2º -miss expectations for the quarter-let the round of negative rumors continue-let the owner of WSJ keep spreading FUD and the stock collapses. Then, Apple has enough money to go private.
A stock buyback has a permanent effect of reducing the number of shares. No matter what the earnings, they are divided by a smaller number of shares.
A stock buyback has no effect unless the company cancels the shares. Apple stated its intent with the buyback was to obtain shares for employee compensation, not to cancel them. The opposite is also true: a company can always issue new shares, which dilutes the value of current shares.
A stock buyback has no effect unless the company cancels the shares. Apple stated its intent with the buyback was to obtain shares for employee compensation, not to cancel them. The opposite is also true: a company can always issue new shares, which dilutes the value of current shares.
This is not true. Treasury stock cannot be counted as part of the calculation number of shares outstanding. A company cannot "own itself." If and when the shares are given to employees, that would be like a new share "issue."
A stock buyback has no effect unless the company cancels the shares. Apple stated its intent with the buyback was to obtain shares for employee compensation, not to cancel them. The opposite is also true: a company can always issue new shares, which dilutes the value of current shares.
Anantksundaram is correct. Treasury shares do not affect outstanding shares or P/E. So if they buy back 10% of the shares, the EPS immediately goes up by 11.1%.
They could, of course, give some shares out later and reduce the EPS, but they can do that anyway, so that doesn't count against the buyback.
Apple is providing the following guidance for its fiscal 2013 second quarter:
• revenue between $41 billion and $43 billion
• gross margin between 37.5 percent and 38.5 percent
• operating expenses between $3.8 billion and $3.9 billion
• other income/(expense) of $350 million
• tax rate of 26%
Lower revenue on top of lower margins = negative YoY EPS growth in Q2.
Lower revenue!? That is clueless.
No pun intended, but I truly wish you'd have the basic knowledge to compare apples to apples. In other words, guidance for 2nd fiscal quarter to guidance for 2nd fiscal quarter (not silly, pointless comparisons like 2nd quarter to 1st quarter, or guidance to actuals).
I'm an AAPL long and while I am grateful for the quarterly cash, I'd much rather Apple sink the money into some blue-sky, long-range technology projects. Where's my flying car or personal robot? Why is home automation still so complicated and unpopular?
Here is why a larger dividend will help Apple stock in the long run. It will attract value/income investors if the return is 3.5%-4.0%. These types of investors will not bail out on Apple after a few rumors like growth investors. If they can sell 100-200M shares to value investors at 450-475 that will provide a stable base so the stock does not fluctuate so much.
Your evidence?
Oh, and btw, perhaps you'd like to explain why the stock has dropped 40% since they started offering dividends. How is that "attract value/income investors" working out for you?
A smart investor knows that the dividend doesn't change the value of the company. Well, technically, it reduces the value of the company because it has less cash after paying a dividend. Plus, you have to pay taxes on the dividends you receive.
A share buyback makes far more sense - Apple should never have caved in to the people whining for a dividend. At least they stood up to the ones demanding preferred shares.
Here is why a larger dividend will help Apple stock in the long run. It will attract value/income investors if the return is 3.5%-4.0%. These types of investors will not bail out on Apple after a few rumors like growth investors. If they can sell 100-200M shares to value investors at 450-475 that will provide a stable base so the stock does not fluctuate so much.
This has to be a decision made by Apple though so what does Apple gain by doing this? Is Apple in need of more people telling them how to run the company? After everything that's happened, wouldn't they have a stronger incentive to get rid of as many outside investors as possible?
They don't need cash, they don't need more armchair management, they don't need to maintain the constant barrage of criticism so it seems like staying the course and buying back shares would be their best plan of action (edit: as noted above). If outside investors and staff are genuinely long term, it won't matter because it will right itself in due time.
It might slowly put an end to the purposefully negative reports but they seem to be running out of FUD anyway.
Nothing on Google News about this. I don't understand how increasing the dividend is supposed to affect investor behavior. AAPL stock typically changes by $5 per day. How would a quarterly dividend of $5 change investor behavior? I think this is all just Wall Street pundits foaming at the mouth.
You should read up on the difference between mean and standard deviation...
As a non-investor (in anything) could someone tell me why Apple needs to worry about the stock price? I mean it's not as if they need the cash, so if the stock crashed to $10 then how would that affect Apple?
Microsoft's stock hasn't moved in ten years, and the effect on the company appears to be zilch. In fact, no one seems to give them any grief about it at all, so they're free to do whatever it is they're doing without any distraction.
Apple is a public company, and thus is owned by the shareholders. Shareholders buy stock in order to make money, so they can pay for their kids orthodontics, houses, and so on. Any management which does not help them achieve these goals is incompetent and should (and will) get fired.
Serious question: Why the hell would Apple want to turn around APPL stock? For what, exactly? Aren't things perfect (for Apple) as they are? Isn't Apple the most lucrative company in the world (right now)? Why would they change something related to their stock?
Wouldn't they want the exact opposite? Since they don't need anyone's help/money, wouldn't be better for shares to fall so they can buy enough to go private?
If they wanted their asses sued off by their shareholders and be put in jail for fraud by the government, that's exactly what they would.
But yes, I would like that. People that understand 0 about how Apple operates (and has been doing since 98) shouldn't been allowed to own a single share of APPL.
There's other ways to pay/motivate executives in Apple. Being the ones changing the world is one of them.
Average costumers? They already do that, by providing the best products.
Shareholders? For what?
Shareholders? Because they own the company. Suppose you hired a maid, and she redecorated your house the way SHE liked it. Do you think that would be acceptable?
Did you enjoy the $270 bath you took in the last 6 months due to missed executions on Main Street and miscommunications with Wall Street? I didn't and I've been invested un AAPL a lot longer than you.
Shareholders? Because they own the company. Suppose you hired a maid, and she redecorated your house the way SHE liked it. Do you think that would be acceptable?
I think some people might assume you mean the maid is the shareholder. I gather you are suggesting Tim is the maid looking after the house that shareholders have paid for. The trouble with that analogy is that the house owner has to make a sacrifice too and take responsibility for the upkeep of the home. Financial investment is a very euphemistic term for what is effectively a button press to transfer a money sequence with the intention of other people raising its value. In that respect it's closer to gambling because there's a disconnect between the value generation and the investment and the term 'investing in' can be replaced with 'betting on'.
The other major factor in that is the proportion of ownership. People who own 0.0001% of the company often use analogies that equate to 100% ownership and express opinions under the assumption of the latter. Tim Cook himself is one of the largest individual shareholders in Apple so by all rights his decisions should outweigh those of minority stockholders.
I think some people might assume you mean the maid is the shareholder. I gather you are suggesting Tim is the maid looking after the house that shareholders have paid for. The trouble with that analogy is that the house owner has to make a sacrifice too and take responsibility for the upkeep of the home. Financial investment is a very euphemistic term for what is effectively a button press to transfer a money sequence with the intention of other people raising its value. In that respect it's closer to gambling because there's a disconnect between the value generation and the investment and the term 'investing in' can be replaced with 'betting on'.
The other major factor in that is the proportion of ownership. People who own 0.0001% of the company often use analogies that equate to 100% ownership and express opinions under the assumption of the latter. Tim Cook himself is one of the largest individual shareholders in Apple so by all rights his decisions should outweigh those of minority stockholders.
It goes beyond what you are stating.
If one wants to use this analogy (as bad as it is), one would have to say that the homeowner told the maid that she has full authority to redecorate the house any way she wishes and that they will remove her if they don't like it.
Shareholders do NOT have decision making authority for a company. They give that authority to the board of directors - which delegates much of it to the management team. The shareholder's sole rights are to remove the BOD if they don't like them or to vote on some very specific proxies that management chooses to present to them (or as are required by the bylaws).
In another thread, someone cited a Supreme Court case that said that the BOD is obligated to do what is best for the company, not individual shareholders. While the goals are shared 99% of the time, the board does not have to follow shareholder wishes in the cases where the goals diverge (again, unless required by the bylaws and or decided by a proxy vote).
I think some people might assume you mean the maid is the shareholder. I gather you are suggesting Tim is the maid looking after the house that shareholders have paid for. The trouble with that analogy is that the house owner has to make a sacrifice too and take responsibility for the upkeep of the home. Financial investment is a very euphemistic term for what is effectively a button press to transfer a money sequence with the intention of other people raising its value. In that respect it's closer to gambling because there's a disconnect between the value generation and the investment and the term 'investing in' can be replaced with 'betting on'.
The other major factor in that is the proportion of ownership. People who own 0.0001% of the company often use analogies that equate to 100% ownership and express opinions under the assumption of the latter. Tim Cook himself is one of the largest individual shareholders in Apple so by all rights his decisions should outweigh those of minority stockholders.
"Euphemistic term"? If this was so easy, why would anyone go public? Answer: because doing so enables the company to exist and to grow, and make money for the original stakeholders (in the case of Apple, mostly Kleiner, Perkins, who also appointed the first chairman of the board (Mike Markkula), but also Jobs and Wozniak). As for people who own 0.0001% of the company: major decisions are made by a vote of SHARES (not people), so, very unfortunately, in the case of Apple the decisions of the board are rubber-stamped by the likes of Vanguard (which owns several percent of the company). The reason they rubberstamp is not that they necessarily think the decisions are great, but rather that Vanguard (and other passive major holders) has the philosophy that if they don't like what the management is doing, they will just sell the shares, instead of getting involved in a business they don't understand. The reason for the Apple share price drop is not the manipulation by some hedge fund cabal, but because the major holders HAVE been selling the shares (not all of them, but enough).
As for Tim Cook, you have no clue what you are talking about. Art Levinson (the chairman of the board) has 162K shares, Al Gore has 61K shares. Since non-insiders do not need to disclose their holdings, I don't know if some real estate developer in Denver has more. Tim has 13K shares (this, per Yahoo finance, which gets the info from SEC filings). I am guessing that MANY reasonably wealthy people have more apple shares than Tim (13K shares is only about $6MM at today's price). Tim dumped $86 MILLION worth of Apple stock about a year ago, when AAPL was trading at $550. Even Tim's underling Federighi has more stock than Tim.
If one wants to use this analogy (as bad as it is), one would have to say that the homeowner told the maid that she has full authority to redecorate the house any way she wishes and that they will remove her if they don't like it.
Shareholders do NOT have decision making authority for a company. They give that authority to the board of directors - which delegates much of it to the management team. The shareholder's sole rights are to remove the BOD if they don't like them or to vote on some very specific proxies that management chooses to present to them (or as are required by the bylaws).
In another thread, someone cited a Supreme Court case that said that the BOD is obligated to do what is best for the company, not individual shareholders. While the goals are shared 99% of the time, the board does not have to follow shareholder wishes in the cases where the goals diverge (again, unless required by the bylaws and or decided by a proxy vote).
Why don't you consult Carl Icahn on what rights shareholders do or do not have? He seems to be using his quite consistently (Apple is just too big for even as big a fish as Icahn).
Comments
Quote:
Originally Posted by herbapou
Quote:
Originally Posted by anantksundaram
What is your logic for why Apple needs to "bring the income funds"?
1. Apple is shiftting from growth ownership to value ownership.
You don't even the see the circularity I referred to, do you?
'Nuff said.
Quote:
Originally Posted by pedromartins
1º the link did not work.
2º -miss expectations for the quarter-let the round of negative rumors continue-let the owner of WSJ keep spreading FUD and the stock collapses. Then, Apple has enough money to go private.
Sorry about that. Here's another one, with the same story: http://www.reuters.com/article/2013/03/11/us-dell-icahn-idUSBRE92A0FV20130311
(If that does not work either, just search for "Dell Icahn").
Your second point still makes no sense whatsoever.
A stock buyback has no effect unless the company cancels the shares. Apple stated its intent with the buyback was to obtain shares for employee compensation, not to cancel them. The opposite is also true: a company can always issue new shares, which dilutes the value of current shares.
Quote:
Originally Posted by pedromartins
That only happens when they introduce new products, like the ton of products they introduced.
Margins will grow, like they always do. But even if growth was negative, the stock price still is too low based on any reasonable metric.
I hope that margins will improve. The problem is Apple did'nt guide an improvement in margins, Apple actually guided even lower margins in fiscal Q2.
http://www.apple.com/pr/library/2013/01/23Apple-Reports-Record-Results.html
Quote:
Apple is providing the following guidance for its fiscal 2013 second quarter:
• revenue between $41 billion and $43 billion
• gross margin between 37.5 percent and 38.5 percent
• operating expenses between $3.8 billion and $3.9 billion
• other income/(expense) of $350 million
• tax rate of 26%
Lower revenue on top of lower margins = negative YoY EPS growth in Q2.
Quote:
Originally Posted by msuberly
A stock buyback has no effect unless the company cancels the shares. Apple stated its intent with the buyback was to obtain shares for employee compensation, not to cancel them. The opposite is also true: a company can always issue new shares, which dilutes the value of current shares.
This is not true. Treasury stock cannot be counted as part of the calculation number of shares outstanding. A company cannot "own itself." If and when the shares are given to employees, that would be like a new share "issue."
Anantksundaram is correct. Treasury shares do not affect outstanding shares or P/E. So if they buy back 10% of the shares, the EPS immediately goes up by 11.1%.
They could, of course, give some shares out later and reduce the EPS, but they can do that anyway, so that doesn't count against the buyback.
Quote:
Originally Posted by herbapou
Quote:
Apple is providing the following guidance for its fiscal 2013 second quarter:
• revenue between $41 billion and $43 billion
• gross margin between 37.5 percent and 38.5 percent
• operating expenses between $3.8 billion and $3.9 billion
• other income/(expense) of $350 million
• tax rate of 26%
Lower revenue on top of lower margins = negative YoY EPS growth in Q2.
Lower revenue!? That is clueless.
No pun intended, but I truly wish you'd have the basic knowledge to compare apples to apples. In other words, guidance for 2nd fiscal quarter to guidance for 2nd fiscal quarter (not silly, pointless comparisons like 2nd quarter to 1st quarter, or guidance to actuals).
Apple's guidance in January 2012 for its 2Q12 was $32.5B in revenue (they did not provide gross margin or operating margin guidance last year, only revenue and EPS; http://www.apple.com/pr/library/2012/01/24Apple-Reports-First-Quarter-Results.html). That is a 26% - 32% increase for 2013 over last year's (2012) guidance.
Stop the FUD. Please.
Your evidence?
Oh, and btw, perhaps you'd like to explain why the stock has dropped 40% since they started offering dividends. How is that "attract value/income investors" working out for you?
A smart investor knows that the dividend doesn't change the value of the company. Well, technically, it reduces the value of the company because it has less cash after paying a dividend. Plus, you have to pay taxes on the dividends you receive.
A share buyback makes far more sense - Apple should never have caved in to the people whining for a dividend. At least they stood up to the ones demanding preferred shares.
This has to be a decision made by Apple though so what does Apple gain by doing this? Is Apple in need of more people telling them how to run the company? After everything that's happened, wouldn't they have a stronger incentive to get rid of as many outside investors as possible?
They don't need cash, they don't need more armchair management, they don't need to maintain the constant barrage of criticism so it seems like staying the course and buying back shares would be their best plan of action (edit: as noted above). If outside investors and staff are genuinely long term, it won't matter because it will right itself in due time.
It might slowly put an end to the purposefully negative reports but they seem to be running out of FUD anyway.
Quote:
Originally Posted by NormM
Nothing on Google News about this. I don't understand how increasing the dividend is supposed to affect investor behavior. AAPL stock typically changes by $5 per day. How would a quarterly dividend of $5 change investor behavior? I think this is all just Wall Street pundits foaming at the mouth.
You should read up on the difference between mean and standard deviation...
Quote:
Originally Posted by addicted44
Agreed. Dividend is nothing but losing shareholders money (because of double taxation, and transaction costs).
Apple should buy back shares, because they are heavily undervalued.
. Maybe they don't agree with you about the valuation?
Quote:
Originally Posted by Rayz
As a non-investor (in anything) could someone tell me why Apple needs to worry about the stock price? I mean it's not as if they need the cash, so if the stock crashed to $10 then how would that affect Apple?
Microsoft's stock hasn't moved in ten years, and the effect on the company appears to be zilch. In fact, no one seems to give them any grief about it at all, so they're free to do whatever it is they're doing without any distraction.
Apple is a public company, and thus is owned by the shareholders. Shareholders buy stock in order to make money, so they can pay for their kids orthodontics, houses, and so on. Any management which does not help them achieve these goals is incompetent and should (and will) get fired.
Quote:
Originally Posted by pedromartins
Serious question: Why the hell would Apple want to turn around APPL stock? For what, exactly? Aren't things perfect (for Apple) as they are? Isn't Apple the most lucrative company in the world (right now)? Why would they change something related to their stock?
Wouldn't they want the exact opposite? Since they don't need anyone's help/money, wouldn't be better for shares to fall so they can buy enough to go private?
If they wanted their asses sued off by their shareholders and be put in jail for fraud by the government, that's exactly what they would.
Quote:
Originally Posted by pedromartins
My questions were clear.
But yes, I would like that. People that understand 0 about how Apple operates (and has been doing since 98) shouldn't been allowed to own a single share of APPL.
There's other ways to pay/motivate executives in Apple. Being the ones changing the world is one of them.
Average costumers? They already do that, by providing the best products.
Shareholders? For what?
Shareholders? Because they own the company. Suppose you hired a maid, and she redecorated your house the way SHE liked it. Do you think that would be acceptable?
Quote:
Originally Posted by MJ Web
Did you enjoy the $270 bath you took in the last 6 months due to missed executions on Main Street and miscommunications with Wall Street? I didn't and I've been invested un AAPL a lot longer than you.
They tried to execute someone and missed?
I think some people might assume you mean the maid is the shareholder. I gather you are suggesting Tim is the maid looking after the house that shareholders have paid for. The trouble with that analogy is that the house owner has to make a sacrifice too and take responsibility for the upkeep of the home. Financial investment is a very euphemistic term for what is effectively a button press to transfer a money sequence with the intention of other people raising its value. In that respect it's closer to gambling because there's a disconnect between the value generation and the investment and the term 'investing in' can be replaced with 'betting on'.
The other major factor in that is the proportion of ownership. People who own 0.0001% of the company often use analogies that equate to 100% ownership and express opinions under the assumption of the latter. Tim Cook himself is one of the largest individual shareholders in Apple so by all rights his decisions should outweigh those of minority stockholders.
It goes beyond what you are stating.
If one wants to use this analogy (as bad as it is), one would have to say that the homeowner told the maid that she has full authority to redecorate the house any way she wishes and that they will remove her if they don't like it.
Shareholders do NOT have decision making authority for a company. They give that authority to the board of directors - which delegates much of it to the management team. The shareholder's sole rights are to remove the BOD if they don't like them or to vote on some very specific proxies that management chooses to present to them (or as are required by the bylaws).
In another thread, someone cited a Supreme Court case that said that the BOD is obligated to do what is best for the company, not individual shareholders. While the goals are shared 99% of the time, the board does not have to follow shareholder wishes in the cases where the goals diverge (again, unless required by the bylaws and or decided by a proxy vote).
Quote:
Originally Posted by Marvin
I think some people might assume you mean the maid is the shareholder. I gather you are suggesting Tim is the maid looking after the house that shareholders have paid for. The trouble with that analogy is that the house owner has to make a sacrifice too and take responsibility for the upkeep of the home. Financial investment is a very euphemistic term for what is effectively a button press to transfer a money sequence with the intention of other people raising its value. In that respect it's closer to gambling because there's a disconnect between the value generation and the investment and the term 'investing in' can be replaced with 'betting on'.
The other major factor in that is the proportion of ownership. People who own 0.0001% of the company often use analogies that equate to 100% ownership and express opinions under the assumption of the latter. Tim Cook himself is one of the largest individual shareholders in Apple so by all rights his decisions should outweigh those of minority stockholders.
"Euphemistic term"? If this was so easy, why would anyone go public? Answer: because doing so enables the company to exist and to grow, and make money for the original stakeholders (in the case of Apple, mostly Kleiner, Perkins, who also appointed the first chairman of the board (Mike Markkula), but also Jobs and Wozniak). As for people who own 0.0001% of the company: major decisions are made by a vote of SHARES (not people), so, very unfortunately, in the case of Apple the decisions of the board are rubber-stamped by the likes of Vanguard (which owns several percent of the company). The reason they rubberstamp is not that they necessarily think the decisions are great, but rather that Vanguard (and other passive major holders) has the philosophy that if they don't like what the management is doing, they will just sell the shares, instead of getting involved in a business they don't understand. The reason for the Apple share price drop is not the manipulation by some hedge fund cabal, but because the major holders HAVE been selling the shares (not all of them, but enough).
As for Tim Cook, you have no clue what you are talking about. Art Levinson (the chairman of the board) has 162K shares, Al Gore has 61K shares. Since non-insiders do not need to disclose their holdings, I don't know if some real estate developer in Denver has more. Tim has 13K shares (this, per Yahoo finance, which gets the info from SEC filings). I am guessing that MANY reasonably wealthy people have more apple shares than Tim (13K shares is only about $6MM at today's price). Tim dumped $86 MILLION worth of Apple stock about a year ago, when AAPL was trading at $550. Even Tim's underling Federighi has more stock than Tim.
Quote:
Originally Posted by jragosta
It goes beyond what you are stating.
If one wants to use this analogy (as bad as it is), one would have to say that the homeowner told the maid that she has full authority to redecorate the house any way she wishes and that they will remove her if they don't like it.
Shareholders do NOT have decision making authority for a company. They give that authority to the board of directors - which delegates much of it to the management team. The shareholder's sole rights are to remove the BOD if they don't like them or to vote on some very specific proxies that management chooses to present to them (or as are required by the bylaws).
In another thread, someone cited a Supreme Court case that said that the BOD is obligated to do what is best for the company, not individual shareholders. While the goals are shared 99% of the time, the board does not have to follow shareholder wishes in the cases where the goals diverge (again, unless required by the bylaws and or decided by a proxy vote).
Why don't you consult Carl Icahn on what rights shareholders do or do not have? He seems to be using his quite consistently (Apple is just too big for even as big a fish as Icahn).