Apple adds $50B to capital return program, increases quarterly dividend by 10%



  • Reply 21 of 23
    icoco3icoco3 Posts: 1,474member
    amarkap said:

    Hello, perhaps AppleInsider is not the best place to ask and learn about how stock buy back works but most everyone seems pretty knowledgeable (at least more than me).  So I wanted to ask.  I purchased my shares at $127.00.  Yes, it hasn't been easy to watch the share price plummet on me but I will hold onto the stock so as long as I use Apple products (which I do). 

    My one question is that I always thought when companies bought back shares of their own stock that that is supposed to be good for the shareholder and the price ought to go up a little bit.  As I understood the Supply is going down so technically people ought to be paying more to own the fewer shares available.  But that doesn't seem to happen (at least not to the guy holding at $127.00).  So if it doesn't really cause the price to go up for us Shareholders why does Apple keep buying back shares?  Perhaps they can spend that money on something else?  Please don't make too much fun of me for asking this naïve question.

    So thank you in advance for any insight and understanding.

    Not naive at all.... Since apple has started their share buyback... 100 billion plus so far.. I have lost net od 500k in my Apple stock value. And i have written in many forums and communicated this to some Apple executives. "How have you paid me back ? Besides dividents!" To this day no one has given me a answer .. Ps.. Yes we all knows it reduces the float... And increases the eps... Its not rocket science. But So what! .....if all that is being obsorbed by the shrinking PE..... Where and when will i see this return.. Or is this money in up in smoke. What would have happened if apple did not do the buyback.? Stock would have been 80 dollars? I am bewildered myself... So are many many out there. Yet apple increased its by back initiative to 250 billion. When they annonced buy back first time... It gave me massive confidance. This time.... I see it as a signal that apple execs expect weakness in their stock for the foreseeable future ..year or more. And they dont want to miss the opertunity to back up the truck and load some more cheap stocks. To what avail? ........So far none of shareholders can see, smell, or touch any benifit from it.
    Your writing style and discussion of investments doesn't seem on par with the amount of holdings you must have.  Are you sure you are "down" $500K ??  You must have bought over 16,000 shares at $130 each to loose that much if we called the stock $100 today (actually about $98 at the time of this post.

    One more thought, you only loose money when you sell at a lose.
    edited April 2016
  • Reply 22 of 23
    macarenamacarena Posts: 365member
    You guys simply don't get it.

    Apple stock is being manipulated down artificially. Whether Apple is a growth stock or value stock or high yield stock, it's all semantics. The idiots who are keeping it down, succeed because we also operate like idiots and play into their hands.

    Apple's problem is very simple. They cannot find another investment that is as cheap as Apple. So they are better off buying Apple. When they bought Beats, it was at 30+ times earnings. Why would you buy a company at 30+ times earnings when you can buy another (that you obviously know much better) at 10 times earnings?

    Apple's current level of earnings seem crazy high, and it feels like they cannot generate this kind of earnings unless they have another hit. I think that's totally wrong and short sighted about the reality of Apple.

    Over the next 5 years, Apple probably would have fallen to a steady state sales level that's about 20% below peak levels. That includes expanding market share in places like India, plus a much longer upgrade cycle in mature markets - from current 2 years to about 3 years.

    However, the profit drop from the sales drop will more than be offset by increasing revenue from services. There is simply no one who can create an ecosystem like this. And anyone else who tries to play on Apple ecosystem invariably has to pay 30% to Apple! And even better ApplePay gets Apple about 0.01% of all the money spent. Which is going to be seriously huge. It is not visible today because Apple is also investing huge amounts to create infrastructure. But in 2 years, there won't be any money being spent, it will just be a flood coming in.

    Apple really doesn't need another hit product. Their share price is low enough that they have zero pressure of having to deliver another success. But if they do, this will be skyrocketing.

    The other game Apple is now playing smart, is to get in on other games. Yahoo got into Alibaba and look how much money they made. Apple could do the same. But even if Didi valuation jumps 100 times today's, and even if Didi goes public, it won't help Apple economically. This is also strategic. That's the real rationale.

    In 10 years from today, Apple will be the biggest player in the financial space - bigger than any bank.

    In 10 years from today, Apple will be the most important player in the healthcare space. Expensive cutting edge technologies from today will all be commoditized and loaded into the Apple Watch. Things like Continuous Glucose Monitoring, Blood Oxygen Monitoring, etc. And the humongous data available will enable creation of newer non-invasive detection tools, using pattern detection.

    In 10 years, Apple will be the biggest player and most profitable player in movies and entertainment. Apple has all the pieces to make an Apple Studio. The whole Pixar game - except played 100 times bigger. That's the natural extension of Apple into a known vision and dream of Steve Jobs. If Apple spends $2B making movies, it will probably be able to recover $10B over the next 10 years. With a small bit of the investment recovered upfront - because it will be sales of Apple hardware and software.

    Apple can hire a 100 VC experts across the world and create a fund with a corpus of $50 Billion to invest in existing and new startups. Especially those that will build on the Apple ecosystem and leverage it. They will not have to spend big money on big ticket acquisitions.
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