Apple, Inc. to distribute another $2.77 billion in dividends to shareholders Thursday

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  • Reply 21 of 25

    Quote:

    Originally Posted by SpamSandwich View Post





    If true, I was not aware there was such a distinction. Thanks.


     


    It is true http://www.investopedia.com/ask/answers/05/retiredstock.asp


     


    Buying back does not strengthen the individual share position as there is still the same amount of shares, although less for the market to buy/sell so there may be an initial increase in share price due to supply and demand, however, the company can resell those shares anytime, or give them away. If you retire, or cancel, the shares, you are removing them permanently from circulation, thus decreasing the overall number of shares available. 


     


    When you retire shares, you increase the remaining share value as there are less shares available overall, just as issuing more shares would dilute your holdings. 

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  • Reply 22 of 25
    jragostajragosta Posts: 10,473member
    It is true http://www.investopedia.com/ask/answers/05/retiredstock.asp

    Buying back does not strengthen the individual share position as there is still the same amount of shares, although less for the market to buy/sell so there may be an initial increase in share price due to supply and demand, however, the company can resell those shares anytime, or give them away. If you retire, or cancel, the shares, you are removing them permanently from circulation, thus decreasing the overall number of shares available. 

    When you retire shares, you increase the remaining share value as there are less shares available overall, just as issuing more shares would dilute your holdings. 

    That is incorrect. EPS is based on the number of shares active in the market. When a company buys back its own shares, they are no longer used in calculating EPS. Only outstanding shares are used in EPS calculations. The number of shares of Apple stock outstanding is down significantly since the peak earlier this year.

    The only real difference between buying shares back and holding them vs buying shares back and retiring them is that you can't do anything with them after they're retired. Since Apple is buying them back and holding them, they could distribute them to employees via stock options or grants or they could re-sell them at a later date (with board approval). Apple has always had more shares than the number of outstanding shares - because they needed to have some shares to give to employees and board members.
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  • Reply 23 of 25

    Quote:

    Originally Posted by MacHarry de View Post



    @sessamoid: Apples innovatio is not driven by money nor by any cash position. Apple has got the smartest brains and PEOPLE MATTER, not monney. Right. Microsoft has all the top people as well but they don't have a leader who can advise them to do the things in the right way with the right target.



    This differs Apple from Microsoft. Apple has some bright heads, living in the Apple DNA, which ist most important - the DNA, set by Steve, executed by Tim.



    This gives reason for a good future that is not comparable with Microsoft.


    I agree here.  But Steve Jobs did not just depend on good people somehow doing good.  He got with educational experts and created Apple University.  Its training on how to make and keep a company great. 


     


    and to Daniel ,  another great article.  I used to think your articles were good. But I keep reading people writing articles and they are just idiots.   Most do not want to do any research.  They seem to read some sub set of bloggers and off they go with the opinions.  This creates comments that obviously lack critical data.  


     


    Even Klugman on the NYTs goes off on a rant and its clear to see that he just does not get it. Its like betting on the Titanic cause its a strong ship and its a big ocean, there is no chance that it will actually HIT an iceberg... even though it already did.  


     


    To conclude.   Good comment.... and Daniel, you do a much better job than you usually get credit for.  Keep up the good work.  


     


    Elder Norm  ( met you in Dallas a number of years ago)

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  • Reply 24 of 25

    Quote:

    Originally Posted by jragosta View Post





    That is incorrect. EPS is based on the number of shares active in the market. When a company buys back its own shares, they are no longer used in calculating EPS. Only outstanding shares are used in EPS calculations. The number of shares of Apple stock outstanding is down significantly since the peak earlier this year.



    The only real difference between buying shares back and holding them vs buying shares back and retiring them is that you can't do anything with them after they're retired. Since Apple is buying them back and holding them, they could distribute them to employees via stock options or grants or they could re-sell them at a later date (with board approval). Apple has always had more shares than the number of outstanding shares - because they needed to have some shares to give to employees and board members.


     


    My point was your second point. If the shares can be put back into circulation, then the value is not there. The market is smart enough to look at EPS and say, yes, EPS has drastically went up, but just as fast, it can go down if Apple brings those share back in. So retiring the shares would be of more value. 

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  • Reply 25 of 25
    Quote:

    Originally Posted by Constable Odo View Post



    I happen to like those dividends and now that I'm getting them, I'd hate to give them up. Those dividends are the only guarantee I'll get anything from owning Apple considering Wall Street's perception Apple being doomed due to loss of smartphone market share. After seeing Apple go from $700 to $400 I just can't depend on Wall Street to value Apple fairly while it gives free passes to stocks like Amazon and Google. However, instead of share repurchases I'd certainly like to see Apple get into some other business unrelated to hardware. Wall Street continues to harp about Apple's falling hardware profit margins and asking a hardware company to stay above 40% profit margins is just downright unfair.



    So, I'm hoping Apple can get into something like media content or cloud services. Apple should be able to afford the best servers in the world and should easily be able to hire experienced staff to maintain it. If Amazon can do it, why not Apple? Wall Street is always bragging about Amazon's AWS Cloud services, so why doesn't Apple set up one of its own. It would seem to be a good side business and supposedly it's rather profitable for Amazon. Apple could just take $5 billion or so and set up cloud services and get a few long-term contracts. That would be better than just letting the money sit in a bank collecting dust.

     

    Especially concerning the dividends, I agree with you. I've often found it odd or amusing when I've read posts here and other places where people actually complain about receiving the dividend. Now, if the existence of a dividend had a direct cause & effect on share price appreciation (or lack thereof), that would be one thing. But that is not the case. At best, you might find a mild correlation. And even then, despite how some people like to think that when the share price rises that they have "made money", the only time you (actually) make money on a stock is when you sell it at a profit. That's it! That's all there is. Even if you sell covered calls, you're making money from the option, not the stock itself - I can just as easily sell naked calls... no need to own the stock to accomplish that.

     

    So since I've felt no pressing need to sell the stock (although I would have surely sold all of my shares at $700 had I known that the stock would sink to the high $300's within 12 months - and I would have bought them back at $400... these darn 20/20 Hindsight Goggles never work like they're supposed to!!!), collecting the dividend has indeed put money in my pocket. There may come a time when selling some or all of my Apple position will be necessary or advantageous. But for right now, I view my AAPL investment more like a piece of income producing property, with the dividend being like a rental receipt.

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