Apple "awash in cash" as Microsoft offers "buckets" to Zune developers

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Comments

  • Reply 41 of 54
    Quote:
    Originally Posted by ghostface147 View Post


    I wonder how much a bucket is. Is it 2k? 10k? A free Zune Pass?



    A free Zune pass = bag of hurt.
  • Reply 42 of 54
    Quote:
    Originally Posted by JeffDM View Post


    That's all well and good, but exactly what is Apple reinvesting the money into? I think it should be obvious that Apple didn't need $31 Billion in cash to buy PA Semi. It would seem that Apple might have to be another special case in another category unless they have something in mind, but all their investments relevant to their needs so far were pretty small relatively speaking, they pre-buy panels and chips, buy small companies, all with money that could be easily covered in one quarter's earnings.



    Weren't there rumblings that Microsoft was going to be classified as a mutual find if they didn't start paying dividends? It wasn't as if they were going to use their $60B to buy useful things, especially given that they were eventually thinking of buying Yahoo.



    +1. And, Apple is doing much better than other companies despite the economic downturn.
  • Reply 43 of 54
    Quote:
    Originally Posted by AppleStud View Post


    none of you understand the real problem with dividends. In high-growth fields like technology, when a firm decides to pay dividends, it sends a signal that share price growth alone is not sufficient to satisfy investors. That means the company is no longer innovating and growing like it did in the past. They are no longer re-investing profits within the company, rather they are paying out income to shareholders. Microsoft made that giant dividend payment a few years ago, and their share price has be completely stagnant, if not actually lower than before. They're done growing. Apple is not. Dividends do indeed create shareholder value, however, Apple feels they can create more value by holding onto their cash. This allows them to continue to make investments during economic downturns (which they are doing), as well as gives them the ability to make acquisitions at the drop of a hat (see the $300 million all-cash PA Semi deal).



    Absolutely not. Just about everything you say here is not supportable by either facts or logic, or completely in opposition to reality.



    First, there is no rule in heaven or earth that companies offering dividends are "no longer innovating." This is a completely invented argument, based on no rationale that I can discover.



    Second, as for reinvesting in growth, this is precisely the argument IN FAVOR of Apple declaring a dividend. They have accumulated so much cash, and are continuing to accumulate it at such a remarkable rate, that they cannot reinvest it responsibly in growth. Further they have no obvious intention of reinvesting in growth on anything like the scale that $30 billion requires. They'd have to spend it like drunken sailors on shore leave (like Microsoft did during the '90s, to no good effect) to even make a noticeable dent in their cash hoard.



    How is Apple "creating more value" by sitting on so much cash? I challenge you to tell me how Apple could create more value with over $30 billion in cash (while adding about another billion every month). The very fact that the example you cite represents less than 1% of Apple cash (or about the amount they're adding to the accumulation every WEEK) suggests that you don't have much of a grasp on the scale of Apple's cash reserves.



    Quote:

    PS - the person who asked for proof that dividends have an immediate effect on share price got totally owned by the guy with all the quotes and links. HA.



    You must have missed my response. Nice selective reading.
  • Reply 44 of 54
    Quote:
    Originally Posted by JeffDM View Post


    That's all well and good, but exactly what is Apple reinvesting the money into? I think it should be obvious that Apple didn't need $31 Billion in cash to buy PA Semi. It would seem that Apple might have to be another special case in another category unless they have something in mind, but all their investments relevant to their needs so far were pretty small relatively speaking, they pre-buy panels and chips, buy small companies, all with money that could be easily covered in one quarter's earnings.



    Weren't there rumblings that Microsoft was going to be classified as a mutual find if they didn't start paying dividends? It wasn't as if they were going to use their $60B to buy useful things, especially given that they were eventually thinking of buying Yahoo.



    This is precisely the issue. If Apple was reinvesting their cash flow in growth, I for one would not be suggesting a dividend, and I think neither would all of the finance pros who have also said that they should. The entire issue is the ability of a company to reinvest capital in growth. if the company can't do that, then they should give some of the capital back to the stockholders. You can invent all sorts of other arbitrary rules about which companies pay dividends and why, but this is the ONLY calculus that actually matters.



    Incidentally, until the mid-'90s, AAPL paid a dividend. They only stopped when their growth stopped, which cancels out the "only companies which aren't growing pay dividends" argument.
  • Reply 45 of 54
    Quote:
    Originally Posted by Dr Millmoss View Post


    You must have missed my response. Nice selective reading.



    Could you please provide some sources backing up your assertion that stock prices don't decrease immediately following a dividend?
  • Reply 46 of 54
    Quote:
    Originally Posted by Wil Maneker View Post


    Could you please provide some sources backing up your assertion that stock prices don't decrease immediately following a dividend?



    I have already said. Stocks paying substantial dividends often exhibit a sawtooth pattern before and after ex-dividend, because some investors buy in before the dividend is declared and sell after it is paid. I don't disagree with you so far. However, for companies offering relatively small dividends, I defy you to show me an effect, one you actually measure on something more than a theoretical basis. In the case of AAPL, if they declared a very generous dividend of $1.00/share, this would amount to $0.25/share on a quarterly basis. Do you honestly believe that AAPL would drop by a predictable $0.25 when they went ex-dividend?



    I don't think so, and I also think that offering a dividend would increase the attractiveness of owning the shares, such that any theoretical decrease in share price on ex-dividend would be rendered less than theoretical.



    I would also suggest that you have misread your own sources. They refer to the adjustments in the value of transactions that occur between the declaration of the dividend and payment of the dividend.



    Quote:

    The ex-dividend date was created to allow all pending transactions to be completed before the record date. If an investor does not own the stock before the ex-dividend date, he or she will be ineligible for the dividend payout. Further, for all pending transactions that have not been completed by the ex-dividend date, the exchanges automatically reduce the price of the stock by the amount of the dividend.



  • Reply 47 of 54
    AI gets top marks for some of the most sensationalist headlines.
  • Reply 48 of 54
    str1f3str1f3 Posts: 573member
    Quote:
    Originally Posted by caliminius View Post


    Because AI knows any article mentioning Microsoft will drive up page hits which is good for advertising revenue. They know the same group of MS haters will have to chime in with the same tired, witless MS bashing comments like they always do.



    That doesn't make any sense. The focus of the story is MS. What is in question is why Apple was mentioned. My guess is to show while Apple is making money off of their App Store, Microsoft is bribing developers to make apps for theirs.
  • Reply 49 of 54
    Quote:
    Originally Posted by Dr Millmoss View Post


    I have already said. Stocks paying substantial dividends often exhibit a sawtooth pattern before and after ex-dividend, because some investors buy in before the dividend is declared and sell after it is paid. I don't disagree with you so far. However, for companies offering relatively small dividends, I defy you to show me an effect, one you actually measure on something more than a theoretical basis. In the case of AAPL, if they declared a very generous dividend of $1.00/share, this would amount to $0.25/share on a quarterly basis. Do you honestly believe that AAPL would drop by a predictable $0.25 when they went ex-dividend?



    I don't think so, and I also think that offering a dividend would increase the attractiveness of owning the shares, such that any theoretical decrease in share price on ex-dividend would be rendered less than theoretical.



    I would also suggest that you have misread your own sources. They refer to the adjustments in the value of transactions that occur between the declaration of the dividend and payment of the dividend.



    First, for a stock with a current market value ~$160, a 25 cent quarterly dividend isn't very generous. The yield would be 0.6%.



    Second, as for defying me to show you something more than theory that a stock price drops at the ex-dividend date, I took some time to look at the trading values of 4 dividend paying stocks via Yahoo Finance. I looked at the opening price on the ex-dividend date and compared it to the closing price for the day prior. I did not take the time to do a statistical analysis to determine validity but rather took a stick count: was the price lower vs. was the price same or higher.



    Proctor & Gamble (PG) Feb 1998 - present

    41 out of 47 times the stock price opened lower. ~87%



    Duke Energy (DUK) Sep 1995 - present

    48 out of 54 times the stock price opened lower. ~89%



    General Electric (GE) Dec 1994 - present

    40 out of 59 times the stock price opened lower. ~68%



    Union Pacific (UNP) Mar 1995 - present

    45 out of 57 times the stock price opened lower. ~79%



    While this is far from conclusive, it only convinces me further that the market makes an adjust for the time value of the next dividend payment. Not just in theory, but also in practice.



    Third, if Apple did announce a regular dividend it would increase the attractiveness to some investors (those interested in increasing their portfolios mix of fixed income) but it would also decrease the attractiveness to some investors (those interested in minimizing their portfolios mix of fixed income).
  • Reply 50 of 54
    I know how much a $1.00/share dividend works out to percentage-wise at the current stock price. This would be seen as a generous dividend for a technology company, many if not most of which don't pay any. I was trying to make it clear that I wasn't suggesting that Apple declare a dividend along the lines of a Procter & Gamble or Pepsico, or even Microsoft, even though they could easily afford to do so. No, I am simply saying that Apple could declare a dividend that would be generally regarded as generous without even breaking a sweat. That is my point.



    Your analysis is certainly less than definitive. I think it's immaterial. As I have already said, companies that pay substantial dividends (buy which I mean, something on the order of 2-3% or more) will display a sawtooth pattern before and after ex-dividend. All other things being equal, this comes out in the wash because the dividend is baked in to the stock's valuation over the long term. The only exception to this (to my knowledge) is when a company is doing poorly and is thought to be considering cutting their dividend.



    I believe it's fanciful to suggest that some investors would prefer to own a stock that pays no dividend if they could own the same stock and get one.



    Incidentally, the article suggests that Apple's board has considered declaring a dividend, or that they may yet do so. But one thing we as individual investors can be sure of, if they do declare a dividend, it wouldn't be to make us happy. They'd do it because they and top management own large numbers of shares and options.
  • Reply 51 of 54
    Quote:
    Originally Posted by Dr Millmoss View Post


    I believe it's fanciful to suggest that some investors would prefer to own a stock that pays no dividend if they could own the same stock and get one.



    Considering that some investors wish to avoid the tax considerations of dividends and that some investors would rather the company have $1 in the bank as an asset rather than personally have 80 cents with the government having 20 cents, I find it realistic to believe that some investors would prefer to own a stock that pays no dividend.
  • Reply 52 of 54
    The maximum tax rate on qualified dividends is 15%.



    So yes, I have heard of (and even known) people who prefer to avoid making money because they don't want to pay taxes. I consider them poorly informed, and I certainly don't want to suffer financially on that basis.
  • Reply 53 of 54
    Quote:
    Originally Posted by Dr Millmoss View Post


    The maximum tax rate on qualified dividends is 15%.



    So yes, I have heard of (and even known) people who prefer to avoid making money because they don't want to pay taxes. I consider them poorly informed, and I certainly don't want to suffer financially on that basis.



    If i had the choice between a stock price doubling (like Apple has done) or getting a small dividend, i'd rather take the share gains. Not everyone invests for dividends.
  • Reply 54 of 54
    dr millmossdr millmoss Posts: 5,403member
    Quote:
    Originally Posted by AppleStud View Post


    If i had the choice between a stock price doubling (like Apple has done) or getting a small dividend, i'd rather take the share gains. Not everyone invests for dividends.



    Since they aren't mutually exclusive propositions, if I had a choice, I'd take both.



    The fundamental mistake being made here is the (apparent) assumption that Apple's share price is in some way predicated on the size of their cash reserves. If they were a bank, maybe. But since they are not a bank, the share price is ultimately predicated on profits.
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