Apple is presently not competing with samsung in mid range and low range smartphones.
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Apple sells at $500 +range only.
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Samsung has long put out a new phone every two weeks. They like to just throw it out there and see what sells. This is not innovation but carpet bombing.
Throwing it out there and seeing what sells seems to be working for them though, as their profits show. You can be as derisive of Samsung's business model as you like, but it is obviously producing very good results and is therefore just as valid as Apple's.
Trying things out to see what works is what drives natural selection. Knock it all you like, but it has stood up to the test of time and is beyond criticism.
In the scheme of things, the total amount of shares sold are not that much. But given his position at the company I am very concerned what this news will do to Apple's share price. And why is his total holdings so small? As an Apple executive he should at least have a more substantial amount of his net worth invested in the company.
Why would Apple be buying back shares like crazy if they didn't believe AAPL would go higher?
Buying back shares makes the price go higher if the company value stays the same. If the company is worth $400b and they have 940m shares, then the share price is $426. If the company is still worth $400b and they have 800m shares, the share price is $500.
If they buy shares low, they can buy back more, which further increases the value of what remains but the very act of trading low is going to affect the perception of what the company is worth so it might take a bit of time for it to go up. If they keep their earnings steady, it will eventually go up because their cash pile will grow again.
Apple makes about $40b profit per year. If they do the same thing for 5 years with zero growth, the value of the company will have to go up because they'd have so much cash - you can't value a company lower than its cash value or the combined value of whatever they buy with it. I doubt they'd accrue over $400b in cash without spending any of it but it's possible. They have about $145b just now and made $125b of it in just the last 5 years. A $60b buyback seems like a lot of money but over the 2 years the buyback happens, they'll make another $80b so their cash reserves are still going to be at least as high as they were before the buyback and the share count will be lower.
Investors will always be looking for high growth and be disappointed if Apple only makes another $40b profit but that still makes them the 1st or 2nd most profitable company in the world, which is hardly something to be disappointed by. I imagine Apple will take on growth opportunities where they present themselves but things like TVs have limited market volume so it's not going to grow earnings massively. Samsung is already the market leader and combined with their smartphones, they make less profit than Apple.
Strategic Analytics, IDC, Gartner should find the market share in different price ranges. The average price for samsung was around $250 and Apple's average price is around $581.
That Samsung average of $250 would include non-smartphones.
We all know that you sell more smartphones in the lower price range which samsung and other android smartphone sellers specialize. Apple sells at $500 +range only. You can sell few BMW's compared to a toyota corolla, nissan maxima or Honda Civic.
Automobile analogies don't work with smartphones.
For one thing, cars are not subsidized by the gas companies. iPhones sell best in countries where they are subsidized, or there are other incentives like trade-ins or loans to make the upfront cost more affordable to the masses.
Apple makes about $40b profit per year. If they do the same thing for 5 years with zero growth, the value of the company will have to go up because they'd have so much cash - you can't value a company lower than its cash value or the combined value of whatever they buy with it. I.
That is absolutely false. There have been a number of times when companies were valued below their cash value.
If a company is losing money, that cash won't last indefinitely.
Comments
Quote:
Originally Posted by sammy100
Apple is presently not competing with samsung in mid range and low range smartphones.
...
Apple sells at $500 +range only.
...
Samsung has long put out a new phone every two weeks. They like to just throw it out there and see what sells. This is not innovation but carpet bombing.
The iP4 sells for $429 in the UK and $450 in the US and it makes up 18% of Apple's phone sales: http://appleinsider.com/articles/13/07/22/iphone-5-accounts-for-half-of-apples-smartphone-sales-iphone-4s-takes-30
Throwing it out there and seeing what sells seems to be working for them though, as their profits show. You can be as derisive of Samsung's business model as you like, but it is obviously producing very good results and is therefore just as valid as Apple's.
Trying things out to see what works is what drives natural selection. Knock it all you like, but it has stood up to the test of time and is beyond criticism.
In the scheme of things, the total amount of shares sold are not that much. But given his position at the company I am very concerned what this news will do to Apple's share price. And why is his total holdings so small? As an Apple executive he should at least have a more substantial amount of his net worth invested in the company.
if you still had your second troll account here, would you have replied to this post with a plus one or something?
Buying back shares makes the price go higher if the company value stays the same. If the company is worth $400b and they have 940m shares, then the share price is $426. If the company is still worth $400b and they have 800m shares, the share price is $500.
If they buy shares low, they can buy back more, which further increases the value of what remains but the very act of trading low is going to affect the perception of what the company is worth so it might take a bit of time for it to go up. If they keep their earnings steady, it will eventually go up because their cash pile will grow again.
Apple makes about $40b profit per year. If they do the same thing for 5 years with zero growth, the value of the company will have to go up because they'd have so much cash - you can't value a company lower than its cash value or the combined value of whatever they buy with it. I doubt they'd accrue over $400b in cash without spending any of it but it's possible. They have about $145b just now and made $125b of it in just the last 5 years. A $60b buyback seems like a lot of money but over the 2 years the buyback happens, they'll make another $80b so their cash reserves are still going to be at least as high as they were before the buyback and the share count will be lower.
Investors will always be looking for high growth and be disappointed if Apple only makes another $40b profit but that still makes them the 1st or 2nd most profitable company in the world, which is hardly something to be disappointed by. I imagine Apple will take on growth opportunities where they present themselves but things like TVs have limited market volume so it's not going to grow earnings massively. Samsung is already the market leader and combined with their smartphones, they make less profit than Apple.
Quote:
Originally Posted by sammy100
Strategic Analytics, IDC, Gartner should find the market share in different price ranges. The average price for samsung was around $250 and Apple's average price is around $581.
That Samsung average of $250 would include non-smartphones.
For smartphones only, their ASP is around $380.
Quote:
We all know that you sell more smartphones in the lower price range which samsung and other android smartphone sellers specialize. Apple sells at $500 +range only. You can sell few BMW's compared to a toyota corolla, nissan maxima or Honda Civic.
Automobile analogies don't work with smartphones.
For one thing, cars are not subsidized by the gas companies. iPhones sell best in countries where they are subsidized, or there are other incentives like trade-ins or loans to make the upfront cost more affordable to the masses.
That is absolutely false. There have been a number of times when companies were valued below their cash value.
If a company is losing money, that cash won't last indefinitely.