Apple was dead in the water until when last year until Icahn got involved. If you thought that was a coincidence, I got a orange bridge for sale.
You're saying their quarterly financial earnings improved with Icahn's involvement? I doubt it. You must be talking about their stock price rising, which has nothing to do with the success of Apple's business. The stock price changed with the buyback, which they set out long before Carl got involved:
No but it still went to 385 with good quarterly reports. Wall Street is about perception and if I need to tell you that, youa re a wall street neophyte just like the Apple Board.
Vote against Icahn if you want to take the ride down to 300 again, not me,
The usual blather from a bunch of Icahnites in this thread.
Look guys, Apple's stock price fell because its margins and growth fell in 2013. The market fully expected it. Did the stock, however, fall a bit too much relative to fundamentals? Perhaps. But for any investor with a horizon longer than that of the lifespan of a gnat, that should have been a once-in-a-lifetime buying opportunity.
Did Icahn's purchase have a positive influence on the price? Yes, but at the margin. Any time there is such a large purchase, it signals investor optimism. The move in AAPL would likely have been similar if a long-term investor like Buffett had made the purchase, rather than a raider like Icahn.
At the end of the day, Apple's value -- for that matter, the value of any company -- comes from it's expected future cash flows, business risk, and growth. That, in turn, is a function of innovating and building great products that people want to buy, selling them at a profit, and sustaining that profit. Financial engineering in the form of repurchases, splits, debt issuances, dividend increases, etc. can only do so much.
As many people here have pointed out, if you dislike the management and the board so much, put your money where your mouth is, sell, and get out. There are hundreds of other stocks out there in which you can invest.
Why do people like you care so much if he's in it for the long hall? If he pushes for a good capital allocation strategy (which he is), makes the stock go up to where it should be trading and then sells his measly 2-3 billion of the stock, so what? His sale will have little impact in what will be a 750 billion dollar market cap if he gets what he wants. The shareholders will all make a lot of money. How exactly is that "bad" again?
Why do people like you care so much if he's in it for the long hall?
Haul.
And I’m now very worried that you’re supporting him without even knowing why he’s doing what he’s doing. Holy cow.
His stance dictates his decisions. His decisions affect the company. If his decisions are out of line with the way the company is run, you get the grating we’re seeing here.
Apple is run under the premise that the stock will take care of itself, and it does. Look at Apple in 2003, look at Apple in 2013, and then shut up. No one intelligent invested into AAPL looks at local peaks, local lows, local anything. It just doesn’t happen. They don’t care. Because they know it’s local.
Icahn is a glorified day trader. He’s a day trader with a few billion to blow, so he’s a month trader. He’s a danger in his ignorance.
If he pushes for a good capital allocation strategy (which he is)
Which you know, being one of the Senior VPs of Apple.
…makes the stock go up to where it should be trading…
Who are you to say where it “should” be trading? Why are you pushing for him to show his hand? Do you not subscribe to the invisible hand theory?
The usual blather from a bunch of Icahnites in this thread.
Look guys, Apple's stock price fell because its margins and growth fell in 2013. The market fully expected it. Did the stock, however, fall a bit too much relative to fundamentals? Perhaps. But for any investor with a horizon longer than that of the lifespan of a gnat, that should have been a once-in-a-lifetime buying opportunity.
Did Icahn's purchase have a positive influence on the price? Yes, but at the margin. Any time there is such a large purchase, it signals investor optimism. The move in AAPL would likely have been similar if a long-term investor like Buffett had made the purchase, rather than a raider like Icahn.
At the end of the day, Apple's value -- for that matter, the value of any company -- comes from it's expected future cash flows, business risk, and growth. That, in turn, is a function of innovating and building great products that people want to buy, selling them at a profit, and sustaining that profit. Financial engineering in the form of repurchases, splits, debt issuances, dividend increases, etc. can only do so much.
As many people here have pointed out, if you dislike the management and the board so much, put your money where your mouth is, sell, and get out. There are hundreds of other stocks out there in which you can invest.
A few points here.
1.) Buffet didn't invest in Apple. You have no way of knowing how low Apple stock might have gone without the dividend and the buy-back as a put under the stock. We have Einhorn and Icahn to thank for Cook and the board to get off their duffs and do the correct things in terms of the dividend and the buy-back. Don't ever forget that. It was not going to happen without their involvement. Shareholder activism is a good thing.
2.) Apple's current value has disconnected from the streets expectation of future growth and cash flows. Google and Apple have the same 5 year expected growth rate on the street, yet Google sells at a 100% premium to Apple. And, Google is a one trick pony whose ad revenue model is at risk with 40% of there total revenues now coming from less lucrative mobile search. So, no, Apple is not trading in tandem with other stocks based on expectations.
3.) Sharholders are the owners of Apple. They should not leave if they don't like the board. That is just the attitude that allows boards to become lazy and feckless like the Apple board. Apple has 150 billion in the bank (mostly due to offshore tax avoidance strategies) and 40 billion a year of positive free cash flow. They continue to make tiny acquisitions that are rounding errors on their money market account. The Apple board has to sh*t or get off the pot or the shareholders should fire them and get new board members. Remember, the board works for the shareholders. Not the other way around.
And I’m now very worried that you’re supporting him without even knowing why he’s doing what he’s doing. Holy cow.
His stance dictates his decisions. His decisions affect the company. If his decisions are out of line with the way the company is run, you get the grating we’re seeing here.
Apple is run under the premise that the stock will take care of itself, and it does. Look at Apple in 2003, look at Apple in 2013, and then shut up. No one intelligent invested into AAPL looks at local peaks, local lows, local anything. It just doesn’t happen. They don’t care. Because they know it’s local.
Icahn is a glorified day trader. He’s a day trader with a few billion to blow, so he’s a month trader. He’s a danger in his ignorance.
Which you know, being one of the Senior VPs of Apple.
Who are you to say where it “should” be trading? Why are you pushing for him to show his hand? Do you not subscribe to the invisible hand theory?
So what, then?
Icahn will do what he thinks is in his best interest as an Apple shareholder. That will benefit all other Apple shareholders. Also, he is not a day trader or a month trader, LOL. And he is worth a hell of a lot more than a few billion, LOL.
You have no way of knowing how low Apple stock might have gone without the dividend and the buy-back as a put under the stock.
Sure we do. We absolutely do. Are you insane? We know it wouldn’t go to $1. This is known. We know it wouldn’t go to $10. Or $50, or even $100. It would stay above these numbers.
The magical dividend and buyback didn’t “save” the stock. There was nothing to save.
We have Einhorn and Icahn to thank for Cook and the board to get off their duffs and do the correct things in terms of the dividend and the buy-back. Don't ever forget that.
It’s not Superman. It’s Superman breaking through the wall and finding not only no danger, but the owner furious for the damage done to his home.
It was not going to happen without their involvement.
Oh, this we know.
…yet Google sells at a 100% premium to Apple. And, Google is a one trick pony whose ad revenue model is at risk with 40% of there total revenues now coming from less lucrative mobile search. So, no, Apple is not trading in tandem with other stocks based on expectations.
Sounds far more like Google is setting itself up for the coolest crash of all time.
3.) Sharholders are the owners of Apple.
Yeah? Are they? Guess what they aren’t, though. They aren’t involved in daily, weekly, monthly, or yearly operations. They aren’t privy to the parts deals, don’t know the
…lazy and feckless like the Apple board.
Proof, please. And no, “they haven’t been giving me the returns on my stock that I demand for absolutely no reason other than I demand them” is not a reason.
Apple has 150 billion in the bank (mostly due to offshore tax avoidance strategies) and 40 billion a year of positive free cash flow. They continue to make tiny acquisitions there are rounding errors on their money market account.
‘Kay. And?
The Apple board has to sh*t or get off the pot or the shareholders should fire them and get new board members.
Nah. Sorry. You’re wrong. They are not bad for managing money wisely. They are not bad for operating like a startup. They are not bad for deciding not to waste their money on things they don’t care about and which would lead to worse products.
Originally Posted by Jack Baker
Icahn will do what he thinks is in his best interest as an Apple shareholder. That will benefit all other Apple shareholders.
Is that second sentence just a second ending to the first sentence, or are you implying that specifically what Icahn thinks is best as a shareholder will inherently benefit other shareholders?
Also, he is not a day trader or a month trader, LOL. And he is worth a hell of a lot more than a few billion, LOL.
Yes, we’re well aware that you’re incapable of understanding what an analogy is.
Crazy Carl is doing this to line his own pockets. He doesn't care about Apple, he cares about $$$. How is the Board greedy? By keeping the money for Apple? Once Apple reaches his target price, he's gone.
Apple already has a buy back program.
What do you care about Carl's pockets? The board is greedy because they are getting paid a lot and not doing a good job of returning value to shareholders. I have news for you. That 150 billion dollars belongs to the shareholders, not Tim Cook or the Apple board. I don't care if he's gone after his target price. Apple should be selling at 800-1,000 now. If he gets us there and then he takes off I could care less. He will have made me and every other Apple shareholder a lot of money in the process of making himself money. When he ultimately sells his relatively tiny position in Apple stock it will have very little impact of the share price.
Carl Icahn is a fool for wasting his time with Apple. He could pick any tech stock name out of a hat and find a better performing stock. Tim Cook is practically useless as a CEO. A company with all that reserve cash and yet Tim Cook can't figure out how to boost shareholder value by normal means except for some financial sleight-of-hand with buybacks. Where are all these products that Apple is supposed to be selling.
I read all these stories of how Apple is leading in this and that category but every time I look at the share price it's dropping lower and lower just like it did last year. It's been a whole year and yet Tim Cook hasn't learned a darn thing except how to make Apple's share price go lower. It's bad enough he's a wuss, but he's making the whole company look incompetent while the rest of the tech stocks are soaring. Even loss leader H-P is gaining in share value while canning employees left and right. Apple's share performance is downright feeble. I hope Apple has been buying up shares like a maniac while the stock plummets.
Oh, and Happy New Year everyone, except for Apple shareholders whose new year is turning out just like last year.
LOL, Icahn is in Apple for the very reason you say he should not be in it.
Why do people like you care so much if he's in it for the long hall? If he pushes for a good capital allocation strategy (which he is), makes the stock go up to where it should be trading and then sells his measly 2-3 billion of the stock, so what? His sale will have little impact in what will be a 750 billion dollar market cap if he gets what he wants. The shareholders will all make a lot of money. How exactly is that "bad" again?
This explains the problem with your thinking. How in heck did you come to the conclusion that Icahn has a ‘good capital allocation strategy’? How is saddling Apple with $150B in debt and/or bringing its overseas cash back at a 35% tax rate and/or the economics of buying back at the current price ($550 - $575, as opposed to the $425 - $450 price when Apple initiated its buyback program) a good capital allocation strategy?
Moreover, if it was so simple to do and will have the valuation impact you suggest, why stop at that number? Why not buy back $200B? Heck, wouldn’t $300B or $400B be even better? In fact, why not take it to the logical extreme, load the company up with massive amounts of debt and do an LBO, taking it private? And, why don’t all companies do this?
The trouble with people like Icahn and Einhorn is, they just throw some wild numbers out there, and expect that people will swallow it. Apparently, some do. It is pure financial alchemy.
Unless, of course, you can show us your analysis? (If you want to learn from a really solid analysis on why Einhorn’s proposal was laughable – and was rightly thrown out by Apple’s shareholders – see here: http://bit.ly/1bIKaw7).
1.) Buffet didn't invest in Apple. You have no way of knowing how low Apple stock might have gone without the dividend and the buy-back as a put under the stock. We have Einhorn and Icahn to thank for Cook and the board to get off their duffs and do the correct things in terms of the dividend and the buy-back. Don't ever forget that. It was not going to happen without their involvement. Shareholder activism is a good thing.
2.) Apple's current value has disconnected from the streets expectation of future growth and cash flows. Google and Apple have the same 5 year expected growth rate on the street, yet Google sells at a 100% premium to Apple. And, Google is a one trick pony whose ad revenue model is at risk with 40% of there total revenues now coming from less lucrative mobile search. So, no, Apple is not trading in tandem with other stocks based on expectations.
3.) Sharholders are the owners of Apple. They should not leave if they don't like the board. That is just the attitude that allows boards to become lazy and feckless like the Apple board. Apple has 150 billion in the bank (mostly due to offshore tax avoidance strategies) and 40 billion a year of positive free cash flow. They continue to make tiny acquisitions that are rounding errors on their money market account. The Apple board has to sh*t or get off the pot or the shareholders should fire them and get new board members. Remember, the board works for the shareholders. Not the other way around.
These arguments are full of platitudes. You missed the main point of my post, which is that, value is created from the real things Apple does as a business, not how it shuffles pieces of paper on the right hand-side of its balance sheet.
1) See post above for why Icahn/Einhorn’s plans are questionable.
2) The ‘Street’s’ estimates of growth (in revenues, earnings, cash flows; not some engineered number like EPS) amount to a hill of beans. Google’s P/E ratio is twice that of Apple’s. If you knew some finance, you’d know that, given their respective costs of capital (which are roughly similar), the long run earnings growth rate implied in Google’s P/E is substantially higher than in Apple’s. That is the market’s verdict.
Please explain, before going any further, exactly will a buyback change that perception?
3) Of course shareholders are the owners of a company. That is a platitude. The question however is, are they long-term shareholders or short-term (US corporate law makes some important distinctions there)?
Re. Apple’s board, sure it could probably do with some new blood (e.g., the Intuit guy; the Avon lady). But many of the same board members oversaw the company’s creation of the iMac, OSX, iPod, iPhone, iPad….. and were part of the process of its share price from the teens to the upper-$500s, making the most valuable company in the world. Give them some credit.
No but it still went to 385 with good quarterly reports. Wall Street is about perception
Right but it has nothing to do with Apple's business. Your comment "Apple was dead in the water" suggests that the company was doing badly. The company was doing just fine. Their stock price going down doesn't mean they are. As you rightly state, the stock value comes from the perception of traders. It's not Apple's responsibility to convince traders of anything - they aren't in need of funding, it's up to traders what they want to believe. If Apple keeps running well then people with a negative perception sell and lose money and it's their fault, that's how it works. The false media reports that drive a lot of trader perception shares a lot of the blame so criticize them.
What do you care about Carl's pockets? The board is greedy because they are getting paid a lot and not doing a good job of returning value to shareholders. I have news for you. That 150 billion dollars belongs to the shareholders, not Tim Cook or the Apple board. I don't care if he's gone after his target price. Apple should be selling at 800-1,000 now. If he gets us there and then he takes off I could care less. He will have made me and every other Apple shareholder a lot of money in the process of making himself money. When he ultimately sells his relatively tiny position in Apple stock it will have very little impact of the share price.
Hogwash. You're right, his tiny position in stick shouldn't impact Apple's share price--good or bad.
This Same board also oversaw the Increase in share price from 32 to 540 in 8 years. I say that's worth it.
Shareholder And a customer for several years now I believe in the team at Apple they are still innovating Steve jobs was amazing . And he believed in Tom Cook and the rest of the team!!
Comments
You're saying their quarterly financial earnings improved with Icahn's involvement? I doubt it. You must be talking about their stock price rising, which has nothing to do with the success of Apple's business. The stock price changed with the buyback, which they set out long before Carl got involved:
http://www.apple.com/pr/library/2012/03/19Apple-Announces-Plans-to-Initiate-Dividend-and-Share-Repurchase-Program.html
Maybe Carl has some influence over other traders' confidence but again that's got nothing to do with Apple's business operation.
No but it still went to 385 with good quarterly reports. Wall Street is about perception and if I need to tell you that, youa re a wall street neophyte just like the Apple Board.
Vote against Icahn if you want to take the ride down to 300 again, not me,
And the perception of those who know nothing is worth what compared to the perception of those who know everything?
Perhaps you are unfamiliar with the invisible hand theory. Bone up on it.
Look guys, Apple's stock price fell because its margins and growth fell in 2013. The market fully expected it. Did the stock, however, fall a bit too much relative to fundamentals? Perhaps. But for any investor with a horizon longer than that of the lifespan of a gnat, that should have been a once-in-a-lifetime buying opportunity.
Did Icahn's purchase have a positive influence on the price? Yes, but at the margin. Any time there is such a large purchase, it signals investor optimism. The move in AAPL would likely have been similar if a long-term investor like Buffett had made the purchase, rather than a raider like Icahn.
At the end of the day, Apple's value -- for that matter, the value of any company -- comes from it's expected future cash flows, business risk, and growth. That, in turn, is a function of innovating and building great products that people want to buy, selling them at a profit, and sustaining that profit. Financial engineering in the form of repurchases, splits, debt issuances, dividend increases, etc. can only do so much.
As many people here have pointed out, if you dislike the management and the board so much, put your money where your mouth is, sell, and get out. There are hundreds of other stocks out there in which you can invest.
So basically “knowledge doesn’t matter as long as the majority makes out well” would be the applicable summary answer to my question?
Why do people like you care so much if he's in it for the long hall? If he pushes for a good capital allocation strategy (which he is), makes the stock go up to where it should be trading and then sells his measly 2-3 billion of the stock, so what? His sale will have little impact in what will be a 750 billion dollar market cap if he gets what he wants. The shareholders will all make a lot of money. How exactly is that "bad" again?
So basically “knowledge doesn’t matter as long as the majority makes out well” would be the applicable summary answer to my question?
Umm........No.
Haul.
And I’m now very worried that you’re supporting him without even knowing why he’s doing what he’s doing. Holy cow.
His stance dictates his decisions. His decisions affect the company. If his decisions are out of line with the way the company is run, you get the grating we’re seeing here.
Apple is run under the premise that the stock will take care of itself, and it does. Look at Apple in 2003, look at Apple in 2013, and then shut up. No one intelligent invested into AAPL looks at local peaks, local lows, local anything. It just doesn’t happen. They don’t care. Because they know it’s local.
Icahn is a glorified day trader. He’s a day trader with a few billion to blow, so he’s a month trader. He’s a danger in his ignorance.
Which you know, being one of the Senior VPs of Apple.
Who are you to say where it “should” be trading? Why are you pushing for him to show his hand? Do you not subscribe to the invisible hand theory?
So what, then?
The usual blather from a bunch of Icahnites in this thread.
Look guys, Apple's stock price fell because its margins and growth fell in 2013. The market fully expected it. Did the stock, however, fall a bit too much relative to fundamentals? Perhaps. But for any investor with a horizon longer than that of the lifespan of a gnat, that should have been a once-in-a-lifetime buying opportunity.
Did Icahn's purchase have a positive influence on the price? Yes, but at the margin. Any time there is such a large purchase, it signals investor optimism. The move in AAPL would likely have been similar if a long-term investor like Buffett had made the purchase, rather than a raider like Icahn.
At the end of the day, Apple's value -- for that matter, the value of any company -- comes from it's expected future cash flows, business risk, and growth. That, in turn, is a function of innovating and building great products that people want to buy, selling them at a profit, and sustaining that profit. Financial engineering in the form of repurchases, splits, debt issuances, dividend increases, etc. can only do so much.
As many people here have pointed out, if you dislike the management and the board so much, put your money where your mouth is, sell, and get out. There are hundreds of other stocks out there in which you can invest.
A few points here.
1.) Buffet didn't invest in Apple. You have no way of knowing how low Apple stock might have gone without the dividend and the buy-back as a put under the stock. We have Einhorn and Icahn to thank for Cook and the board to get off their duffs and do the correct things in terms of the dividend and the buy-back. Don't ever forget that. It was not going to happen without their involvement. Shareholder activism is a good thing.
2.) Apple's current value has disconnected from the streets expectation of future growth and cash flows. Google and Apple have the same 5 year expected growth rate on the street, yet Google sells at a 100% premium to Apple. And, Google is a one trick pony whose ad revenue model is at risk with 40% of there total revenues now coming from less lucrative mobile search. So, no, Apple is not trading in tandem with other stocks based on expectations.
3.) Sharholders are the owners of Apple. They should not leave if they don't like the board. That is just the attitude that allows boards to become lazy and feckless like the Apple board. Apple has 150 billion in the bank (mostly due to offshore tax avoidance strategies) and 40 billion a year of positive free cash flow. They continue to make tiny acquisitions that are rounding errors on their money market account. The Apple board has to sh*t or get off the pot or the shareholders should fire them and get new board members. Remember, the board works for the shareholders. Not the other way around.
Haul.
And I’m now very worried that you’re supporting him without even knowing why he’s doing what he’s doing. Holy cow.
His stance dictates his decisions. His decisions affect the company. If his decisions are out of line with the way the company is run, you get the grating we’re seeing here.
Apple is run under the premise that the stock will take care of itself, and it does. Look at Apple in 2003, look at Apple in 2013, and then shut up. No one intelligent invested into AAPL looks at local peaks, local lows, local anything. It just doesn’t happen. They don’t care. Because they know it’s local.
Icahn is a glorified day trader. He’s a day trader with a few billion to blow, so he’s a month trader. He’s a danger in his ignorance.
Which you know, being one of the Senior VPs of Apple.
Who are you to say where it “should” be trading? Why are you pushing for him to show his hand? Do you not subscribe to the invisible hand theory?
So what, then?
Icahn will do what he thinks is in his best interest as an Apple shareholder. That will benefit all other Apple shareholders. Also, he is not a day trader or a month trader, LOL. And he is worth a hell of a lot more than a few billion, LOL.
You have no way of knowing how low Apple stock might have gone without the dividend and the buy-back as a put under the stock.
Sure we do. We absolutely do. Are you insane? We know it wouldn’t go to $1. This is known. We know it wouldn’t go to $10. Or $50, or even $100. It would stay above these numbers.
The magical dividend and buyback didn’t “save” the stock. There was nothing to save.
We have Einhorn and Icahn to thank for Cook and the board to get off their duffs and do the correct things in terms of the dividend and the buy-back. Don't ever forget that.
It’s not Superman. It’s Superman breaking through the wall and finding not only no danger, but the owner furious for the damage done to his home.
Oh, this we know.
…yet Google sells at a 100% premium to Apple. And, Google is a one trick pony whose ad revenue model is at risk with 40% of there total revenues now coming from less lucrative mobile search. So, no, Apple is not trading in tandem with other stocks based on expectations.
Sounds far more like Google is setting itself up for the coolest crash of all time.
Yeah? Are they? Guess what they aren’t, though. They aren’t involved in daily, weekly, monthly, or yearly operations. They aren’t privy to the parts deals, don’t know the
Proof, please. And no, “they haven’t been giving me the returns on my stock that I demand for absolutely no reason other than I demand them” is not a reason.
‘Kay. And?
Nah. Sorry. You’re wrong. They are not bad for managing money wisely. They are not bad for operating like a startup. They are not bad for deciding not to waste their money on things they don’t care about and which would lead to worse products.
Is that second sentence just a second ending to the first sentence, or are you implying that specifically what Icahn thinks is best as a shareholder will inherently benefit other shareholders?
Yes, we’re well aware that you’re incapable of understanding what an analogy is.
Crazy Carl is doing this to line his own pockets. He doesn't care about Apple, he cares about $$$. How is the Board greedy? By keeping the money for Apple? Once Apple reaches his target price, he's gone.
Apple already has a buy back program.
What do you care about Carl's pockets? The board is greedy because they are getting paid a lot and not doing a good job of returning value to shareholders. I have news for you. That 150 billion dollars belongs to the shareholders, not Tim Cook or the Apple board. I don't care if he's gone after his target price. Apple should be selling at 800-1,000 now. If he gets us there and then he takes off I could care less. He will have made me and every other Apple shareholder a lot of money in the process of making himself money. When he ultimately sells his relatively tiny position in Apple stock it will have very little impact of the share price.
I think we have a much better picture of who you are and what you think now.
Who says? You? What right do you have to say that?
Carl Icahn is a fool for wasting his time with Apple. He could pick any tech stock name out of a hat and find a better performing stock. Tim Cook is practically useless as a CEO. A company with all that reserve cash and yet Tim Cook can't figure out how to boost shareholder value by normal means except for some financial sleight-of-hand with buybacks. Where are all these products that Apple is supposed to be selling.
I read all these stories of how Apple is leading in this and that category but every time I look at the share price it's dropping lower and lower just like it did last year. It's been a whole year and yet Tim Cook hasn't learned a darn thing except how to make Apple's share price go lower. It's bad enough he's a wuss, but he's making the whole company look incompetent while the rest of the tech stocks are soaring. Even loss leader H-P is gaining in share value while canning employees left and right. Apple's share performance is downright feeble. I hope Apple has been buying up shares like a maniac while the stock plummets.
Oh, and Happy New Year everyone, except for Apple shareholders whose new year is turning out just like last year.
LOL, Icahn is in Apple for the very reason you say he should not be in it.
Why do people like you care so much if he's in it for the long hall? If he pushes for a good capital allocation strategy (which he is), makes the stock go up to where it should be trading and then sells his measly 2-3 billion of the stock, so what? His sale will have little impact in what will be a 750 billion dollar market cap if he gets what he wants. The shareholders will all make a lot of money. How exactly is that "bad" again?
This explains the problem with your thinking. How in heck did you come to the conclusion that Icahn has a ‘good capital allocation strategy’? How is saddling Apple with $150B in debt and/or bringing its overseas cash back at a 35% tax rate and/or the economics of buying back at the current price ($550 - $575, as opposed to the $425 - $450 price when Apple initiated its buyback program) a good capital allocation strategy?
Moreover, if it was so simple to do and will have the valuation impact you suggest, why stop at that number? Why not buy back $200B? Heck, wouldn’t $300B or $400B be even better? In fact, why not take it to the logical extreme, load the company up with massive amounts of debt and do an LBO, taking it private? And, why don’t all companies do this?
The trouble with people like Icahn and Einhorn is, they just throw some wild numbers out there, and expect that people will swallow it. Apparently, some do. It is pure financial alchemy.
Unless, of course, you can show us your analysis? (If you want to learn from a really solid analysis on why Einhorn’s proposal was laughable – and was rightly thrown out by Apple’s shareholders – see here: http://bit.ly/1bIKaw7).
A few points here.
1.) Buffet didn't invest in Apple. You have no way of knowing how low Apple stock might have gone without the dividend and the buy-back as a put under the stock. We have Einhorn and Icahn to thank for Cook and the board to get off their duffs and do the correct things in terms of the dividend and the buy-back. Don't ever forget that. It was not going to happen without their involvement. Shareholder activism is a good thing.
2.) Apple's current value has disconnected from the streets expectation of future growth and cash flows. Google and Apple have the same 5 year expected growth rate on the street, yet Google sells at a 100% premium to Apple. And, Google is a one trick pony whose ad revenue model is at risk with 40% of there total revenues now coming from less lucrative mobile search. So, no, Apple is not trading in tandem with other stocks based on expectations.
3.) Sharholders are the owners of Apple. They should not leave if they don't like the board. That is just the attitude that allows boards to become lazy and feckless like the Apple board. Apple has 150 billion in the bank (mostly due to offshore tax avoidance strategies) and 40 billion a year of positive free cash flow. They continue to make tiny acquisitions that are rounding errors on their money market account. The Apple board has to sh*t or get off the pot or the shareholders should fire them and get new board members. Remember, the board works for the shareholders. Not the other way around.
These arguments are full of platitudes. You missed the main point of my post, which is that, value is created from the real things Apple does as a business, not how it shuffles pieces of paper on the right hand-side of its balance sheet.
1) See post above for why Icahn/Einhorn’s plans are questionable.
2) The ‘Street’s’ estimates of growth (in revenues, earnings, cash flows; not some engineered number like EPS) amount to a hill of beans. Google’s P/E ratio is twice that of Apple’s. If you knew some finance, you’d know that, given their respective costs of capital (which are roughly similar), the long run earnings growth rate implied in Google’s P/E is substantially higher than in Apple’s. That is the market’s verdict.
Please explain, before going any further, exactly will a buyback change that perception?
3) Of course shareholders are the owners of a company. That is a platitude. The question however is, are they long-term shareholders or short-term (US corporate law makes some important distinctions there)?
Re. Apple’s board, sure it could probably do with some new blood (e.g., the Intuit guy; the Avon lady). But many of the same board members oversaw the company’s creation of the iMac, OSX, iPod, iPhone, iPad….. and were part of the process of its share price from the teens to the upper-$500s, making the most valuable company in the world. Give them some credit.
Right but it has nothing to do with Apple's business. Your comment "Apple was dead in the water" suggests that the company was doing badly. The company was doing just fine. Their stock price going down doesn't mean they are. As you rightly state, the stock value comes from the perception of traders. It's not Apple's responsibility to convince traders of anything - they aren't in need of funding, it's up to traders what they want to believe. If Apple keeps running well then people with a negative perception sell and lose money and it's their fault, that's how it works. The false media reports that drive a lot of trader perception shares a lot of the blame so criticize them.
Hogwash. You're right, his tiny position in stick shouldn't impact Apple's share price--good or bad.
This Same board also oversaw the Increase in share price from 32 to 540 in 8 years. I say that's worth it.