Apple sells $7B in debt in first bond offer since $285B cash repatriation [u]

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Comments

  • Reply 41 of 90
    Cash is considered dead money by the market, and given zero value. So saying the “value” of a company decreases when it’s excess cash is used to buy back shares is wrong. The cash never had value in the first place. Now, one could argue that buying back overvalued shares is a sketchy idea. But that may depend on the future value of those shares, so even that might turn out to be a good idea. BTW, if the market actually started to value cash (hasn’t happened yet), then this calculation would change.

    Does buying back shares provably increase the stock price? For Apple, I have a graph that shows a strong correlation between EPS and stock price over the last 11 years, much stronger than against revenue growth or net income. Is that proof? Maybe not, but it shows a very strong correlation. In my opinion, that puts the onus on proving it ISN’T correlated! And it does make sense, because the percentage ownership represented by a share increases as the share count reduces, and valuation has nothing to do with excess cash anyway.

    But there’s something else to keep in mind in the case of Apple, and that’s it’s low relative valuation. I haven’t done the numbers lately, but if you add up the cost to Apple of it’s buybacks at absurdly low valuations, the average they’ve paid per share since they started buybacks is far, far below even today’s stunted valuation. Ergo, it’s paid off long term AAPL investors handsomely thus far, and shows every indication of continuing to do so for years to come.


    edited September 4 fastasleeptmayMacPro
  • Reply 42 of 90
    dougd said:
    Greedy bastards
    Explain?
  • Reply 43 of 90
    So now let’s talk about Apple using borrowed money to buy back stock. Apple has actually reduced it’s (very low interest) debt to about $100 B by now. So increasing debt is actually a way to reach a “balance” ( the so-called net zero cash state) more quickly. Perhaps more importantly, increasing debt actually increases Apple’s “net zero” cash stash, and with the Trump Tariff starting to take a toll, that excess cash, albeit balanced by debt, can be thought of as an emergency reserve. After all, it’s not set in stone that Apple HAS to balance its debt with cash, and if things go south, I’d expect Apple to break into that cash stash if it needs to.
    edited September 4 fastasleeptmaydedgecko
  • Reply 44 of 90
    fahlman said:
    dougd said:
    Greedy bastards
    Explain?
    Fairly certain it's just a negative Apple commenter bot. Usually spits out 4 or 5 words; this one is a bit more succinct than most.
    muthuk_vanalingam
  • Reply 45 of 90
    tmay said:
    gatorguy said:
    red oak said:
    Debt interest is tax deductible for Apple.  That brings the interest cost down to its dividend yield 

    So,  a nearly cost free way for Apple to buy back its own stock.   Makes a ton of sense, especially if Apple thinks the stock will 2 or 3X in the next 8 years 


    Nothing about the stock repurchase program makes any sense to me. Apple doesn't keep it, they burn it, and if there's some proof that the buybacks have increased the stock price above where it would otherwise be it's being keep secret. 
    "Makes a ton of sense, especially if Apple thinks the stock will 2 or 3X in the next 8 years"

    What red oak said.

    Your short term thinking correlating disbursements with stock value is the problem. That isn't the primary concern of Apple. Their plan is to disburse it back to the stockholder until they are cash neutral while at the same time, generating buybacks at a rate and timing that makes sense.


    Unfortunately, part of why their stock is where it is is due to the exraordinary dividends and buybacks propping up the price.   When that ends, the stock drops. 

    Further, if Apple wanted to invest in itself, it would.   Buybacks and dividends beyond current earings is essentially welfare for the stockholders -- the opposite of an investment.
    SpamSandwich
  • Reply 46 of 90
    red oak said:
    gatorguy said:
    tjwolf said:

    gatorguy said:
    red oak said:
    Debt interest is tax deductible for Apple.  That brings the interest cost down to its dividend yield 

    So,  a nearly cost free way for Apple to buy back its own stock.   Makes a ton of sense, especially if Apple thinks the stock will 2 or 3X in the next 8 years 


    Nothing about the stock repurchase program makes any sense to me. Apple doesn't keep it, they burn it, and if there's some proof that the buybacks have increased the stock price above where it would otherwise be it's being keep secret. 
    This goes both ways: there's no proof that "they burn it" - that share buyback have had no impact on stock prices.  But in general, the laws of supply/demand would suggest that buybacks would positively impact stock price.
    There is proof the stock is "burned", zero residual value. But we do both agree there's no hard evidence (that you or I are privy to) that these Apple repurchases have boosted the stock price. 
    That is a ridiculous take.   When they buy back stock, each remaining shareholder owns a larger piece of the company.  Company valuations are (largely) based on earnings (really cash flow) per share 

    It works great if a company is aggressively funding its business (R&D, cap ex) and is still generating massive excess cash that it can’t effectively use and is defensible.   It is not good if a company is not investing in itself (eg IBM, GE) 

    Apple is in the sweet spot.  Every year it is able to buy back 5-8% of itself.  In five years, it will have bought back over 60% of itself vs 2012 levels.

    As a stockholder (a primary constituent), I think this is awesome. 


    Welfare for stockholders.   What's not to like?
  • Reply 47 of 90
    tmaytmay Posts: 3,944member
    tmay said:
    gatorguy said:
    red oak said:
    Debt interest is tax deductible for Apple.  That brings the interest cost down to its dividend yield 

    So,  a nearly cost free way for Apple to buy back its own stock.   Makes a ton of sense, especially if Apple thinks the stock will 2 or 3X in the next 8 years 


    Nothing about the stock repurchase program makes any sense to me. Apple doesn't keep it, they burn it, and if there's some proof that the buybacks have increased the stock price above where it would otherwise be it's being keep secret. 
    "Makes a ton of sense, especially if Apple thinks the stock will 2 or 3X in the next 8 years"

    What red oak said.

    Your short term thinking correlating disbursements with stock value is the problem. That isn't the primary concern of Apple. Their plan is to disburse it back to the stockholder until they are cash neutral while at the same time, generating buybacks at a rate and timing that makes sense.


    Unfortunately, part of why their stock is where it is is due to the exraordinary dividends and buybacks propping up the price.   When that ends, the stock drops. 

    Further, if Apple wanted to invest in itself, it would.   Buybacks and dividends beyond current earings is essentially welfare for the stockholders -- the opposite of an investment.
    Apple is certainly investing in itself and especially R&D, and given that Apple is spending almost as much as the SOE Huawei that you fawn over, I'd say that Apple is in fact investing heavily. Your problem is that Apple has been such a money machine, that it will take another 5 years to get to cash neutral even with disbursing the repatriated funds as dividends. In the meantime, should there be a recession, Apple will be in a position to not only weather that, but likely pick up some bargains in small technology companies along the way.
    SoliMacPro
  • Reply 48 of 90
    tjwolf said:

    gatorguy said:
    red oak said:
    Debt interest is tax deductible for Apple.  That brings the interest cost down to its dividend yield 

    So,  a nearly cost free way for Apple to buy back its own stock.   Makes a ton of sense, especially if Apple thinks the stock will 2 or 3X in the next 8 years 


    Nothing about the stock repurchase program makes any sense to me. Apple doesn't keep it, they burn it, and if there's some proof that the buybacks have increased the stock price above where it would otherwise be it's being keep secret. 
    This goes both ways: there's no proof that "they burn it" - that share buyback have had no impact on stock prices.  But in general, the laws of supply/demand would suggest that buybacks would positively impact stock price.
    Of course it has impact on stocks. Less outstanding shares over which the net worth is spread. 
  • Reply 49 of 90
    SoliSoli Posts: 9,270member
    larryjw said:
    tjwolf said:

    gatorguy said:
    red oak said:
    Debt interest is tax deductible for Apple.  That brings the interest cost down to its dividend yield 

    So,  a nearly cost free way for Apple to buy back its own stock.   Makes a ton of sense, especially if Apple thinks the stock will 2 or 3X in the next 8 years 


    Nothing about the stock repurchase program makes any sense to me. Apple doesn't keep it, they burn it, and if there's some proof that the buybacks have increased the stock price above where it would otherwise be it's being keep secret. 
    This goes both ways: there's no proof that "they burn it" - that share buyback have had no impact on stock prices.  But in general, the laws of supply/demand would suggest that buybacks would positively impact stock price.
    Of course it has impact on stocks. Less outstanding shares over which the net worth is spread. 
    But the buyback also reduces their assets on the balance sheet, specifically cash, which is why so many don't think that buybacks have an impact on valuation, but they clearly do for a variety of reasons, but in Apple's case being constantly undervalued is a major reason that the buybacks are beneficial.
  • Reply 50 of 90
    flydogflydog Posts: 340member
    Very interesting. It seems like it could only mean that they have specific and unrealized plans for the pile of cash they’re already sitting on, and plans that they are confident will yield a better return than the bonds will for their purchasers, or one huge plan that will require all of the stockpile plus the additional funds, which seems less likely. Either way, it’s probably a good sign. 
    It doesn’t mean that at all. Only a complete moron would use his own cash with the current bond yields.
    fastasleep
  • Reply 51 of 90
    flydogflydog Posts: 340member
    gatorguy said:
    red oak said:
    Debt interest is tax deductible for Apple.  That brings the interest cost down to its dividend yield 

    So,  a nearly cost free way for Apple to buy back its own stock.   Makes a ton of sense, especially if Apple thinks the stock will 2 or 3X in the next 8 years 


    Nothing about the stock repurchase program makes any sense to me. Apple doesn't keep it, they burn it, and if there's some proof that the buybacks have increased the stock price above where it would otherwise be it's being keep secret. 
    If you don’t understand something it’s best to keep your uninformed opinion to yourself. Share buybacks  increase earnings distributed to the remaining investors. That is reflected in both dividends and in the share price. 

    Apple’s board didn’t authorize share repurchases simply to piss away money for the hell of it. 
    MacProfastasleep
  • Reply 52 of 90
    Soli said:
    larryjw said:
    tjwolf said:

    gatorguy said:
    red oak said:
    Debt interest is tax deductible for Apple.  That brings the interest cost down to its dividend yield 

    So,  a nearly cost free way for Apple to buy back its own stock.   Makes a ton of sense, especially if Apple thinks the stock will 2 or 3X in the next 8 years 


    Nothing about the stock repurchase program makes any sense to me. Apple doesn't keep it, they burn it, and if there's some proof that the buybacks have increased the stock price above where it would otherwise be it's being keep secret. 
    This goes both ways: there's no proof that "they burn it" - that share buyback have had no impact on stock prices.  But in general, the laws of supply/demand would suggest that buybacks would positively impact stock price.
    Of course it has impact on stocks. Less outstanding shares over which the net worth is spread. 
    But the buyback also reduces their assets on the balance sheet, specifically cash, which is why so many don't think that buybacks have an impact on valuation, but they clearly do for a variety of reasons, but in Apple's case being constantly undervalued is a major reason that the buybacks are beneficial.
    It’s a bit broad, but I basically concur. Cash is technically an “asset on the balance sheet”, but it’s an asset that is ignored when valued in the market. You might say that moving it from the balance sheet to an increase in EPS (and Revenue Per Share!) means the value becomes “visible” to investors.

    Apple’s almost perpetual state of undervaluation has meant tremendous bang per buck on buyback revenue. That may begin to taper off going forward, if for no other reason than the shrinking net positive cash reserves as Apple moves towards net cash neutral.

    Still, Apple is clearing between $50 and $60 B per year. So even after it reaches net cash zero, the cash flow will remain incredible, fueling some hefty buybacks pretty much into perpetuity.
    tmayfastasleep
  • Reply 53 of 90
    If you are a long term holder the effects of the buyback will be tremendous.  Short term holders won't see as much growth.

    Apple is currently able to retire 300-400 million shares per year.  Maybe more.  If you can't look 5-10 years down the road and see that as a positive then.........I don't know what to tell you.
    edited September 5 fastasleep
  • Reply 54 of 90
    tmay said:
    tmay said:
    gatorguy said:
    red oak said:
    Debt interest is tax deductible for Apple.  That brings the interest cost down to its dividend yield 

    So,  a nearly cost free way for Apple to buy back its own stock.   Makes a ton of sense, especially if Apple thinks the stock will 2 or 3X in the next 8 years 


    Nothing about the stock repurchase program makes any sense to me. Apple doesn't keep it, they burn it, and if there's some proof that the buybacks have increased the stock price above where it would otherwise be it's being keep secret. 
    "Makes a ton of sense, especially if Apple thinks the stock will 2 or 3X in the next 8 years"

    What red oak said.

    Your short term thinking correlating disbursements with stock value is the problem. That isn't the primary concern of Apple. Their plan is to disburse it back to the stockholder until they are cash neutral while at the same time, generating buybacks at a rate and timing that makes sense.


    Unfortunately, part of why their stock is where it is is due to the exraordinary dividends and buybacks propping up the price.   When that ends, the stock drops. 

    Further, if Apple wanted to invest in itself, it would.   Buybacks and dividends beyond current earings is essentially welfare for the stockholders -- the opposite of an investment.
    Apple is certainly investing in itself and especially R&D, and given that Apple is spending almost as much as the SOE Huawei that you fawn over, I'd say that Apple is in fact investing heavily. Your problem is that Apple has been such a money machine, that it will take another 5 years to get to cash neutral even with disbursing the repatriated funds as dividends. In the meantime, should there be a recession, Apple will be in a position to not only weather that, but likely pick up some bargains in small technology companies along the way.
    Yes, Apple does invest in R&D -- but not as much as they could or should (look at their problems in 5G modems or OLED screens -- both critical components of their core product) and obviously not as much Huawei who has.   Liquidating the organization with stockholder welfare is not a path to success.  Stating that they have a policy does not make it a smart policy.

  • Reply 55 of 90
    Soli said:
    larryjw said:
    tjwolf said:

    gatorguy said:
    red oak said:
    Debt interest is tax deductible for Apple.  That brings the interest cost down to its dividend yield 

    So,  a nearly cost free way for Apple to buy back its own stock.   Makes a ton of sense, especially if Apple thinks the stock will 2 or 3X in the next 8 years 


    Nothing about the stock repurchase program makes any sense to me. Apple doesn't keep it, they burn it, and if there's some proof that the buybacks have increased the stock price above where it would otherwise be it's being keep secret. 
    This goes both ways: there's no proof that "they burn it" - that share buyback have had no impact on stock prices.  But in general, the laws of supply/demand would suggest that buybacks would positively impact stock price.
    Of course it has impact on stocks. Less outstanding shares over which the net worth is spread. 
    But the buyback also reduces their assets on the balance sheet, specifically cash, which is why so many don't think that buybacks have an impact on valuation, but they clearly do for a variety of reasons, but in Apple's case being constantly undervalued is a major reason that the buybacks are beneficial.
    That is a true statement:   If you measure the stock price vs corporate net worth (as it was typically done in the past), it is a neutral measure.   But in more modern times, stock prices are generally measured in terms of Earnings -- which, at least in the short term -- are unaffected.  So earnings per share increase which tends to drive up the stock price.
  • Reply 56 of 90
    flydog said:
    gatorguy said:
    red oak said:
    Debt interest is tax deductible for Apple.  That brings the interest cost down to its dividend yield 

    So,  a nearly cost free way for Apple to buy back its own stock.   Makes a ton of sense, especially if Apple thinks the stock will 2 or 3X in the next 8 years 


    Nothing about the stock repurchase program makes any sense to me. Apple doesn't keep it, they burn it, and if there's some proof that the buybacks have increased the stock price above where it would otherwise be it's being keep secret. 
    If you don’t understand something it’s best to keep your uninformed opinion to yourself. Share buybacks  increase earnings distributed to the remaining investors. That is reflected in both dividends and in the share price. 

    Apple’s board didn’t authorize share repurchases simply to piss away money for the hell of it. 
    Yeh, they pretty much did.   Apple the company reaps no benefit from shareholder welfare programs. 
  • Reply 57 of 90
    tmaytmay Posts: 3,944member
    tmay said:
    tmay said:
    gatorguy said:
    red oak said:
    Debt interest is tax deductible for Apple.  That brings the interest cost down to its dividend yield 

    So,  a nearly cost free way for Apple to buy back its own stock.   Makes a ton of sense, especially if Apple thinks the stock will 2 or 3X in the next 8 years 


    Nothing about the stock repurchase program makes any sense to me. Apple doesn't keep it, they burn it, and if there's some proof that the buybacks have increased the stock price above where it would otherwise be it's being keep secret. 
    "Makes a ton of sense, especially if Apple thinks the stock will 2 or 3X in the next 8 years"

    What red oak said.

    Your short term thinking correlating disbursements with stock value is the problem. That isn't the primary concern of Apple. Their plan is to disburse it back to the stockholder until they are cash neutral while at the same time, generating buybacks at a rate and timing that makes sense.


    Unfortunately, part of why their stock is where it is is due to the exraordinary dividends and buybacks propping up the price.   When that ends, the stock drops. 

    Further, if Apple wanted to invest in itself, it would.   Buybacks and dividends beyond current earings is essentially welfare for the stockholders -- the opposite of an investment.
    Apple is certainly investing in itself and especially R&D, and given that Apple is spending almost as much as the SOE Huawei that you fawn over, I'd say that Apple is in fact investing heavily. Your problem is that Apple has been such a money machine, that it will take another 5 years to get to cash neutral even with disbursing the repatriated funds as dividends. In the meantime, should there be a recession, Apple will be in a position to not only weather that, but likely pick up some bargains in small technology companies along the way.
    Yes, Apple does invest in R&D -- but not as much as they could or should (look at their problems in 5G modems or OLED screens -- both critical components of their core product) and obviously not as much Huawei who has.   Liquidating the organization with stockholder welfare is not a path to success.  Stating that they have a policy does not make it a smart policy.

    LOL.

    Apple just bought Intel's modem business, and also has a license to Qualcomm's IP so that they can develop their own 5G, and even with Huawei's server, surveillance and telecom businesses absorbing the bulk of Huawei's R&D, Apple's $14.5 B in R&D is still only a bit less than the mostly government owned Huawei. 

    What exactly do you expect Apple to spend more money on? Apple is routinely in the top five of profitable companies WW, and its hard to imagine a better run company.

    edited September 5 MacProSoliPickUrPoisonfastasleep
  • Reply 58 of 90
    gatorguygatorguy Posts: 21,106member
    flydog said:
    gatorguy said:
    red oak said:
    Debt interest is tax deductible for Apple.  That brings the interest cost down to its dividend yield 

    So,  a nearly cost free way for Apple to buy back its own stock.   Makes a ton of sense, especially if Apple thinks the stock will 2 or 3X in the next 8 years 


    Nothing about the stock repurchase program makes any sense to me. Apple doesn't keep it, they burn it, and if there's some proof that the buybacks have increased the stock price above where it would otherwise be it's being keep secret. 
    If you don’t understand something it’s best to keep your uninformed opinion to yourself. 
    If you don't understand something you ask fellow forum members to chime in.

    Other than theory no one has yet shown that the price of Apple stock is higher than it would otherwise have been,much less by any particular percentage. It boils down to "it must be so, thus spake investors". 

    But yeah, EPS is demonstrably higher. It seems to this non-professional stock player that raising the dividends substantially would be a more direct and measurable way of returning cash to investors. Might even raise the stock price in the process based on what other members in this thread are saying.

    IMO trying to prop up a stock price with no means of measuring the results requires a leap of faith from you that it actually worked to your benefit. Are you typically driven by faith? 

    The stock market would be 10,000 points higher without the trade war. That's the claim. Have faith. 
    edited September 5 muthuk_vanalingam
  • Reply 59 of 90
    Where is all the hysteria about Bloomberg now? How conveniently we forget. 
  • Reply 60 of 90
    MacProMacPro Posts: 18,368member
    gatorguy said:
    Duplicate
    Definitely one of your better posts ;)
    PickUrPoisonjdb8167
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