"Apple is selling China's vast emerging middle class technology products that, while perhaps luxurious, are broadly affordable."
but all that 'journalism' would tell you that in china they cannot afford the phone, only assemble it.
The problem with American media is that they are like a frog in a well and the well is the whole universe to them. I am really getting tired of hearing that people China and India cannot afford to pay for such luxury items such as expensive iPhone. Actually, the only way people were able to buy iPhone in US, when it was introduced until last year, is because carriers where subsidizing the phone cost, where one can buy a phone at $199 or less. In China, India and many part of the world there was never a subsidized phone and the paid full price for the phone - And American media is questioning if Chinese people can afford the iPhone. Apple and Nike has demonstrated once again, that China is a bit market who can afford their product. India is another big market who can afford their products too. America - Wake up! You are not as rich as you think anymore!
As to the topic - I don't think so - the concept of buybacks does not work - period. Fewer shares on the market boosts eps and thus share price. Has not worked with over $100,000,000,000 wasted on buybacks and share price is barely improved over 3 years.
As a poster above points out, you don't know what the counter-factual would have been.
Obviously to minimize taxes, which should be anyone's objective any time.
But in this instance, it's with the hope that US tax laws change. In the meantime, there are real resources stranded abroad, and Apple is borrowing against it. I think it's runs the risk of distorting their financial decision-making. Moreover, I am coming to the conclusion that the tax laws won't change any time soon. None of the bozos in Washington DC -- on either side -- cares.
I believe that shareholders cannot sue Apple for following the tax laws of its home country. Maybe I am wrong.
Actually, presidential candidate Rand Paul (with the surprise alliance of California Democrat Barbara Boxer) presented a plan back in January, long before he announced his candidacy:
If a company buys back 50% of the available shares, shouldn't the share price rise in proportion, by doubling?
I see that others answered the earlier part of your question.
On this one, the short answer is, in general, it should have a positive impact, at least in the short run, relative to what would've been (which is always the tough benchmark, since we're then in the world of counterfactuals!). Can't say for sure it would have 'doubled.'
Additionally, it also depends what types of signals the market reads into the buyback: given its view/knowledge of its own future, is the company signaling that it feels significantly undervalued by the market so it's a great 'investment'? Or is it signaling that the company has run out of ideas, i.e., sees no opportunities for value-creating investments in organic or acquisition-led growth, and hence decided that the money is best returned to shareholders to use as they see fit?
Actually, presidential candidate Rand Paul (with the surprise alliance of California Democrat Barbara Boxer) presented a plan back in January, long before he announced his candidacy:
As a poster above points out, you don't know what the counter-factual would have been.
But as I pointed out - I KNOW I would have a lot more cash in my account. The real value of AAPL could be up or down - not really an issue until I (or others) sell. Until then it is a paper gain or loss depending on when you look at it.
The problem with your logic is the last 5 words. How do you know this?
On ex-div day, the share price is instantly lowered by the amount $16.67/share so that everyone who dove in for the dividend is at net zero at market open. What makes you think AAPL would recover that huge amount?
How do you know this? You know what the AAPL price is now compared to what it used to be (it was significantly higher before, for a while at least) and to what we all believe it should be (much higher). But you don't know what the AAPL price is now compared to what it would have been if they did't do the buybacks. It is not clear that dividends would have worked, nor acquisitions, nor just continuing to hoard.
What ails AAPL the most is that they are in unprecedented territory, so they can only be compared to themselves. Most on Wall Street can't fathom that there could be any more growth from such a lofty perch, so they are voting against it with their wallets. This is going to be true from now on, regardless of what Apple does with its capital, so you might as well get used to it.
Thompson
The share price will be whatever the market dictates - where do you get that the price will be lowered by $16.67? You, and others, are missing the point. Give me my share of that cash - my ROI will increase greatly. I don't care about the short term roller coaster ups and downs on paper. Share price is critical only when I decide to sell or buy. The dividend cash is real.
Just because they haven't gone anywhere yet does not mean they are DOA. These thing require more sponsors to get passed, which inevitably means more "pork" added to them.
As a poster above points out, you don't know what the counter-factual would have been.
But as I pointed out - I KNOW I would have a lot more cash in my account. The real value of AAPL could be up or down - not really an issue until I (or others) sell. Until then it is a paper gain or loss depending on when you look at it.
If you want cash on your AAPL, you have the choice to sell a portion of your holdings or you can write options. If I don't want cash (and don't like paying taxes at the income tax rate) I don't have a choice if Apple pays dividends.
I don't care about the short term roller coaster ups and downs on paper. Share price is critical only when I decide to sell or buy. The dividend cash is real.
Well it's your perception, but you're flat out wrong.
I suggest that you read up on Warren Buffett's thoughts on dividends and why Berkshire Hathaway doesn't give out dividends (rather than arguing your face blue). Primarily because it's inefficient compared to buybacks.
Also, buybacks, at this price point, is better value than dividends. You're probably not seeing it, though, but you're not Tim Cook or Carl Icahn. Once Apple is no longer a value stock, dividends would be a better choice.
I do know with certainty that I would have far, far more cash in my account had they distributed that amount to shareholders AND I would have the same number of shares - the value of which may be higher or lower. The $100,000,000,000 of buybacks appear to be an ineffective effort to prop up the stock which should need no "prop up" if Cook & boys could get the vision and execution and message mojo working.
You can't know that, because when they give out a dividend, they subtract the equivalent amount from the share price. If the subsequent (negative) action on AAPL still took place, but starting from this lower value, you might be in the same boat as now, or even worse.
The share price will be whatever the market dictates - where do you get that the price will be lowered by $16.67? You, and others, are missing the point. Give me my share of that cash - my ROI will increase greatly. I don't care about the short term roller coaster ups and downs on paper. Share price is critical only when I decide to sell or buy. The dividend cash is real.
Go look up how dividend payouts are implemented. Then come back enlightened, and you will see my point.
If you want cash on your AAPL, you have the choice to sell a portion of your holdings or you can write options. If I don't want cash (and don't like paying taxes at the income tax rate) I don't have a choice if Apple pays dividends.
Got it?
No - you don't get it. The name of the game is ROI - I keep my number of shares AND get a much larger ROI from that huge pile of $$$ Apple has earned as opposed to wasted $$$ on buybacks. Get it??
No - you don't get it. The name of the game is ROI - I keep my number of shares AND get a much larger ROI from that huge pile of $$$ Apple has earned as opposed to wasted $$$ on buybacks. Get it??
Oh boy.
Do you know the "ROI" on Apple's "huge pile $$$"? Look it up on their 10K or 10Q, before making such outlandish statements.
Hmmmm "why doesn't apple spend the billions on dividends, which will reward long-term shareholders." Its amazing to see how many people here do not understand economics and the market.
Once Apple announces its dividend rate, outside speculators can buy apple shares just to collect the dividend. This DOES NOT help investors (long term holders), it just throws the money away.
One battle at a time, goal ? to win the war. just saying.
What in the world are you rambling on about? I am talking about MY ROI - billions squandered by Apple on buybacks have done virtually zip for my ROI compared to what my pro rated value of a huge special dividend would be.
Do you even own a significant # of AAPL shares? And for how long have you been an investor??
Comments
Evidently we're making everyone else rich.
Bravadu - no, not that person
As to the topic - I don't think so - the concept of buybacks does not work - period. Fewer shares on the market boosts eps and thus share price. Has not worked with over $100,000,000,000 wasted on buybacks and share price is barely improved over 3 years.
As a poster above points out, you don't know what the counter-factual would have been.
Obviously to minimize taxes, which should be anyone's objective any time.
But in this instance, it's with the hope that US tax laws change. In the meantime, there are real resources stranded abroad, and Apple is borrowing against it. I think it's runs the risk of distorting their financial decision-making. Moreover, I am coming to the conclusion that the tax laws won't change any time soon. None of the bozos in Washington DC -- on either side -- cares.
I believe that shareholders cannot sue Apple for following the tax laws of its home country. Maybe I am wrong.
Actually, presidential candidate Rand Paul (with the surprise alliance of California Democrat Barbara Boxer) presented a plan back in January, long before he announced his candidacy:
http://www.businessinsider.com/repatriation-tax-holiday-proposed-by-senators-barbara-boxer-and-rand-paul-2015-1
http://www.bloomberg.com/news/articles/2015-01-29/corporate-tax-holiday-to-fund-highways-gets-boost-in-u-s-senate
If a company buys back 50% of the available shares, shouldn't the share price rise in proportion, by doubling?
I see that others answered the earlier part of your question.
On this one, the short answer is, in general, it should have a positive impact, at least in the short run, relative to what would've been (which is always the tough benchmark, since we're then in the world of counterfactuals!). Can't say for sure it would have 'doubled.'
Additionally, it also depends what types of signals the market reads into the buyback: given its view/knowledge of its own future, is the company signaling that it feels significantly undervalued by the market so it's a great 'investment'? Or is it signaling that the company has run out of ideas, i.e., sees no opportunities for value-creating investments in organic or acquisition-led growth, and hence decided that the money is best returned to shareholders to use as they see fit?
So the true answer is, "it depends."
Actually, presidential candidate Rand Paul (with the surprise alliance of California Democrat Barbara Boxer) presented a plan back in January, long before he announced his candidacy:
http://www.businessinsider.com/repatriation-tax-holiday-proposed-by-senators-barbara-boxer-and-rand-paul-2015-1
http://www.bloomberg.com/news/articles/2015-01-29/corporate-tax-holiday-to-fund-highways-gets-boost-in-u-s-senate
Yeah, I knew that. Many others have tried too.
All of them were DOA, and remain so AFAIK.
Anybody complaining about the buyback obviously isn't in this for the long run.
As a poster above points out, you don't know what the counter-factual would have been.
But as I pointed out - I KNOW I would have a lot more cash in my account. The real value of AAPL could be up or down - not really an issue until I (or others) sell. Until then it is a paper gain or loss depending on when you look at it.
The problem with your logic is the last 5 words. How do you know this?
On ex-div day, the share price is instantly lowered by the amount $16.67/share so that everyone who dove in for the dividend is at net zero at market open. What makes you think AAPL would recover that huge amount?
How do you know this? You know what the AAPL price is now compared to what it used to be (it was significantly higher before, for a while at least) and to what we all believe it should be (much higher). But you don't know what the AAPL price is now compared to what it would have been if they did't do the buybacks. It is not clear that dividends would have worked, nor acquisitions, nor just continuing to hoard.
What ails AAPL the most is that they are in unprecedented territory, so they can only be compared to themselves. Most on Wall Street can't fathom that there could be any more growth from such a lofty perch, so they are voting against it with their wallets. This is going to be true from now on, regardless of what Apple does with its capital, so you might as well get used to it.
Thompson
The share price will be whatever the market dictates - where do you get that the price will be lowered by $16.67? You, and others, are missing the point. Give me my share of that cash - my ROI will increase greatly. I don't care about the short term roller coaster ups and downs on paper. Share price is critical only when I decide to sell or buy. The dividend cash is real.
New Phillip Elmer DeWitt article... Bloggers clobber pros in Apple earnings smackdown: http://fortune.com/2015/10/28/apple-analysts-best-worst-q4/
Yeah, I knew that. Many others have tried too.
All of them were DOA, and remain so AFAIK.
Just because they haven't gone anywhere yet does not mean they are DOA. These thing require more sponsors to get passed, which inevitably means more "pork" added to them.
If you want cash on your AAPL, you have the choice to sell a portion of your holdings or you can write options. If I don't want cash (and don't like paying taxes at the income tax rate) I don't have a choice if Apple pays dividends.
Got it?
I don't care about the short term roller coaster ups and downs on paper. Share price is critical only when I decide to sell or buy. The dividend cash is real.
Well it's your perception, but you're flat out wrong.
I suggest that you read up on Warren Buffett's thoughts on dividends and why Berkshire Hathaway doesn't give out dividends (rather than arguing your face blue). Primarily because it's inefficient compared to buybacks.
Also, buybacks, at this price point, is better value than dividends. You're probably not seeing it, though, but you're not Tim Cook or Carl Icahn. Once Apple is no longer a value stock, dividends would be a better choice.
I do know with certainty that I would have far, far more cash in my account had they distributed that amount to shareholders AND I would have the same number of shares - the value of which may be higher or lower. The $100,000,000,000 of buybacks appear to be an ineffective effort to prop up the stock which should need no "prop up" if Cook & boys could get the vision and execution and message mojo working.
You can't know that, because when they give out a dividend, they subtract the equivalent amount from the share price. If the subsequent (negative) action on AAPL still took place, but starting from this lower value, you might be in the same boat as now, or even worse.
The share price will be whatever the market dictates - where do you get that the price will be lowered by $16.67? You, and others, are missing the point. Give me my share of that cash - my ROI will increase greatly. I don't care about the short term roller coaster ups and downs on paper. Share price is critical only when I decide to sell or buy. The dividend cash is real.
Go look up how dividend payouts are implemented. Then come back enlightened, and you will see my point.
If you want cash on your AAPL, you have the choice to sell a portion of your holdings or you can write options. If I don't want cash (and don't like paying taxes at the income tax rate) I don't have a choice if Apple pays dividends.
Got it?
No - you don't get it. The name of the game is ROI - I keep my number of shares AND get a much larger ROI from that huge pile of $$$ Apple has earned as opposed to wasted $$$ on buybacks. Get it??
Go look up how dividend payouts are implemented. Then come back enlightened, and you will see my point.
What is you point? I have received many AAPL dividend payments (small % though they are) over the years.
The name of the game is ROI - buybacks are not demonstrating an ROI for long term investors.
No - you don't get it. The name of the game is ROI - I keep my number of shares AND get a much larger ROI from that huge pile of $$$ Apple has earned as opposed to wasted $$$ on buybacks. Get it??
Oh boy.
Do you know the "ROI" on Apple's "huge pile $$$"? Look it up on their 10K or 10Q, before making such outlandish statements.
Its amazing to see how many people here do not understand economics and the market.
Once Apple announces its dividend rate, outside speculators can buy apple shares just to collect the dividend. This DOES NOT help investors (long term holders), it just throws the money away.
One battle at a time, goal ? to win the war. just saying.
Ummm - speculators can't BUY AAPL shares unless someone (knowing the dividend $$ on the way) is willing to sell them and lose the dividend.
What in the world are you rambling on about? I am talking about MY ROI - billions squandered by Apple on buybacks have done virtually zip for my ROI compared to what my pro rated value of a huge special dividend would be.
Do you even own a significant # of AAPL shares? And for how long have you been an investor??