I do not have the feeling Carl Icahn has Apple's best interest in mind. He is in this to make quick billions. There is nothing wrong with Apple pursuing its current repurchase plan, which has actually retired more shares more quickly than expected.
Taking on more debt to increase the stock price is a losing move for Apple. Wall Street would make billions then turn against Apple using unrevealed Asian sources who rumor any kind of problem to knock the stock price down while earning more billions betting against the company.
We have already witnessed one of the largest financial decimations occur over the last year as Wall Street pumped Apple above $700 per share then brought the company down to $400 just on rumors that have yet to pan out. Not one analyst has or will apologize for their actions because of greed, greed and more greed.
Apple has a ton of money and Wall Street and the US government want it. The future of the company be damned as long as they can squeeze every penny they can from Apple today!
I agree and I seriously doubt Tim will be taking instructions from him or anyone else on how to run Apple.
The US needs to lower tax rates of offshore money into single digits and lower domestic tax rate below 20%. For example, Canada as a corporate tax rate of 15% compare to 35% in the US.
The nominal US corporate tax rate of 35% is a lie designed to fool us all. The effective (actual) corporate tax rate in the US is much lower than in most countries, at around 12% after credits and deductions (it was 12.1% in 2011). We can argue whether 12% is too low or too high, but lets not use the idiot number of 35%.
When the share prices are way undervalued [and for a routine company not a growth company P/E of 20 is nominal] and it is at 10-12X now and if you discount cash closer to 8-10X, then this is a good time to buy back shares at a steep discount. This was Buffet's guidance, "... Regarding the option of repurchasing Apple stock, Buffett offered a simple guideline: If you believe your stock is cheap, "then the best thing you can do with your cash is buy in shares." ..." Salena Maranjian, June 19 2013.
So its not about Icahn its about a great opportunity that the market has created for Apple to get back shares at a bargain. In the long run this will enhance company value and for those investors in for the long haul will see great return.
Apple could easily spend its annual earnings going forward on stock re-purchase while retaining a huge hoard of funds to avoid loans and make major purchases. One might disagree on the amount to be spent, but as long as the market is so dramatically undervaluing Apple stock and Apple's long term prospects [and Cook would know] are bright its not about if, rather about how much.
The nominal US corporate tax rate of 35% is a lie designed to fool us all. The effective (actual) corporate tax rate in the US is much lower than in most countries, at around 12% after credits and deductions (it was 12.1% in 2011). We can argue whether 12% is too low or too high, but lets not use the idiot number of 35%.
That average rate includes all the offshore tax dodging. The real ratio is more like 25% on tax credit alone. The system doesnt allows cash to return into the US and this is where it fails.
So Apple goes from debt free with billions in cash to debtor with substantially less cash just to line the pockets of billionaires? How is this good for the company? What does this leave for R&D, which has been a kind of sore spot for me?
It's good for the company if it is prudent leveraging of cash/assets. If borrowing costs are low, then it makes absolute sense to leverage that debt into increased positions + less dividend payout + increased market value.
A better question to ask would be: how much cash is needed to ensure successful operations, investment and contingency? Anything more than that should be utilized to increase company value whether it be investments or a return of investment to share holders.
But I totally agree with your opinion that Icahn's motive is purely for his short term monetary gain. And for that, I hope that Tim gives him the middle finger.
Instead of taking 115 BILLION dollars to buy back shares to "boost the stock price", invest the money as Steve would have--in making the awesome products we all know and love and buy and buy again.
THAT is what boosted the stock price to its current levels, and what will keep the company strong in the years to come.
These speculators care nothing about the company or the products we love. They just care about making (more) money. They've never actually produced anything, except perhaps gambling receipts. Let them go speculating on another company.
Comments
Ah yes a highly courageous analyst call.
Apple is at 500 so 525 is possible! If AAPL was a 50 dollar stock the call would have them rise to hold it.....52.5 wow what a gain.
Or did he mean AAPL could go up one day 25$??
I agree and I seriously doubt Tim will be taking instructions from him or anyone else on how to run Apple.
The nominal US corporate tax rate of 35% is a lie designed to fool us all. The effective (actual) corporate tax rate in the US is much lower than in most countries, at around 12% after credits and deductions (it was 12.1% in 2011). We can argue whether 12% is too low or too high, but lets not use the idiot number of 35%.
So its not about Icahn its about a great opportunity that the market has created for Apple to get back shares at a bargain. In the long run this will enhance company value and for those investors in for the long haul will see great return.
Apple could easily spend its annual earnings going forward on stock re-purchase while retaining a huge hoard of funds to avoid loans and make major purchases. One might disagree on the amount to be spent, but as long as the market is so dramatically undervaluing Apple stock and Apple's long term prospects [and Cook would know] are bright its not about if, rather about how much.
Quote:
Originally Posted by JONOROM
The nominal US corporate tax rate of 35% is a lie designed to fool us all. The effective (actual) corporate tax rate in the US is much lower than in most countries, at around 12% after credits and deductions (it was 12.1% in 2011). We can argue whether 12% is too low or too high, but lets not use the idiot number of 35%.
That average rate includes all the offshore tax dodging. The real ratio is more like 25% on tax credit alone. The system doesnt allows cash to return into the US and this is where it fails.
Lower the rate, remove the gimmics. Simple.
Reference for this? Your number suggests that half of US corporate profits are held overseas.
Quote:
Originally Posted by herbapou
We have bigger personnal tax rates because it includes health insurance, not because of corporate taxes...
Just. Keep. Believing. That.
Quote:
Originally Posted by lkrupp
So Apple goes from debt free with billions in cash to debtor with substantially less cash just to line the pockets of billionaires? How is this good for the company? What does this leave for R&D, which has been a kind of sore spot for me?
It's good for the company if it is prudent leveraging of cash/assets. If borrowing costs are low, then it makes absolute sense to leverage that debt into increased positions + less dividend payout + increased market value.
A better question to ask would be: how much cash is needed to ensure successful operations, investment and contingency? Anything more than that should be utilized to increase company value whether it be investments or a return of investment to share holders.
But I totally agree with your opinion that Icahn's motive is purely for his short term monetary gain. And for that, I hope that Tim gives him the middle finger.
Quote:
Originally Posted by lkrupp
What does this leave for R&D, which has been a kind of sore spot for me?
What exactly is your 'sore spot' with Apple's R&D?
Ha!
Downside of $350... With $147 per share in cash?
Instead of taking 115 BILLION dollars to buy back shares to "boost the stock price", invest the money as Steve would have--in making the awesome products we all know and love and buy and buy again.
THAT is what boosted the stock price to its current levels, and what will keep the company strong in the years to come.
These speculators care nothing about the company or the products we love. They just care about making (more) money. They've never actually produced anything, except perhaps gambling receipts. Let them go speculating on another company.
Originally Posted by Albertadoc
I have a better idea.
Shush now.
Let them go speculating on another company.
See, they'll never do that unless Apple goes private again, which is nothing but a pipe dream.
Quote:
Originally Posted by Albertadoc
I have a better idea. ...
"I have a better idea", let Tim Cook run the company, he is doing a good job.