 10B buyback over 3 years (about $3/share per year) goes to offset stock option grant dilution. Doesn't shrink the float. No benefit to shareholders. The buyback in context is meaningless. At this pace it would take 25 years to get you back to 700 if the stock stays flat.
Cook and the board are intent on the continued hoarding of the cash to save for a rainy day. They know in tech those days come and they may start burning that cash pile to stay in business. It will keep them in business for quite some time but the upshot is that shareholders aren't going to get it, period.
As such and for that reason only I sold. I only invest in companies who are very shareholder friendly. The tell for me should have been when they did no special dividend but even more so the refusal like half the S&P 500 companies to simply move Q1 dividend ahead so it was paid to shareholders before the end of 2012 to avoid tax hike. They could not even do this. Message received loud and clear Tim.
Money has been deployed to other stocks that will make back the 50% plus necessary that it will take now for apple to reach the old high. Less downside risk and way more upside in other companies now. Large numbers and competition do matter. I thought I'd get some breaks with simple market sentiment and expanding PE but that has no chance and the stock remains broken across the board.
Cook blew it completely. Let the stock go and decided to ignore it. Would have been fine if they had total blowout numbers but they didn't. He could have done a 50B to 100B buyback along with a 20/share dividend and a 10 for 1 split. When the stock cratered 20% he should have been all over that. He can only blame himself and the board now. This is the team to make great products maybe but not one that is financially savvy (money sits in bank forever losing to inflation) nor one that understands or even wants to play in the stock game.
Great companies with years of growth and 5 or 10 bagger potential ahead of them with little downside. Take a look around. I was in love with Apple stock for 5 years until the conference call. I realized as an owner of Apple I was not going to share in the spoils. That is reserved for the board and management only.
What you're saying is Apple is not doing enough distributions, making it a shareholder unfriendly company. I understand your reasoning but I disagree with the conclusion.
The stock buyback was always about offsetting dilution from stock option grants. Companies have to be very careful about the message they send when they do distributions. Look at this way. Companies have two choices when it comes to their cash. They can give it back to shareholders or they can reinvest it in the company.
When companies make a distribution, they are trying to show their confidence in future earning power by reducing the amount of cash they have on hand in case things go south. They're trying to show that they're confident that things will be just fine going forward. However, there is a risk of sending another message-that management doesn't see any opportunities for growth, so they've decided to give the cash back to shareholders. The same danger is there with buybacks. A colleague at work told me that you should never try to catch a falling knife in connection with buying stocks. He said to watch for signs of the price bottoming out.
Also, you're saying that Apple is hoarding cash for a rainy day rather than giving it back to shareholders. If Apple goes bankrupt, is that a good thing for shareholders? Apple has the financial resources to weather a major product failure. They can afford to make mistakes because it won't destroy them for good. They might miss out on a major breakthrough, but they've got the resources to go back to the drawing board and come up with something else. That is downside protection.
And also, a lot of Apple's $137 billion is overseas. Only about $40 billion of it is in the US, so they can't just plunk down $100B for a stock buyback.
I had a flash dump once.
Ate a bad clam.
Actually, as one of the articles cited above states, for some time they've been reserving the taxes that would be due if they repatriated the money, so if they bring it back to the US, the tax has already been reserved - and would not affect net income.
OTOH, if they buy a company overseas in a country where they have cash, then they could reverse that reserve - and get an additional boost to net income.
Quote:
Originally Posted by mvigod
I was a 5 year holder of apple stock. Sold not on the earnings release as I thought that was actually fine although the trend is starting to show rapid deceleration. That aside once I heard management state that no dividend boost or additional buyback was on the table I hit the sell button. Got out in the 475 range.
The current 10B buyback over 3 years (about $3/share per year) goes to offset stock option grant dilution. Doesn't shrink the float. No benefit to shareholders. The buyback in context is meaningless. At this pace it would take 25 years to get you back to 700 if the stock stays flat.
As such and for that reason only I sold. I only invest in companies who are very shareholder friendly. The tell for me should have been when they did no special dividend but even more so the refusal like half the S&P 500 companies to simply move Q1 dividend ahead so it was paid to shareholders before the end of 2012 to avoid tax hike. They could not even do this. Message received loud and clear Tim.
Money has been deployed to other stocks that will make back the 50% plus necessary that it will take now for apple to reach the old high. Less downside risk and way more upside in other companies now. Large numbers and competition do matter. I thought I'd get some breaks with simple market sentiment and expanding PE but that has no chance and the stock remains broken across the board.
Cook blew it completely. Let the stock go and decided to ignore it. Would have been fine if they had total blowout numbers but they didn't. He could have done a 50B to 100B buyback along with a 20/share dividend and a 10 for 1 split. When the stock cratered 20% he should have been all over that. He can only blame himself and the board now. This is the team to make great products maybe but not one that is financially savvy (money sits in bank forever losing to inflation) nor one that understands or even wants to play in the stock game.
Great companies with years of growth and 5 or 10 bagger potential ahead of them with little downside. Take a look around. I was in love with Apple stock for 5 years until the conference call. I realized as an owner of Apple I was not going to share in the spoils. That is reserved for the board and management only.
I dont think your first point is accurate. The indicated $45 billion would be returned to shareholders over 3 years included in that was a 10 billion share buyback. The dividend is 10 billion a year right now, so where is the other 5 billion going? I actually assumed it was for budgeted dividend increases. If it isn't where is it going? they made it a point to talk about that figure and I cant believe they arent going to raise the dividend in March. I hope the inflation of the dividend as a percentage because of the price drop doesn make them consider postponing the increase or reducing the size of it. They really should get it to 3% to appeal to more income and value investors.
I believe the 3.3 a year will shrink the float but not by much. I believe it shrunk by 1 million last quarter and typical stock compensation is about half a billion a quarter. Either way it's a pretty small number in the big picture and if keeps the share count from expanding further I dont see it as a bad thing. Certainly buying back more than last quarter since the price has dropped so much.
I do agree about the special and everything else. Cook sold all his shares when they vested. I think he might have kept like 10k. Ties into your last point, management does not seem too concerned with how they are perceived. Granted, when you've had a run like they've had until the last four months there isnt much to complain about.
Lol, now you are taking a trip to crazy town population you. Buyback 100 billion dollars worth of shares? First of all the share price is dropping. If you are going to be responsible about a dramatic move like that why wouldnt you wait until it bottomed out? Buy back far more shares and better for everyone.
Please name a great company with little downside that is going to be 5 or 10 bagger. Frankly, if they are so easy to identify why would you bother with Apple?
Either way, fun read and best of luck.
Ok, but was it premeditated?
Quote:
Originally Posted by jragosta
You're confusing profits and revenues. Revenues actually continued to increase at double digit rates.
I'm referring to the projections for the next quarter where they place revenue growth at 4-8% down from 83% in 2011 and 60% in 2012. I'm still not clear why they have such a low projection because combined with the drop in margins it paints a relatively bleak picture for the second quarter. I say relative because while they will still be doing 41-43 billion in revenue, EPS will certainly drop significantly...which of course will cause concern that will probably get reflected in the share price depending on guidance for the third quarter.
Of course if they beat guidance it might be a non-issue, but I'm sure you read/heard they are giving more accurate guidance or perhaps a better way to say it, guidance they will actually hit versus beat.
Quote:
Originally Posted by jragosta
Samsung is kicking the crap out of Apple?
Let's see:
Samsung: (phones, tablets, computers, CPUs, screens, heavy industry, dozens of other products)
Revenues - $52.9 B
Net income - $6.6 B
Warns of slowdown for 2013
Apple: (phones, tablets, computers)
Revenues - $54.5 B
Net Income - $13.1 B
Forecast is for continued growth, albeit somewhat slower.
Yep. Samsung is really kicking the crap out of Apple. /s
And the figure that is often ignored is that Apple's cash flow increased by 33% last quarter.
Um, Exactly...
To add to that....Samsung's TV division reported sales for the quarter were FLAT Y/Y.. Um if Apple is so behind then why o why would they be getting into a space that is flatlining? Um, OPPORTUNITY. GO STEVE!
Further....It was reported in Samsungs earnings that it's Smartphone sales for the quarter were 60 Million plus...But...But... But ONLY 1/3 of those were GALAXY'S, NOTES, etc. If I believe that report, then that means the $200 mil anti Apple ad campaign was realistically more of a failure to spur it's own sales than it was to win praise from fellow marketers...anal-ysts....ugh. From Samsung's OWN mouth -- prepare for a slowdown...
Apple's biggest mistake this quarter was not having enough supply, period. Whether there was trouble in China with assembly, supply was just not there...
Finally --- the deal with one less week in the quarter also clearly dinged them big time... It's reported Apple was selling 4 MILLION iPhones a week/4 Billion in sales..last quarter....Loose a week and.... Do the math... Doh!=
Quote:
Originally Posted by WelshDog
I had a flash dump once.
Ate a bad clam.
Yeah I read about it in the WSJ. Its a shame what that publication has come to now...
Quote:
Originally Posted by lostkiwi
Yeah I read about it in the WSJ. Its a shame what that publication has come to now...
Yea, the same publication that precipitated the "supposed" "massive cut" story just in time -- before earnings -- in part orders from "unnamed sources" at several of Apple's suppliers.... You mean that WSJ? Rupert Murdoch's WSJ? The same WSJ that launched the "first iPad Magazine" The Daily that recently (December 2012) shut down operating? The same Rupert Murdoch whose employees hacked into everything and anything to gain an edge on it's competitors?? Gotta love and "trust" the good ol WSJ....?? Keep lovin' em.
Quote:
Originally Posted by tkell31
I'm referring to the projections for the next quarter where they place revenue growth at 4-8% down from 83% in 2011 and 60% in 2012. I'm still not clear why they have such a low projection because combined with the drop in margins it paints a relatively bleak picture for the second quarter. I say relative because while they will still be doing 41-43 billion in revenue, EPS will certainly drop significantly...which of course will cause concern that will probably get reflected in the share price depending on guidance for the third quarter.
Of course if they beat guidance it might be a non-issue, but I'm sure you read/heard they are giving more accurate guidance or perhaps a better way to say it, guidance they will actually hit versus beat.
I don't think they said "more accurate guidance"...On the contrary...they said a broader guidance so Wall Streeters don't take a dump when they miss RECORD earnings by $200 mil....Ugh.
Murdoch had nothing to do with the hacking scandal, which is why no charges have been filed against him.
And it wasn't just the WSJ that reported those numbers, and that's a matter of record.
Quote:
Originally Posted by Apple ][
I'm not surprised. There's a lot of BS and manipulation taking place. AAPL is huge, and is bound to attract all sorts of shady characters.
Having said that, I think that any investor in Apple (not the big firms and the crooks, but the average small time investor), selling their shares of AAPL now is dumb.
Anyone investing any amount of money in the Stock Market should read The Snowball.
Maybe this is only a testbed for nanosecond tradingalgorithms to see what would happen during an all-out attack on US stocks.
These trading algorithms are not even called targeted viruses, like the ones that public utilities, the banking world, server farms, even the pentagon, recently have recognized as digital threats.
It is time that the SEC work out some rules to prevent catastrophic collapse of the stock market, if those nanosecond trading algorithms were to come under the control of REALLY maliscious people.
Isn't that now known as the Amazon Model?
I'm not sure it's illegal.
Trader says to self: It would be more profitable for me to sell my AAPL shares at a loss in order to save an even greater amount of money on the bonds. It's not clear that any laws were broken-especially since they didn't publicize their dumping of the stock.
Unless there's evidence of collusion between brokerages or some sort of insider trading, it's not illegal. As per the current rules, you can use your own trades to drive the price of a stock up or down as much as you want, although I wouldn't call it a great strategy (it can easily backfire).
"Apple's earnings for the winter quarter of 2012... involved an extra, 14th week."
I watched a Bloomberg video where the talking head got it backwards. He said the current quarter had an extra week which made Apple's current quarter earnings worse than reported. I guess it is probably extreme incompetence, but combined with the WSJ's mysterious and now retracted 65 million iPhone expectation for the next quarter in their supply chain rumor article it sure looks like deliberate misinformation.
That was my point. In this case, it looks like a valid trading strategy for them to make more money (because they'd pay out less on the bonds and more than make up for the loss on the stock).
Your first statement is wrong, though. You don't have to prove collusion or insider trading for something to be illegal. One can be charge (and convicted) for posting fales information about a company to drive the stock up or down - even if there's no collusion.
I cam across another interesting article today. It highlights the press' efforts to minimize Apple's accomplishments and maximize its weaknesses. The headline reads:
"Apple is Among the Companies in the Computer Hardware Industry With the Highest Free Cash Flow Per Share"
From that, you'd conclude that they're not #1 - and that there are other companies that are comparable. When you read clear to the bottom of the article, you learn:
AAPL $45.53
HP $3.48
DELL $2.64
Apple isn't just "among the companies with the highest fcf", but they're miles ahead of the competition.
Now, Free Cash Flow is not a very useful metric (share price as a multiple of free cash flow is a much better one), but the article is choosing to talk about FCF, so they should discuss it in an unbiased manner.
BTW, a great article to read