Amazon destroys traditional markets (like Walmart does) but makes minuscule profits in the process.
Quarter just ended, $20 billion gross sales netted only $180 million in profit.
Explain to me how this makes bezos some kind of genius? If he was running any other business he'd be out on his ... ear.
In the short term, customers save $2 on a $10 item.
In the long term, employment and variety / choice are reduced while society as a whole suffers to benefit a very small number of people.
"maximizing shareholder value" is code for corporate psychopathy.
People are sheep.
And yet the financial world (and tech media) keep making excuses for Amazon. It's always they're investing for the future, wait 10 years (which they said 10 years ago). blah blah blah. As if Amazon will be able to magically turn on a profit spigot one day. Jeff Bezos might not care what happens with Amazon stock but I'm sure the employees do.as the pay at Amazon isn't that great and I'm sure a lot employees are counting on stock options.
As a long-term Apple investor, I wish they had focused 100% of their capital returns to stock buybacks and provided NO dividend at all, until they had boughten backed $100B or so of their stock. THEN they could give a very hefty dividend that is paid out to a lower number of shares.
Amazon destroys traditional markets (like Walmart does) but makes minuscule profits in the process.
Quarter just ended, $20 billion gross sales netted only $180 million in profit.
Explain to me how this makes bezos some kind of genius? If he was running any other business he'd be out on his ... ear.
In the short term, customers save $2 on a $10 item.
In the long term, employment and variety / choice are reduced while society as a whole suffers to benefit a very small number of people.
"maximizing shareholder value" is code for corporate psychopathy.
People are sheep.
$180 Million on $20 Bill? Ouch.... I can get better ROI with a standard passbook savings account. That's chump change.
What Amazon is doing is leveraging their infrastructure to help retail stores, but I don't know how they can be trading at a 570 P/E ratio and get on conference calls with a straight face. I buy lots of things from Amazon when I can't buy locally or if I see it at a higher discount, it does save me travel time and gas money overall. So far, I've had great service and most of the products were bought were from small retail stores that just sell through them, so I don't think they are bad for retailers per se, just SOME retail stores that don't sell through them is who they are hurting. The problem I see about Amazon is trying convince people it's a HYPER GROWTH stock that warrants trading at such high P/E ratios. No, i don't buy Kindle and I think eventually Kindle will fail. I think their streaming service is OK, it does't have the best and most complete catalog of content, but it's just included in the yearly price that I get cheaper and faster package delivery service since I make about 20 to 30 purchases a year through them, the streaming content for me was an added bonus, plus I paid at the older cheaper yearly fee. I don't know if renewing will be as advantageous but since I buy a lot, I probably will renew in about a year.
But getting back to it being a good stock pick? I wouldn't touch that stock with a 10 foot pole as I can see that this stock may come back into reality mode and maybe go where it SHOULD be, which is a penny stock. That's the type of Net Margins they are making and I think this stock, and others like it should be penny stocks. Maybe people will realize that Facebook and Twitter should actually be penny stocks.
As a long-term Apple investor, I wish they had focused 100% of their capital returns to stock buybacks and provided NO dividend at all, until they had boughten backed $100B or so of their stock. THEN they could give a very hefty dividend that is paid out to a lower number of shares.
I personally think they need to spend money on getting their production so they don't have product supply issues, for them to start entering in new product markets like the SmartTV and maybe spending more money on advertising the Mac product line which seems to be neglected. Why spend money advertising products that already sell? I mean, everyone knows about the iPhone and they sell as many as they make so why keep on adversing it unless it's a new product announcement? I think if they want to attract more Windows switchers, they should get new, updated and relevant Mac vs PC ads going. If done tastefully, that will drive more business to the Macs and since their average selling price is higher, the average Mac sale is about 3x of the price of an average iPad sale. yeah, they should increase the dividends, which they did, but I'm still getting my head wrapped around spending cash to buyback shares and then turn around and issue more shares. I'm trying to find the logic in that. I think 7 to 1 stock split was a little aggressive, I would have done maybe a 3-1 split instead as to not dilute the stock so much at one time.
I personally think they need to spend money on getting their production so they don't have product supply issues, for them to start entering in new product markets like the SmartTV and maybe spending more money on advertising the Mac product line which seems to be neglected. Why spend money advertising products that already sell? I mean, everyone knows about the iPhone and they sell as many as they make so why keep on adversing it unless it's a new product announcement? I think if they want to attract more Windows switchers, they should get new, updated and relevant Mac vs PC ads going. If done tastefully, that will drive more business to the Macs and since their average selling price is higher, the average Mac sale is about 3x of the price of an average iPad sale. yeah, they should increase the dividends, which they did, but I'm still getting my head wrapped around spending cash to buyback shares and then turn around and issue more shares. I'm trying to find the logic in that. I think 7 to 1 stock split was a little aggressive, I would have done maybe a 3-1 split instead as to not dilute the stock so much at one time.
1. There is no money in televisions.
2. Advertising doesn't always help. Just ask Microsoft who has been unrelentlessly advertising their failed tablet lines. Once your brand is established and trusted, there is little benefit to continued advertising.
3. Production problems are very temporary and don't tend to cause long term revenue problems. In fact some would argue that Apple's image is helped by the long times and wait times making the news.
4. This is a big one: Apple is NOT issuing more stock and a stock split does NOT dilute their shares. You have a very basic misunderstanding of what a stock split is. Think of it as changing a $100 bill into 5 $20 bills. Did you "issue more money" or dilute the money supply by doing that? No. Its a very similar concept. I chose this example as I hope it makes sense to someone unfamiliar with stocks in general.
<div class="quote-container" data-huddler-embed="/t/178863/apples-44-billion-in-stock-buybacks-have-helped-increase-market-cap-by-100-billion#post_2523262" data-huddler-embed-placeholder="false">Quote:<div class="quote-block">Originally Posted by <strong>Savio</strong> <a href="/t/178863/apples-44-billion-in-stock-buybacks-have-helped-increase-market-cap-by-100-billion#post_2523262"><img alt="View Post" src="/img/forum/go_quote.gif" /></a><br /> <p>1. There is no money in televisions. </p><p>2. Advertising doesn't always help. Just ask Microsoft who has been unrelentlessly advertising their failed tablet lines. Once your brand is established and trusted, there is little benefit to continued advertising. </p><p>3. Production problems are very temporary and don't tend to cause long term revenue problems. In fact some would argue that Apple's image is helped by the long times and wait times making the news. </p><p>4. This is a big one: Apple is NOT issuing more stock and a stock split does NOT dilute their shares. You have a very basic misunderstanding of what a stock split is. Think of it as changing a $100 bill into 5 $20 bills. Did you "issue more money" or dilute the money supply by doing that? No. Its a very similar concept. I chose this example as I hope it makes sense to someone unfamiliar with stocks in general. </p></div></div><p> </p><p>1. I disagree. The cheaper, low budget dumb TVs don't make any money, but I thing that sweetspot that Apple would go after would. Apple knows how to streamline the electronics inside and I know they could figure out how to do it where they could make money. It's like any technology industry. Only some smartphone mfg make money, but most of them don't. That's why Apple only goes after a certain price range and market segment of the smartphone industry. Same rules apply in TVs.</p><p> </p><p>2. Advertising does help. It helped Apple with the Switcher campaign and since Windows XP is now FINALLY DEAD, it's a great time to advertise Macs. You wouldn't believe how many people bought certain brands from advertising. It does help. If Microsoft didn't advertise, they wouldn't have sold as many as they did. Instead of selling none, they sold at least a couple of hundred thousand to a million units. They just were too late to the party. :-)</p><p> </p><p>3. Meeting demand is almost as bad as not having demand. It's only better because people actually want your product, but they can fix it by spreading out product releases and getting production levels up as they increase the markets they sell into and introducing new lines that will attract new customers. They have an issue. If the company wants to get 15 to 20% growth rate, then they HAVE to increase production to over 200 Million phones a year in the next 12 months. Apple has a lot of demand when they have a new product, but they can't make them fast enough. That's a production issue, not enough assembly places. It takes time to build a new facility, etc., but the demand is still there.</p><p> </p><p>4. Yeah, stocks splits dilute. Think of this way. You have a piece of paper and it's worth $100, because they issued more shares through a stock split, that piece of paper isn't worth $100, it's only worth 1/7th of $100 in the case of a 7 to 1 split. Now, the other way they can dilute the shares is by issuing more shares and selling through another Public Offering, it's not commonly done, but when they do that, the existing shares get diluted and the price goes down. So it doesn't matter HOW they issue more shares, the concept of devaluing the share by issuing more shares is what's called dilution. Sorry, but I'v</p>
1. There is no money in televisions.
2. Advertising doesn't always help. Just ask Microsoft who has been unrelentlessly advertising their failed tablet lines. Once your brand is established and trusted, there is little benefit to continued advertising.
3. Production problems are very temporary and don't tend to cause long term revenue problems. In fact some would argue that Apple's image is helped by the long times and wait times making the news.
4. This is a big one: Apple is NOT issuing more stock and a stock split does NOT dilute their shares. You have a very basic misunderstanding of what a stock split is. Think of it as changing a $100 bill into 5 $20 bills. Did you "issue more money" or dilute the money supply by doing that? No. Its a very similar concept. I chose this example as I hope it makes sense to someone unfamiliar with stocks in general.
SmartTV is a segment that does make money, it's the cheap dumb TVs that don't.
Advertising always help, it helped in the switcher campaign and because XP is dead, this would be a good time to run some more ads that are catering to those that might be buying a new computer.
If Apple is going to enter another product category in smart phones, and they want to increase their revenues and net profit, they have to increase production to reflect this growth. They can't produce enough product at this time when they only have 4 inch refresh, and this year they are going to announce a ~5 inch model that's going to attract Android users to Apple. They need to ramp up production to meet this increase demand and to show the analysts that they can sell more than 60 Million phones in a quarter to show they are still growing.
Any time a company issues more shares, that's dilution. They can do it a variety of ways. But if they issue more stock, the value per share drops, they just did it with a stock split to give you more shares so your position would be of equal value, but the share price does drop per share as a result. Stock prices tend to not move up as fast if the company has too many shares outstanding.
If you still think that stock splits "dilute" the shares, then I can't help you. But I will try anyway.
You said:
"I'm still getting my head wrapped around spending cash to buyback shares and then turn around and issue more shares"
Apple is NOT issuing any shares (and hasn't for a while) and the buyback and stock split are completely independent of each other and do not affect each other in any way.
1. "This dilution can shift fundamental positions of the stock such as ownership percentage, voting control, earnings per share, and the value of individual shares" and BTW, a stock split does NOT change any of these fundamental positions.
2. "Stock dilution is an economic phenomenon resulting from the issue of additional common shares by a company."
The takeaway is in the very first sentence: "stock split or stock divide increases the number of shares in a public company. The price is adjusted such that the before and after market capitalization of the company remains the same and dilution does not occur""
If you still think that stock splits "dilute" the shares, then I can't help you. But I will try anyway.
You said:
"I'm still getting my head wrapped around spending cash to buyback shares and then turn around and issue more shares"
Apple is NOT issuing any shares (and hasn't for a while) and the buyback and stock split are completely independent of each other and do not affect each other in any way.
1. "This dilution can shift fundamental positions of the stock such as ownership percentage, voting control, earnings per share, and the value of individual shares" and BTW, a stock split does NOT change any of these fundamental positions.
2. "Stock dilution is an economic phenomenon resulting from the issue of additional common shares by a company."
The takeaway is in the very first sentence: "stock split or stock divide increases the number of shares in a public company. The price is adjusted such that the before and after market capitalization of the company remains the same and dilution does not occur""
When there is a stock split, more shares are issued, the share price goes down by a rate determined by the split adjustment, the Earnings per Share goes down because there is more shares outstanding and the same earnings, the earnings haven't changed, but the number of shares has. Market capitalization stays the same because they are just multiplying more shares by a smaller number, but they both were effected equally in opposite directions. But the shares outstanding are increasing which is a form of dilution. I think you are thinking of the dilutions of one's personal ownership, which is true. the stock split won't change one's dilution of ownership, but I wasn't talking about that type of dilution. I was speaking more of a tremendous amount of shares coming on the market that's going to change the stock behavior. You aren't going to see lots of HUGE swings in the stock price because of it. At least not this time. The number of shares is diluted to the point where it's now going to behave more like Microsoft, unless Apple goes back into hyper growth mode. I would expect the stock behave more like a snail after this stock split.
BEFORE the stock split, owning 100 shares will have a larger percentage of ownership than if you bought 100 shares AFTER the stock split.
When there is a stock split, more shares are issued, the share price goes down by a rate determined by the split adjustment, the Earnings per Share goes down because there is more shares outstanding and the same earnings, the earnings haven't changed, but the number of shares has. Market capitalization stays the same because they are just multiplying more shares by a smaller number, but they both were effected equally in opposite directions. But the shares outstanding are increasing which is a form of dilution. I think you are thinking of the dilutions of one's personal ownership, which is true. the stock split won't change one's dilution of ownership, but I wasn't talking about that type of dilution. I was speaking more of a tremendous amount of shares coming on the market that's going to change the stock behavior. You aren't going to see lots of HUGE swings in the stock price because of it. At least not this time. The number of shares is diluted to the point where it's now going to behave more like Microsoft, unless Apple goes back into hyper growth mode. I would expect the stock behave more like a snail after this stock split.
BEFORE the stock split, owning 100 shares will have a larger percentage of ownership than if you bought 100 shares AFTER the stock split.
I was using the definition of dilution and stock splits that are the actual definitions as I linked in my post. I'm not sure what definition you are using. Again, a stock split is NOT an issuance of stock and does NOT dilute the stock.
You said, " I think you are thinking of the dilutions of one's personal ownership, which is true"
Again, its not about what I am thinking. Its about what the reality is and the real definitions of the words.
You may not have read the article I posted so I'll repost them:
Quoted from the 2nd one: "stock split....increases the number of shares in a public company. The price is adjusted such that the before and after market capitalization of the company remains the same and dilution does not occur."
Dilution is when new stock is issued that didn't previously exist. NOT when previously existing stock is split into smaller pieces.
Its like the difference between printing new money (causing inflation) or changing a $100 for $20s (which does NOT cause inflation).
I was using the definition of dilution and stock splits that are the actual definitions as I linked in my post. I'm not sure what definition you are using. Again, a stock split is NOT an issuance of stock and does NOT dilute the stock.
You said, " I think you are thinking of the dilutions of one's personal ownership, which is true"
Again, its not about what I am thinking. Its about what the reality is and the real definitions of the words.
You may not have read the article I posted so I'll repost them:
Quoted from the 2nd one: "stock split....increases the number of shares in a public company. The price is adjusted such that the before and after market capitalization of the company remains the same and dilution does not occur."
Dilution is when new stock is issued that didn't previously exist. NOT when previously existing stock is split into smaller pieces.
Its like the difference between printing new money (causing inflation) or changing a $100 for $20s (which does NOT cause inflation).
I'm just looking at the number of shares outstanding and why Apple would buy HUGE amounts of stock, which effectively removes shares from the market (outstanding) and then in June they are going to perform the stock split. BTW, I have NEVER seen or can't remember at any time that a company announced a stock split and bought up large chunks of stocks just prior and right after the announcement before the stock split takes place. That's why I'm wondering why they would effectively waste BILLIONS of money buying stock and then issue a massive stock split? They don't have that much of their cash in the US, most of their money (to my knowledge) is in Ireland.
How many shares does Apple have now? A little less than 900 Million shares outstanding. Before they started buying stocks, at one time about a year ago they had as many as 990 Million shares outstanding.
if Apple doesn't buy anymore shares and they leave this alone, how many shares outstanding will there be AFTER the Stock actually splits? Approximately?
Just answer this last question. That's all I'm looking at.
That's why I'm wondering why they would effectively waste BILLIONS of money buying stock and then issue a massive stock split?
I don't understand the point of your question. Nothing about those two things are contradictory or mutually exclusive.
How many shares does Apple have now? A little less than 900 Million shares outstanding. Before they started buying stocks, at one time about a year ago they had as many as 990 Million shares outstanding.
if Apple doesn't buy anymore shares and they leave this alone, how many shares outstanding will there be AFTER the Stock actually splits? Approximately?
Why can't you answer it? If, for example, a share of a $200 stock has 1,000,000 shares outstanding it has a $200 million market cap. If it gets a 2:1 split it's now a $100 stock with 2,000,000 shares outstanding and still a $200 million market cap. A 7:1 split means you simply multiply the number of shares by 7. In and of itself the market cap remains exactly the same with a split.
I'm just looking at the number of shares outstanding and why Apple would buy HUGE amounts of stock, which effectively removes shares from the market (outstanding) and then in June they are going to perform the stock split. BTW, I have NEVER seen or can't remember at any time that a company announced a stock split and bought up large chunks of stocks just prior and right after the announcement before the stock split takes place. That's why I'm wondering why they would effectively waste BILLIONS of money buying stock and then issue a massive stock split? They don't have that much of their cash in the US, most of their money (to my knowledge) is in Ireland.
How many shares does Apple have now? A little less than 900 Million shares outstanding. Before they started buying stocks, at one time about a year ago they had as many as 990 Million shares outstanding.
if Apple doesn't buy anymore shares and they leave this alone, how many shares outstanding will there be AFTER the Stock actually splits? Approximately?
Just answer this last question. That's all I'm looking at.
I don't understand the point of your question. Nothing about those two things are contradictory or mutually exclusive.
Why can't you answer it? If, for example, a share of a $200 stock has 1,000,000 shares outstanding it has a $200 million market cap. If it get a 2:1 split it's now a $100 stock with 2,000,000 shares outstanding and still a $200 market cap. A 7:1 split means you simply multiply the number of shares by 7. In and of itself the market cap remains exactly the same with a split.
I know the market cap stays the same, I wasn't speaking of the market cap. The point is Apple's spending BILLIONS of dollars to effectively REMOVE stock and then turn around and increase the shares outstanding by a fact of 7, but they lost money that is basically dumped and not recouped. They're not recouping that money they just dropped in purchasing tens of millions of shares when they increase the number of shares by many billion. It just doesn't make sense.
I already know they are going to have 7x the outstanding shares in June after they complete the stock split, but why are they buying shares back right before that and spending BILLIONS in doing so? They aren't going to get that money back when they split the stock.
So you can't explain why Apple would spend billions of dollars effectively removing stock months before they increase the number of shares outstanding after they split the stock?
I know the market cap stays the same, I wasn't speaking of the market cap. The point is Apple's spending BILLIONS of dollars to effectively REMOVE stock and then turn around and increase the shares outstanding by a fact of 7, but they lost money that is basically dumped and not recouped. They're not recouping that money they just dropped in purchasing tens of millions of shares when they increase the number of shares by many billion. It just doesn't make sense.
I already know they are going to have 7x the outstanding shares in June after they complete the stock split, but why are they buying shares back right before that and spending BILLIONS in doing so? They aren't going to get that money back when they split the stock.
I think I know what your issue is. You think the reason for a share repurchase is to reduce the number of active shares. It's not. That's just an effect of the purchase. The point is to reduce the float and based on a given market cap the buyback will have the exact same effect whether is't 7x as many shares at 1/7th the valuation as a month prior because those numbers are all connected to the market cap. I honestly don't know why you're even asking about this.
So you can't explain why Apple would spend billions of dollars effectively removing stock months before they increase the number of shares outstanding after they split the stock?
So you can't explain why Apple would spend billions of dollars effectively removing stock months before they increase the number of shares outstanding after they split the stock?
The point of buying back stock isn't to have less stock, it's to increase the value of the remaining stock going forward, which should return more value to existing shareholders if/when the stock price rises.
Splitting it splits the value of each individual share to make it more affordable to buy a piece of Apple for low volume stock traders, but doesn't have any effect on the total value (price x quantity) of the stock held by existing shareholders.
The goals of buying back and splitting stock do not conflict.
I think I know what your issue is. You think the reason for a share repurchase is to reduce the number of active shares. It's not. That's just an effect of the purchase. The point is to reduce the float and based on a given market cap the buyback will have the exact same effect whether is't 7x as many shares at 1/7th the valuation as a month prior because those numbers are all connected to the market cap. I honestly don't know why you're even asking about this.
Comments
If you're just looking at absolute stock prices, you have no business being in -- let alone commenting on -- the stock market.
Somebody has to be stupid if they think all market cap raise is due to buyback. Seriously AI?
Out of that 100B,40B came in just a day of result, Where they can't even trade in that lockout time.
Maybe you didn't read the article. I'll quote it for you:
"However, in addition to the number of shares changing due to Apple's buybacks, the company is also reporting improved fundamentals."
Basically AI is pointing out how impressive it is that the Market Cap has grown so much despite the large buybacks which tend to shrink market cap.
Amazon destroys traditional markets (like Walmart does) but makes minuscule profits in the process.
Quarter just ended, $20 billion gross sales netted only $180 million in profit.
Explain to me how this makes bezos some kind of genius? If he was running any other business he'd be out on his ... ear.
In the short term, customers save $2 on a $10 item.
In the long term, employment and variety / choice are reduced while society as a whole suffers to benefit a very small number of people.
"maximizing shareholder value" is code for corporate psychopathy.
People are sheep.
$180 Million on $20 Bill? Ouch.... I can get better ROI with a standard passbook savings account. That's chump change.
What Amazon is doing is leveraging their infrastructure to help retail stores, but I don't know how they can be trading at a 570 P/E ratio and get on conference calls with a straight face. I buy lots of things from Amazon when I can't buy locally or if I see it at a higher discount, it does save me travel time and gas money overall. So far, I've had great service and most of the products were bought were from small retail stores that just sell through them, so I don't think they are bad for retailers per se, just SOME retail stores that don't sell through them is who they are hurting. The problem I see about Amazon is trying convince people it's a HYPER GROWTH stock that warrants trading at such high P/E ratios. No, i don't buy Kindle and I think eventually Kindle will fail. I think their streaming service is OK, it does't have the best and most complete catalog of content, but it's just included in the yearly price that I get cheaper and faster package delivery service since I make about 20 to 30 purchases a year through them, the streaming content for me was an added bonus, plus I paid at the older cheaper yearly fee. I don't know if renewing will be as advantageous but since I buy a lot, I probably will renew in about a year.
But getting back to it being a good stock pick? I wouldn't touch that stock with a 10 foot pole as I can see that this stock may come back into reality mode and maybe go where it SHOULD be, which is a penny stock. That's the type of Net Margins they are making and I think this stock, and others like it should be penny stocks. Maybe people will realize that Facebook and Twitter should actually be penny stocks.
As a long-term Apple investor, I wish they had focused 100% of their capital returns to stock buybacks and provided NO dividend at all, until they had boughten backed $100B or so of their stock. THEN they could give a very hefty dividend that is paid out to a lower number of shares.
I personally think they need to spend money on getting their production so they don't have product supply issues, for them to start entering in new product markets like the SmartTV and maybe spending more money on advertising the Mac product line which seems to be neglected. Why spend money advertising products that already sell? I mean, everyone knows about the iPhone and they sell as many as they make so why keep on adversing it unless it's a new product announcement? I think if they want to attract more Windows switchers, they should get new, updated and relevant Mac vs PC ads going. If done tastefully, that will drive more business to the Macs and since their average selling price is higher, the average Mac sale is about 3x of the price of an average iPad sale. yeah, they should increase the dividends, which they did, but I'm still getting my head wrapped around spending cash to buyback shares and then turn around and issue more shares. I'm trying to find the logic in that. I think 7 to 1 stock split was a little aggressive, I would have done maybe a 3-1 split instead as to not dilute the stock so much at one time.
I personally think they need to spend money on getting their production so they don't have product supply issues, for them to start entering in new product markets like the SmartTV and maybe spending more money on advertising the Mac product line which seems to be neglected. Why spend money advertising products that already sell? I mean, everyone knows about the iPhone and they sell as many as they make so why keep on adversing it unless it's a new product announcement? I think if they want to attract more Windows switchers, they should get new, updated and relevant Mac vs PC ads going. If done tastefully, that will drive more business to the Macs and since their average selling price is higher, the average Mac sale is about 3x of the price of an average iPad sale. yeah, they should increase the dividends, which they did, but I'm still getting my head wrapped around spending cash to buyback shares and then turn around and issue more shares. I'm trying to find the logic in that. I think 7 to 1 stock split was a little aggressive, I would have done maybe a 3-1 split instead as to not dilute the stock so much at one time.
1. There is no money in televisions.
2. Advertising doesn't always help. Just ask Microsoft who has been unrelentlessly advertising their failed tablet lines. Once your brand is established and trusted, there is little benefit to continued advertising.
3. Production problems are very temporary and don't tend to cause long term revenue problems. In fact some would argue that Apple's image is helped by the long times and wait times making the news.
4. This is a big one: Apple is NOT issuing more stock and a stock split does NOT dilute their shares. You have a very basic misunderstanding of what a stock split is. Think of it as changing a $100 bill into 5 $20 bills. Did you "issue more money" or dilute the money supply by doing that? No. Its a very similar concept. I chose this example as I hope it makes sense to someone unfamiliar with stocks in general.
SmartTV is a segment that does make money, it's the cheap dumb TVs that don't.
Advertising always help, it helped in the switcher campaign and because XP is dead, this would be a good time to run some more ads that are catering to those that might be buying a new computer.
If Apple is going to enter another product category in smart phones, and they want to increase their revenues and net profit, they have to increase production to reflect this growth. They can't produce enough product at this time when they only have 4 inch refresh, and this year they are going to announce a ~5 inch model that's going to attract Android users to Apple. They need to ramp up production to meet this increase demand and to show the analysts that they can sell more than 60 Million phones in a quarter to show they are still growing.
Any time a company issues more shares, that's dilution. They can do it a variety of ways. But if they issue more stock, the value per share drops, they just did it with a stock split to give you more shares so your position would be of equal value, but the share price does drop per share as a result. Stock prices tend to not move up as fast if the company has too many shares outstanding.
*sigh*
If you still think that stock splits "dilute" the shares, then I can't help you. But I will try anyway.
You said:
"I'm still getting my head wrapped around spending cash to buyback shares and then turn around and issue more shares"
Apple is NOT issuing any shares (and hasn't for a while) and the buyback and stock split are completely independent of each other and do not affect each other in any way.
Please review: http://en.wikipedia.org/wiki/Stock_dilution
Here are some tidbits from the article:
1. "This dilution can shift fundamental positions of the stock such as ownership percentage, voting control, earnings per share, and the value of individual shares" and BTW, a stock split does NOT change any of these fundamental positions.
2. "Stock dilution is an economic phenomenon resulting from the issue of additional common shares by a company."
And here is another article for your education: http://en.wikipedia.org/wiki/Stock_split
The takeaway is in the very first sentence: " stock split or stock divide increases the number of shares in a public company. The price is adjusted such that the before and after market capitalization of the company remains the same and dilution does not occur""
*sigh*
If you still think that stock splits "dilute" the shares, then I can't help you. But I will try anyway.
You said:
"I'm still getting my head wrapped around spending cash to buyback shares and then turn around and issue more shares"
Apple is NOT issuing any shares (and hasn't for a while) and the buyback and stock split are completely independent of each other and do not affect each other in any way.
Please review: http://en.wikipedia.org/wiki/Stock_dilution
Here are some tidbits from the article:
1. "This dilution can shift fundamental positions of the stock such as ownership percentage, voting control, earnings per share, and the value of individual shares" and BTW, a stock split does NOT change any of these fundamental positions.
2. "Stock dilution is an economic phenomenon resulting from the issue of additional common shares by a company."
And here is another article for your education: http://en.wikipedia.org/wiki/Stock_split
The takeaway is in the very first sentence: " stock split or stock divide increases the number of shares in a public company. The price is adjusted such that the before and after market capitalization of the company remains the same and dilution does not occur""
When there is a stock split, more shares are issued, the share price goes down by a rate determined by the split adjustment, the Earnings per Share goes down because there is more shares outstanding and the same earnings, the earnings haven't changed, but the number of shares has. Market capitalization stays the same because they are just multiplying more shares by a smaller number, but they both were effected equally in opposite directions. But the shares outstanding are increasing which is a form of dilution. I think you are thinking of the dilutions of one's personal ownership, which is true. the stock split won't change one's dilution of ownership, but I wasn't talking about that type of dilution. I was speaking more of a tremendous amount of shares coming on the market that's going to change the stock behavior. You aren't going to see lots of HUGE swings in the stock price because of it. At least not this time. The number of shares is diluted to the point where it's now going to behave more like Microsoft, unless Apple goes back into hyper growth mode. I would expect the stock behave more like a snail after this stock split.
BEFORE the stock split, owning 100 shares will have a larger percentage of ownership than if you bought 100 shares AFTER the stock split.
When there is a stock split, more shares are issued, the share price goes down by a rate determined by the split adjustment, the Earnings per Share goes down because there is more shares outstanding and the same earnings, the earnings haven't changed, but the number of shares has. Market capitalization stays the same because they are just multiplying more shares by a smaller number, but they both were effected equally in opposite directions. But the shares outstanding are increasing which is a form of dilution. I think you are thinking of the dilutions of one's personal ownership, which is true. the stock split won't change one's dilution of ownership, but I wasn't talking about that type of dilution. I was speaking more of a tremendous amount of shares coming on the market that's going to change the stock behavior. You aren't going to see lots of HUGE swings in the stock price because of it. At least not this time. The number of shares is diluted to the point where it's now going to behave more like Microsoft, unless Apple goes back into hyper growth mode. I would expect the stock behave more like a snail after this stock split.
BEFORE the stock split, owning 100 shares will have a larger percentage of ownership than if you bought 100 shares AFTER the stock split.
I was using the definition of dilution and stock splits that are the actual definitions as I linked in my post. I'm not sure what definition you are using. Again, a stock split is NOT an issuance of stock and does NOT dilute the stock.
You said, " I think you are thinking of the dilutions of one's personal ownership, which is true"
Again, its not about what I am thinking. Its about what the reality is and the real definitions of the words.
You may not have read the article I posted so I'll repost them:
http://en.wikipedia.org/wiki/Stock_dilution
http://en.wikipedia.org/wiki/Stock_split
Quoted from the 2nd one: "stock split....increases the number of shares in a public company. The price is adjusted such that the before and after market capitalization of the company remains the same and dilution does not occur."
Dilution is when new stock is issued that didn't previously exist. NOT when previously existing stock is split into smaller pieces.
Its like the difference between printing new money (causing inflation) or changing a $100 for $20s (which does NOT cause inflation).
I was using the definition of dilution and stock splits that are the actual definitions as I linked in my post. I'm not sure what definition you are using. Again, a stock split is NOT an issuance of stock and does NOT dilute the stock.
You said, " I think you are thinking of the dilutions of one's personal ownership, which is true"
Again, its not about what I am thinking. Its about what the reality is and the real definitions of the words.
You may not have read the article I posted so I'll repost them:
http://en.wikipedia.org/wiki/Stock_dilution
http://en.wikipedia.org/wiki/Stock_split
Quoted from the 2nd one: "stock split....increases the number of shares in a public company. The price is adjusted such that the before and after market capitalization of the company remains the same and dilution does not occur."
Dilution is when new stock is issued that didn't previously exist. NOT when previously existing stock is split into smaller pieces.
Its like the difference between printing new money (causing inflation) or changing a $100 for $20s (which does NOT cause inflation).
I'm just looking at the number of shares outstanding and why Apple would buy HUGE amounts of stock, which effectively removes shares from the market (outstanding) and then in June they are going to perform the stock split. BTW, I have NEVER seen or can't remember at any time that a company announced a stock split and bought up large chunks of stocks just prior and right after the announcement before the stock split takes place. That's why I'm wondering why they would effectively waste BILLIONS of money buying stock and then issue a massive stock split? They don't have that much of their cash in the US, most of their money (to my knowledge) is in Ireland.
How many shares does Apple have now? A little less than 900 Million shares outstanding. Before they started buying stocks, at one time about a year ago they had as many as 990 Million shares outstanding.
if Apple doesn't buy anymore shares and they leave this alone, how many shares outstanding will there be AFTER the Stock actually splits? Approximately?
Just answer this last question. That's all I'm looking at.
I don't understand the point of your question. Nothing about those two things are contradictory or mutually exclusive.
Why can't you answer it? If, for example, a share of a $200 stock has 1,000,000 shares outstanding it has a $200 million market cap. If it gets a 2:1 split it's now a $100 stock with 2,000,000 shares outstanding and still a $200 million market cap. A 7:1 split means you simply multiply the number of shares by 7. In and of itself the market cap remains exactly the same with a split.
\facepalm
I give up.
I don't understand the point of your question. Nothing about those two things are contradictory or mutually exclusive.
Why can't you answer it? If, for example, a share of a $200 stock has 1,000,000 shares outstanding it has a $200 million market cap. If it get a 2:1 split it's now a $100 stock with 2,000,000 shares outstanding and still a $200 market cap. A 7:1 split means you simply multiply the number of shares by 7. In and of itself the market cap remains exactly the same with a split.
I know the market cap stays the same, I wasn't speaking of the market cap. The point is Apple's spending BILLIONS of dollars to effectively REMOVE stock and then turn around and increase the shares outstanding by a fact of 7, but they lost money that is basically dumped and not recouped. They're not recouping that money they just dropped in purchasing tens of millions of shares when they increase the number of shares by many billion. It just doesn't make sense.
I already know they are going to have 7x the outstanding shares in June after they complete the stock split, but why are they buying shares back right before that and spending BILLIONS in doing so? They aren't going to get that money back when they split the stock.
\facepalm
I give up.
So you can't explain why Apple would spend billions of dollars effectively removing stock months before they increase the number of shares outstanding after they split the stock?
I think I know what your issue is. You think the reason for a share repurchase is to reduce the number of active shares. It's not. That's just an effect of the purchase. The point is to reduce the float and based on a given market cap the buyback will have the exact same effect whether is't 7x as many shares at 1/7th the valuation as a month prior because those numbers are all connected to the market cap. I honestly don't know why you're even asking about this.
It looks like he's explained many, many times.
Splitting it splits the value of each individual share to make it more affordable to buy a piece of Apple for low volume stock traders, but doesn't have any effect on the total value (price x quantity) of the stock held by existing shareholders.
The goals of buying back and splitting stock do not conflict.
Why would Apple need to reduce the float?