6.1 Common shares will tank when they are massively dumped by value investors and institutions.
7.1 Apple will have a perpetual $10 Billion per year leech attached to its neck.
8 When interest rates inevitably rise from their current historical lows, the preferred shares (not being convertible or pegged to anything) will decrease in market value
8.1 Some Wall Street dipshit, holding millions of shares of preferred, will sue Apple try to force them to repurchase the preferred at face value.
6.1 Common shares may drop but not close to $250. Even after taking out the $10 Bil in Preferred Div the Net Income to common shares would be over $30 Bil. Do you seriously think the stock will drop to $200 per share if they stop doing the div to common and move it to preferred? Seriously? They will have close to $200 per share in cash a year from now. Seriously!
7.1 Same leach as the common dividend now. Apple has the right to lower the dividend rate at any time just like with common. Only restriction is that they need to pay the pref shares first.
8 If it decreases in value who cares. If it goes to $230 big deal. You still are netting over $200 in shareholder value
8.1 They can try all they want but they won't win that case against Apple. Its been proven a million times in court.
6.1 This seems to be the leap of faith that is required to support this proposal. Somehow, by separating
a preferred share from a common share, the market will begin to evaluate AAPL on some other basis than
they have been using lately. Apple management is going to conjure a new class of equity by subtraction from
the common equity, and declare it has a certain value, and the market is not going to subtract this made-up
face value on a dollar for dollar basis from the value of the common stock. I don't have the faith.
7.1 If they are so similar, than the smoke-and-mirrors wealth creation must be the main motivation.
8. I'm going to say the people who swallowed this proposal, thinking the shares would be worth $250 would
care. Again, the shareholder values posited are wet dream guesses. They can't be predicted accurately.
8.1 A million? Name three. Recent court decisions have taught me not to be certain about anything, anyway.
First, a serious stock split, while seemingly meaningless, will bring in droves of more investors & the stock will go up quickly. It's a good proven stock marketing tactic. High stock valuation per share is a bad ego thing for those controlling the company. Split ASAP!
Second, a substantial but responsible increase in stock buy back and dividend increase w/out borrowing money is required by shareholders and again good marketing but not the real mover.
Third, and most important, Apple must become a credit card company. Already global, well funded and with credit cards moving to smart phones, Apple is the only company with in house control of the banking, the secure hardware (fingerprint recognition technology that they own) and a more secure closed Eco-system OS they own. This is a "no brainer" and a must that Apple does soon. It would be an immense income stream.
New products? Has everyone forgotten that Ives was there with most of Apple's new products in prototype form when Steve returned from the desert to run Apple? An iWatch coupled with an iPad mini that has an international LTD Phone chip instantly becomes a small iPhone while staying a premium product. The iPad stays in your briefcase or purse yet you can still answer or make a call just like Dick Tracy. Ives will WOW you for awhile then fade into history. Until then Apple will do great.
Couple all of these and the moon is the limit on stock value!
Long Apple. Death to brokerage rules that let funds move the market for personal gain regardless of how well the company is performing.
6.1 Why would value investors/institutions dump the common shares? They could just hold the pref shares and common shares and GET THE EXACT SAME DIVIDEND. Only difference is they would have the option to sell the growth portion (common stock) or value portion (pref stock) at their discretion.
I think you answered your own question. Value investors/institutions want to own value stocks. They would dump the zero-dividend "growth" AAPL common at the first possible moment and use the funds received to buy other "value" stocks. In the case of some mutual funds which are chartered to only own dividend paying stocks, they
would be required to sell, rather than relying on their discretion.
People around here don't seem to know what a bond is.
Sure we do, he's that British guy that goes around drinking martinis and drives a gadget laden Aston Martin, and bangs hot chicks with names like Pussy Galore.
There are no 'taxes' to be paid on loans. If anything, interest payments on loans being tax-deductible means that there is a 'tax shield benefit from debt' for equity holders. (This is, for example, an important source of gains to shareholders from an LBO).
Are you warming up to the idea of borrowing to do a share repurchase?
ABSOLUTELY not! I think taking on debt would be a terribly dumb idea for Apple (although, I should point out that Google took on debt to take advantage of cheap financing a couple of years ago).
I was merely responding to a factual error in charlituna's post.
Third, and most important, Apple must become a credit card company. Already global, well funded and with credit cards moving to smart phones, .... etc etc.
A terrible idea, IMHO. Low-end financial services is just about the worst business that there is (just look at GE and its travails with GE Capital, which nearly made the 100+ year-old company go bankrupt a couple of years ago). Moreover, the credit card business has nothing remotely to do with Apple's core competency.
One more consideration is this will signficantly reduce the market cap. If the stock goes down to $340 then the cap would be only $300 billion. And that is a good thing. One of the reasons for the fall form $700 is because it is very hard if not impossible for the market to support a $700 Billion stock, no matter how good it is. At a mere $300 bil market cap it will be much easier for the market to support its growth to $400 or even $500 bil.
You must have added this part while I was typing. I think you are mistaken about the market cap. All equity must be taken into consideration. You don't get to ignore the preferred equity. If the total of the value of the two classes of shares increases, as you dream, the market cap will increase correspondingly.
6.1 No leap of faith needed. Like I said even with the $10 Bil of Pref Div that will leave over $30 bil of net income for common. They will have almost $200 cash per share in a year. Do you SERIOUSLY think the stock will be worth less than $300 a share? That would be a PE of 3.3 taking out cash. REALLY?
7.1 Issuing common shares is smoke and mirrors too. So is dividends. The bottom line is Apple has a very peculiar problem = they have too much cash, more than they could ever spend effectively. They need to use smoke and mirrors to bring value to the shareholders to unlock that cash. You cannot compare Apple with any other company because there has never been a company in this situation before.
8. In this market who would not buy a share at close to $250 face that gives 4%? Where else can you get anything close to that with a company that has $150 Bil, no debt, and will probably be making $40-$50 bil for the next few years?
8.1 On what basis would they ask for face value? They can simply sell it in the market for that amount. The only way the preferred shares go below $200 on the open market is if Apple is going bankrupt.
6.1 I understand and totally relate to your astonishment. For years the market has been evaluating AAPL based upon factors other than traditional metrics like net income and P/E and net cash and marketable securities. You just can't rely on the market valuing AAPL like other companies. You, Einhorn, and others believe that this proposed ploy will shove the reality into the face of the market and the market will finally get the message. That is the leap of faith to which I refer, and without it the proposal has no appeal.
7.1 The smoke and mirrors is when you subtract $250 from $450 and end up with $405. You claim to have created $205 without doing anything but waving your hands
(see your quote below).
8. Today's market is not the same as it will be in the future. It is good that you realize that you are making assumptions about Apple's future earnings. That is a step in the right direction. Even today there are investments which pay more than 4%. VZ and INTC both have dividends over 4%, just to name two that people might be familiar with.
8.1 They would want face value if it was more than the market value. I think you should study up on the relationship between market interest rates and prices of fixed income paying securities.
I think you answered your own question. Value investors/institutions want to own value stocks. They would dump the zero-dividend "growth" AAPL common at the first possible moment and use the funds received to buy other "value" stocks. In the case of some mutual funds which are chartered to only own dividend paying stocks, they
would be required to sell, rather than relying on their discretion.
So according to you none of these funds bought Apple before they had a dividend?
Having a less cash PE of 3.3 is pretty value oriented
People around here don't seem to know what a bond is.
Sure we do, he's that British guy that goes around drinking martinis and drives a gadget laden Aston Martin, and bangs hot chicks with names like Pussy Galore.
There are no 'taxes' to be paid on loans. If anything, interest payments on loans being tax-deductible means that there is a 'tax shield benefit from debt' for equity holders. (This is, for example, an important source of gains to shareholders from an LBO).
Are you warming up to the idea of borrowing to do a share repurchase?
ABSOLUTELY not! I think taking on debt would be a terribly dumb idea for Apple (although, I should point out that Google took on debt to take advantage of cheap financing a couple of years ago).
I was merely responding to a factual error in charlituna's post.
OK. You persuaded me. If Google is doing it, I don't want Apple to do it.
6.1 One of the main reasons why Apple always had a realively low PE is because they are so unfriendly to the investor. Having this plan will show they care about investor value.
7.1 Things can be worth more when they are separated or combined. This is an instance when a division of a product is worth more.
6.1: Abject nonsense. Show us one shred of evidence that makes a connection between companies "unfriendly to investors" and PE ratio. Moreover, the assertion that a stock that has risen 6000% (that's right, look it up) in the past ten years (and 12,500% since inception) is investor-unfriendly is horse manure.
7.1: You have to argue why, instead of just making another cheap assertion.
First, a serious stock split, while seemingly meaningless, will bring in droves of more investors & the stock will go up quickly. It's a good proven stock marketing tactic. High stock valuation per share is a bad ego thing for those controlling the company. Split ASAP!
Second, a substantial but responsible increase in stock buy back and dividend increase w/out borrowing money is required by shareholders and again good marketing but not the real mover.
Third, and most important, Apple must become a credit card company. Already global, well funded and with credit cards moving to smart phones, Apple is the only company with in house control of the banking, the secure hardware (fingerprint recognition technology that they own) and a more secure closed Eco-system OS they own. This is a "no brainer" and a must that Apple does soon. It would be an immense income stream.
New products? Has everyone forgotten that Ives was there with most of Apple's new products in prototype form when Steve returned from the desert to run Apple? An iWatch coupled with an iPad mini that has an international LTD Phone chip instantly becomes a small iPhone while staying a premium product. The iPad stays in your briefcase or purse yet you can still answer or make a call just like Dick Tracy.
Ives will WOW you for awhile then fade into history. Until then Apple will do great.
Couple all of these and the moon is the limit on stock value!
Long Apple. Death to brokerage rules that let funds move the market for personal gain regardless of how well the company is performing.
OMG, did you say a stock split. Now why didn't I think of that?
6.1: Abject nonsense. Show us one shred of evidence that makes a connection between companies "unfriendly to investors" and PE ratio. Moreover, the assertion that a stock that has risen 6000% (that's right, look it up) in the past ten years (and 12,500% since inception) is investor-unfriendly is horse manure.
7.1: You have to argue why, instead of just making another cheap assertion.
6.1 Its pretty self evident. Even at $700 Apple's PE was quite low. The stock has risen 6000% but so has Apples net income.
Examples of Apple's unfriendlyness:
Not debunking hurtful 'reports' and 'rumors' of product demand cuts. If Tim Cook debunked those reports in Dec/Jan the stock would not be as low now. He debunked them in the conference call but it was too late.
Tim Cook saying he does not care about revenue and net income. He just worries about making great products. Seriously. Any shorty can float a rumor and some ridiculous media website will publish it and Apple does NOTHING. No matter how false and unfounded these reports may be. Bottom line is Apple does not defend their stock.
Uh.... did you understand the question? I asked, "Show us one shred of evidence that makes a connection between companies "unfriendly to investors" and PE ratio" And your answer is it's 'self-evident'? To whom -- just you?
Also, does Tim Cook have to respond to every rumor on every news channel and every blog from every source and every talking head? Quite apart from the task of deciding which ones he should respond to, do you seriously think he'll have time to run a $450B market cap company?!
Because value/income investors don't want to deal with the volitile nature of APPL common. By breaking out the dividend portion of the stock it gives them the stability and larger div% they are looking for.
Really? Why not payout 100% of earnings as dividends then?
Because value/income investors don't want to deal with the volitile nature of APPL common. By breaking out the dividend portion of the stock it gives them the stability and larger div% they are looking for.
Really? Why not payout 100% of earnings as dividends then?
I was going to suggest assigning a face value of $1000 per share to the preferred and then, even if the common goes to .000001, we will still unlock more value, but I didn't because I thought it might sound petulant.
Comments
6.1 This seems to be the leap of faith that is required to support this proposal. Somehow, by separating
a preferred share from a common share, the market will begin to evaluate AAPL on some other basis than
they have been using lately. Apple management is going to conjure a new class of equity by subtraction from
the common equity, and declare it has a certain value, and the market is not going to subtract this made-up
face value on a dollar for dollar basis from the value of the common stock. I don't have the faith.
7.1 If they are so similar, than the smoke-and-mirrors wealth creation must be the main motivation.
8. I'm going to say the people who swallowed this proposal, thinking the shares would be worth $250 would
care. Again, the shareholder values posited are wet dream guesses. They can't be predicted accurately.
8.1 A million? Name three. Recent court decisions have taught me not to be certain about anything, anyway.
Second, a substantial but responsible increase in stock buy back and dividend increase w/out borrowing money is required by shareholders and again good marketing but not the real mover.
Third, and most important, Apple must become a credit card company. Already global, well funded and with credit cards moving to smart phones, Apple is the only company with in house control of the banking, the secure hardware (fingerprint recognition technology that they own) and a more secure closed Eco-system OS they own. This is a "no brainer" and a must that Apple does soon. It would be an immense income stream.
New products? Has everyone forgotten that Ives was there with most of Apple's new products in prototype form when Steve returned from the desert to run Apple? An iWatch coupled with an iPad mini that has an international LTD Phone chip instantly becomes a small iPhone while staying a premium product. The iPad stays in your briefcase or purse yet you can still answer or make a call just like Dick Tracy.
Ives will WOW you for awhile then fade into history. Until then Apple will do great.
Couple all of these and the moon is the limit on stock value!
Long Apple. Death to brokerage rules that let funds move the market for personal gain regardless of how well the company is performing.
For some reason it's not as attractive as we think it should. They love the companies in debt.
I think you answered your own question. Value investors/institutions want to own value stocks. They would dump the zero-dividend "growth" AAPL common at the first possible moment and use the funds received to buy other "value" stocks. In the case of some mutual funds which are chartered to only own dividend paying stocks, they
would be required to sell, rather than relying on their discretion.
Sure we do, he's that British guy that goes around drinking martinis and drives a gadget laden Aston Martin, and bangs hot chicks with names like Pussy Galore.
Quote:
Originally Posted by quinney
Quote:
Originally Posted by anantksundaram
There are no 'taxes' to be paid on loans. If anything, interest payments on loans being tax-deductible means that there is a 'tax shield benefit from debt' for equity holders. (This is, for example, an important source of gains to shareholders from an LBO).
Are you warming up to the idea of borrowing to do a share repurchase?
ABSOLUTELY not! I think taking on debt would be a terribly dumb idea for Apple (although, I should point out that Google took on debt to take advantage of cheap financing a couple of years ago).
I was merely responding to a factual error in charlituna's post.
Quote:
Originally Posted by mrphil49
Third, and most important, Apple must become a credit card company. Already global, well funded and with credit cards moving to smart phones, .... etc etc.
A terrible idea, IMHO. Low-end financial services is just about the worst business that there is (just look at GE and its travails with GE Capital, which nearly made the 100+ year-old company go bankrupt a couple of years ago). Moreover, the credit card business has nothing remotely to do with Apple's core competency.
Leave that to Capital One and Bank of America.
You must have added this part while I was typing. I think you are mistaken about the market cap. All equity must be taken into consideration. You don't get to ignore the preferred equity. If the total of the value of the two classes of shares increases, as you dream, the market cap will increase correspondingly.
6.1 I understand and totally relate to your astonishment. For years the market has been evaluating AAPL based upon factors other than traditional metrics like net income and P/E and net cash and marketable securities. You just can't rely on the market valuing AAPL like other companies. You, Einhorn, and others believe that this proposed ploy will shove the reality into the face of the market and the market will finally get the message. That is the leap of faith to which I refer, and without it the proposal has no appeal.
7.1 The smoke and mirrors is when you subtract $250 from $450 and end up with $405. You claim to have created $205 without doing anything but waving your hands
(see your quote below).
8. Today's market is not the same as it will be in the future. It is good that you realize that you are making assumptions about Apple's future earnings. That is a step in the right direction. Even today there are investments which pay more than 4%. VZ and INTC both have dividends over 4%, just to name two that people might be familiar with.
8.1 They would want face value if it was more than the market value. I think you should study up on the relationship between market interest rates and prices of fixed income paying securities.
That is a little bit like what I said.
I stand corrected.
OK. You persuaded me. If Google is doing it, I don't want Apple to do it.
Why?
Quote:
Originally Posted by sog35
6.1 One of the main reasons why Apple always had a realively low PE is because they are so unfriendly to the investor. Having this plan will show they care about investor value.
7.1 Things can be worth more when they are separated or combined. This is an instance when a division of a product is worth more.
6.1: Abject nonsense. Show us one shred of evidence that makes a connection between companies "unfriendly to investors" and PE ratio. Moreover, the assertion that a stock that has risen 6000% (that's right, look it up) in the past ten years (and 12,500% since inception) is investor-unfriendly is horse manure.
7.1: You have to argue why, instead of just making another cheap assertion.
Originally Posted by anantksundaram
6.1: Abject nonsense.
I'm not paying attention, so don't take this as agreeing, but I saw this and it made me smile.
Quote:
Originally Posted by mrphil49
First, a serious stock split, while seemingly meaningless, will bring in droves of more investors & the stock will go up quickly. It's a good proven stock marketing tactic. High stock valuation per share is a bad ego thing for those controlling the company. Split ASAP!
Second, a substantial but responsible increase in stock buy back and dividend increase w/out borrowing money is required by shareholders and again good marketing but not the real mover.
Third, and most important, Apple must become a credit card company. Already global, well funded and with credit cards moving to smart phones, Apple is the only company with in house control of the banking, the secure hardware (fingerprint recognition technology that they own) and a more secure closed Eco-system OS they own. This is a "no brainer" and a must that Apple does soon. It would be an immense income stream.
New products? Has everyone forgotten that Ives was there with most of Apple's new products in prototype form when Steve returned from the desert to run Apple? An iWatch coupled with an iPad mini that has an international LTD Phone chip instantly becomes a small iPhone while staying a premium product. The iPad stays in your briefcase or purse yet you can still answer or make a call just like Dick Tracy.
Ives will WOW you for awhile then fade into history. Until then Apple will do great.
Couple all of these and the moon is the limit on stock value!
Long Apple. Death to brokerage rules that let funds move the market for personal gain regardless of how well the company is performing.
OMG, did you say a stock split. Now why didn't I think of that?
Quote:
Originally Posted by sog35
Quote:
Originally Posted by anantksundaram
6.1: Abject nonsense. Show us one shred of evidence that makes a connection between companies "unfriendly to investors" and PE ratio. Moreover, the assertion that a stock that has risen 6000% (that's right, look it up) in the past ten years (and 12,500% since inception) is investor-unfriendly is horse manure.
7.1: You have to argue why, instead of just making another cheap assertion.
6.1 Its pretty self evident. Even at $700 Apple's PE was quite low. The stock has risen 6000% but so has Apples net income.
Examples of Apple's unfriendlyness:
Not debunking hurtful 'reports' and 'rumors' of product demand cuts. If Tim Cook debunked those reports in Dec/Jan the stock would not be as low now. He debunked them in the conference call but it was too late.
Tim Cook saying he does not care about revenue and net income. He just worries about making great products. Seriously. Any shorty can float a rumor and some ridiculous media website will publish it and Apple does NOTHING. No matter how false and unfounded these reports may be. Bottom line is Apple does not defend their stock.
Uh.... did you understand the question? I asked, "Show us one shred of evidence that makes a connection between companies "unfriendly to investors" and PE ratio" And your answer is it's 'self-evident'? To whom -- just you?
Also, does Tim Cook have to respond to every rumor on every news channel and every blog from every source and every talking head? Quite apart from the task of deciding which ones he should respond to, do you seriously think he'll have time to run a $450B market cap company?!
Please stop.
Quote:
Originally Posted by sog35
Because value/income investors don't want to deal with the volitile nature of APPL common. By breaking out the dividend portion of the stock it gives them the stability and larger div% they are looking for.
Really? Why not payout 100% of earnings as dividends then?
I was going to suggest assigning a face value of $1000 per share to the preferred and then, even if the common goes to .000001, we will still unlock more value, but I didn't because I thought it might sound petulant.