In my opinion, AAPL is being too conservative with its cash. With $40B in the bank, I'd expect them to be aggressive in using it (even more than they are). While they have continued to expand by opening retail stores, develop new products, etc, it is evident that AAPL is still growing the cash account. Given that AAPL has both relatively small (Mac) and large (iPod/iPhone) markets across its product lines, I'd think they should open the spigot and let the cash flow a bit more. And if I were an investor, I'd be raising my eyebrow at their $0 debt. Debt is a double-edged sword in that yes, debt creates obligation to others, but is also a sign of healthy growth and business expansion. To me, this says that AAPL could be doing so much more with what they have. Whats the point of hording all that cash if it's just going to sit there? With $40B in reserves, you'd think that AAPL should be around $300 or higher per stock, but its not. I think the reasons I state above contribute at least somewhat to their seemingly under-valued stock- investor apprehension.
My $.02
I can't agree with that. Apple accumulates cash because they have a very strong business. Using it to buy something that isn't required would be absurd. As far as debt goes, no, it's not a sign of anything positive. It's a sign that they needed that debt to do what they wanted to do, and that their cash and stock wasn't sufficient to do it. Not a good move.
Apple can do what most companies can only dream to do, which is to self finance all their expansion.
They also grow by developing their own product lines, not by buying their way into them. When that's done, a company is stuck with those products. Any major changes will turn the old firms customers away. Apple can innovate their own way, and it costs far less. That's good for investors. If we didn't have this deep and long recession, Apple's sales last year might have been closer to $50 billion, rather than the $43 billion it was. Their cash hoard would now be another 6 billion over what it is.
One thing I really despise is when a company buys their stock back. The idea is to increase the value of n individual share, but it doesn't always work. The price rises right after, but longer term, its no better than if it hadn't been done. All the company has done is throw money away, especially if they retire most of the shares. There's nothing to show for it. Companies sometimes have to buy back small amounts of stock for purposes of compensation, but that's trivial.
A dividend would spend some of the money, but this is a growth company. There's no evidence that stock prices rise for growth companies when dividends are given. Not long term; and it becomes difficult to separate out the stock growth from dividends and that from sales and profit growth. With companies that are not growth companies, dividends can make the stock rise faster than average.
But we can look at MS. Until recently, MS's stock had been very low for a long time, despite their giving a dividend. Windows 7 resulted in their stock rising for the first time in what, six or seven years? A better product caused that.
So what should Apple do? Cook said that they do look at major acquisitions, but haven't found any good ones.
Spending tens of billions isn't easy, if it's to be done properly. We can all complain, but none of us are privy to what they are thinking, and at this time, I think they know best.
I notice that you didn't come up with any suggestions.
You don't know anything about their program, that's clear.
You can also replace the batteries. They aren't glued to the inside. Plenty of companies sell replacement batteries, and you can do it yourself. If you're too lazy, or afraid to, Apple will do it.
Guys like you make me laugh. Before you come on and make incorrect statements, learn something about the facts first.
I've been inside every ipod ever made. You are very wrong. But don't let that stop you from laughing at me.
I hear you, and thankfully you are correct, these decisions are not made by AI readers. But then again, human beings are human beings, and it's in the nature of of human beings to do things just because they can. Impulsively, if you will. My fear is that of all that spare cash will start to speak for itself. This happened to Microsoft during the '90s -- they were placing bets left and right without any obvious strategic plan behind it. None of that paid off AFAIK, and look where they are today.
Also, Apple has made strategic investments in parts suppliers in the past, and I'd expect them to continue to do so. These investments have been in the several hundred million dollar range however, which obviously begs the questions of what they'd do with the $40 billion they've got to work with today, and far more than that in a year's time.
It's tough to figure out a way to spend money that's coming in faster than beer spilling from a keg with a broken spigot.
I also believe that Apple is wary of getting involved with other companies in dual management roles. The Samsung deal is the only one I'm aware of, and that could have soured them on the whole idea. There is no way Apple will involve themselves with companies that MAY have problems like that.
So, expanding their campus for a billion or so. Adding communications and network centers for a billion apiece is where I see the money going. Expanding the stores by 50 a year, takes money, but they won't go much faster, because they want to make certain they do it right.
Will they ever build, or buy an advanced manufacturing plant? Who knows. But it would have to either offer better security, better efficiency, higher quality, or some combo. Otherwise, there's no point.
As I'm totally against stock buybacks, I'm happy they seem to see it the same way. I'm not opposed to dividends, but I don't see it making a difference, and it wouldn't soak up that much cash.
Quite frankly, I'm stumped! The cash is getting to the point where there won't be anything they can do with it. No matter what they do, there will be analysts who will see a downside, or regulators won't approve it. Even if they bought Adobe, a popular notion, it might not get approved. And even if it did, Apple would be forced in selling more than two thirds of the products to the Windows and Linux markets. They couldn't discontinue most of that stuff, including Flash, as there would be lawsuits all over the place.
Canada is the second largest nation in the world behind Russia. You can ask most people about world geography and elicit a correct answer.
I've been vacationing in Canada for the last ten years. We regularly meet Canadians who can't give you adequate directions across town, let alone know what's going on where in other parts of the world.
Considering the entire population of Canada is not quite 33.4 million -- the equivalent of Los Angeles, New York, Chicago and Miami combined -- the few dozen Canadian elitists who can actually afford to get online and continually bark about how marvelously special they are, should realize that most of the country is underdeveloped and their youth uneducated beyond that of any other industrialized country. Furthermore, their vaunted health care system only works because they live just across the border from the good doctors, their standard unemployment rate is typical of a bad recession in the USA, and they pay monstrous taxes and additional product prices to have all of their road signs and food containers printed in a second language less than one tenth of them can actually speak.
Canada is so culturally impoverished that even when hosting the Winter Olympics, they used an American reformed drug addict skier from Colorado, USA to compete for them, and then he fell and lost a guaranteed medal in his race.
It's true, we met a lot of very polite people when vacationing in Canada. Most of them were from Australia, working the jobs the Canadians wouldn't, while ranting about how bad their economy was and trying to blame the USA for it.
I've been inside every ipod ever made. You are very wrong. But don't let that stop you from laughing at me.
So? What's the point? Are you now claiming to be an expert? If you've been inside every iPod, you should also be inside every iPhone, and every iPodTouch. Things change over the years. Apparently, you're not aware of the batteries you can buy.
And as for their programs, even Greenpeace now agrees that Apple is doing more than other companies in this regard.
I've been vacationing in Canada for the last ten years. We regularly meet Canadians who can't give you adequate directions across town, let alone know what's going on where in other parts of the world.
Considering the entire population of Canada is not quite 33.4 million -- the equivalent of Los Angeles, New York, Chicago and Miami combined -- the few dozen Canadian elitists who can actually afford to get online and continually bark about how marvelously special they are, should realize that most of the country is underdeveloped and their youth uneducated beyond that of any other industrialized country. Furthermore, their vaunted health care system only works because they live just across the border from the good doctors, their standard unemployment rate is typical of a bad recession in the USA, and they pay monstrous taxes and additional product prices to have all of their road signs and food containers printed in a second language less than one tenth of them can actually speak.
Canada is so culturally impoverished that even when hosting the Winter Olympics, they used an American reformed drug addict skier from Colorado, USA to compete for them, and then he fell and lost a guaranteed medal in his race.
It's true, we met a lot of very polite people when vacationing in Canada. Most of them were from Australia, working the jobs the Canadians wouldn't, while ranting about how bad their economy was and trying to blame the USA for it.
A dividend would spend some of the money, but this is a growth company. There's no evidence that stock prices rise for growth companies when dividends are given. Not long term; and it becomes difficult to separate out the stock growth from dividends and that from sales and profit growth. With companies that are not growth companies, dividends can make the stock rise faster than average.
I was with you right up to this point. The idea that a growth company should not pay a dividend is an arbitrary one, or at least, an antique concept. It comes from the days of heavy industrial companies throwing off a lot of cash in sectors that don't grow very much. The company generates a big cash flow which it can't reasonably reinvest in expansion, so they give some it back to the stockholders. The key is whether the capital generated can be reinvested in growth -- and not whether the company is growing.
As you pointed out, Apple is growing by expanding their product line. This is where the cash comes from. So the reality is, they can continue this pattern of growth provided they keep coming up with the ideas. This is not a capital-intensive way of growing a business. I have seen no scenario where they could spend even a small fraction of $40 billion on growth, without making a major acquisition, which I think both of us agree would be very risky.
So they should give some of that cash back to the stockholders, not because it makes the share price grow, but because there isn't any other responsible use for it.
I was with you right up to this point. The idea that a growth company should not pay a dividend is an arbitrary one, or at least, an antique concept. It comes from the days of heavy industrial companies throwing off a lot of cash in sectors that don't grow very much. The company generates a big cash flow which it can't reasonably reinvest in expansion, so they give some it back to the stockholders. The key is whether the capital generated can be reinvested in growth -- and not whether the company is growing.
As you pointed out, Apple is growing by expanding their product line. This is where the cash comes from. So the reality is, they can continue this pattern of growth provided they keep coming up with the ideas. This is not a capital-intensive way of growing a business. I have seen no scenario where they could spend even a small fraction of $40 billion on growth, without making a major acquisition, which I think both of us agree would be very risky.
So they should give some of that cash back to the stockholders, not because it makes the share price grow, but because there isn't any other responsible use for it.
As I said, I have no philosophical reason to disagree. I mentioned the stock price because giving a dividend is often given as a major reason to have a dividend. MS only gave one this century because their stock was stuck. It didn't help. They did give a one time $30 billion back when they had a $63 billion hoard. Gates, Ballmer, and a few others mostly benefitted from that.
If Apple's numbers get to $50 billion before they spend a good part of it, there will be clamor for that too. Personally, I wouldn't turn it down, as I have a fair amount of stock, but most stockholders have little stock, and will get little. Mostly, institutional investors would benefit.
I was with you right up to this point. The idea that a growth company should not pay a dividend is an arbitrary one, or at least, an antique concept. It comes from the days of heavy industrial companies throwing off a lot of cash in sectors that don't grow very much. The company generates a big cash flow which it can't reasonably reinvest in expansion, so they give some it back to the stockholders. The key is whether the capital generated can be reinvested in growth -- and not whether the company is growing.
As you pointed out, Apple is growing by expanding their product line. This is where the cash comes from. So the reality is, they can continue this pattern of growth provided they keep coming up with the ideas. This is not a capital-intensive way of growing a business. I have seen no scenario where they could spend even a small fraction of $40 billion on growth, without making a major acquisition, which I think both of us agree would be very risky.
So they should give some of that cash back to the stockholders, not because it makes the share price grow, but because there isn't any other responsible use for it.
Personally, I foresee them riding out the recession/depression in fine shape, continuing to make smart small company acquisitions, and continuing a moderate growth curve. Let other companies risk their existence on big risks for now, many of them won't survive this downturn. Apple will.
Personally, I foresee them riding out the recession/depression in fine shape, continuing to make smart small company acquisitions, and continuing a middle of the road growth curve. Let other companies risk their existence on big risks for now, many of them won't survive this downturn. Apple will.
At the beginning of the recession, Jobs was asked what Apple would be doing to get through the recession. His answer was that they would put more money into R&D so that when the recession ended they would have these great new products while their competitors would be rebuilding their R&D departments.
I think we can see that it's exactly what's happened.
At the beginning of the recession, Jobs was asked what Apple would be doing to get through the recession. His answer was that they would put more money into R&D so that when the recession ended they would have these great new products while their competitors would be rebuilding their R&D departments.
I think we can see that it's exactly what's happened.
I forgot about that statement.
My personal hope is that they come out with a new AppleTV and Home Server, both based on ARM and iPhone OS. The latter product I think would be very popular. HP is coming out with a $25 OS update to their Media Smart server. I'll have to read some reviews before seeing if it's worth it for me.
At the beginning of the recession, Jobs was asked what Apple would be doing to get through the recession. His answer was that they would put more money into R&D so that when the recession ended they would have these great new products while their competitors would be rebuilding their R&D departments.
I think we can see that it's exactly what's happened.
I thought this comment was older and did not refer to our current recession, and I was right. Found the quote: "We decided to innovate our way through this downturn, so that we would be further ahead of our competitors when things turn up."
I thought this comment was older and did not refer to our current recession, and I was right. Found the quote: "We decided to innovate our way through this downturn, so that we would be further ahead of our competitors when things turn up."
As I said, I have no philosophical reason to disagree. I mentioned the stock price because giving a dividend is often given as a major reason to have a dividend. MS only gave one this century because their stock was stuck. It didn't help. They did give a one time $30 billion back when they had a $63 billion hoard. Gates, Ballmer, and a few others mostly benefitted from that.
If Apple's numbers get to $50 billion before they spend a good part of it, there will be clamor for that too. Personally, I wouldn't turn it down, as I have a fair amount of stock, but most stockholders have little stock, and will get little. Mostly, institutional investors would benefit.
I wouldn't think bumping the stock price is a good reason by itself, though I suspect it would help some if only because cash assets are not factored into the valuation of the company by investors, but dividends are. I do think dividends would if nothing else reduce volatility, because they reward long term investors while volatility rewards active traders. And as you say, I don't see them doing it for little guy investors like you and I. Nobody does anything for people like us. But that doesn't mean we wouldn't benefit.
The clamoring for a dividend started a long time ago. It's a question that gets asked at every annual stockholder's meeting, and I've seen plenty of commentaries from investment experts saying that Apple should do this, going back at least a year. In any event at the present rate of accumulation, that magic $50 billion number will be reached by the middle of this year, so I don't think it's any too soon to ask the question.
I don't argue that the Microsoft-style one time dividend makes sense. The number I've always had in mind is $1.00 a share annually, which works out to about two weeks of free cash flow. So that means they reach $50 billion a few days later. Big deal.
Quote:
Originally Posted by SpamSandwich
Personally, I foresee them riding out the recession/depression in fine shape, continuing to make smart small company acquisitions, and continuing a moderate growth curve. Let other companies risk their existence on big risks for now, many of them won't survive this downturn. Apple will.
Well yes, I don't see them needing multiple billions for anything they could do responsibly. But whenever the question is asked at the stockholder meetings, we get flimflammed by Steve. He should save that art for flogging product instead of sandbagging investors.
In my opinion, AAPL is being too conservative with its cash. With $40B in the bank, I'd expect them to be aggressive in using it (even more than they are). While they have continued to expand by opening retail stores, develop new products, etc, it is evident that AAPL is still growing the cash account. Given that AAPL has both relatively small (Mac) and large (iPod/iPhone) markets across its product lines, I'd think they should open the spigot and let the cash flow a bit more. And if I were an investor, I'd be raising my eyebrow at their $0 debt. Debt is a double-edged sword in that yes, debt creates obligation to others, but is also a sign of healthy growth and business expansion. To me, this says that AAPL could be doing so much more with what they have. Whats the point of hording all that cash if it's just going to sit there? With $40B in reserves, you'd think that AAPL should be around $300 or higher per stock, but its not. I think the reasons I state above contribute at least somewhat to their seemingly under-valued stock- investor apprehension.
I think part of the problem is that expanding to a very wide market means moving into much lower margin business, and in some ways, over reaching. Apple can't be all things to all people.
A lot of that money is invested and they seem to make a fair amount of money from that, it's not as if it's just sitting there, rotting.
Why have debt if you can just pay it off? Also, debt isn't just an obligation to others. There is a certain amount of control that is lost, especially if a loan gets called in, which can and does happen even if all bills are paid 100% and on time. If there isn't anything else to cover the value of the called loan by the deadline, then that can be crippling, if not a death blow.
Quote:
Originally Posted by SpamSandwich
I thought this comment was older and did not refer to our current recession, and I was right. Found the quote: "We decided to innovate our way through this downturn, so that we would be further ahead of our competitors when things turn up."
I think that makes sense. Too many people lose perspective in a recession and make problems even worse than it needs to be. Some people behave as if it just stops everything, when it's really a slowdown, usually a moderate one at that. This time, it's not as moderate, but a sense of perspctive is still needed.
Comments
In my opinion, AAPL is being too conservative with its cash. With $40B in the bank, I'd expect them to be aggressive in using it (even more than they are). While they have continued to expand by opening retail stores, develop new products, etc, it is evident that AAPL is still growing the cash account. Given that AAPL has both relatively small (Mac) and large (iPod/iPhone) markets across its product lines, I'd think they should open the spigot and let the cash flow a bit more. And if I were an investor, I'd be raising my eyebrow at their $0 debt. Debt is a double-edged sword in that yes, debt creates obligation to others, but is also a sign of healthy growth and business expansion. To me, this says that AAPL could be doing so much more with what they have. Whats the point of hording all that cash if it's just going to sit there? With $40B in reserves, you'd think that AAPL should be around $300 or higher per stock, but its not. I think the reasons I state above contribute at least somewhat to their seemingly under-valued stock- investor apprehension.
My $.02
I can't agree with that. Apple accumulates cash because they have a very strong business. Using it to buy something that isn't required would be absurd. As far as debt goes, no, it's not a sign of anything positive. It's a sign that they needed that debt to do what they wanted to do, and that their cash and stock wasn't sufficient to do it. Not a good move.
Apple can do what most companies can only dream to do, which is to self finance all their expansion.
They also grow by developing their own product lines, not by buying their way into them. When that's done, a company is stuck with those products. Any major changes will turn the old firms customers away. Apple can innovate their own way, and it costs far less. That's good for investors. If we didn't have this deep and long recession, Apple's sales last year might have been closer to $50 billion, rather than the $43 billion it was. Their cash hoard would now be another 6 billion over what it is.
One thing I really despise is when a company buys their stock back. The idea is to increase the value of n individual share, but it doesn't always work. The price rises right after, but longer term, its no better than if it hadn't been done. All the company has done is throw money away, especially if they retire most of the shares. There's nothing to show for it. Companies sometimes have to buy back small amounts of stock for purposes of compensation, but that's trivial.
A dividend would spend some of the money, but this is a growth company. There's no evidence that stock prices rise for growth companies when dividends are given. Not long term; and it becomes difficult to separate out the stock growth from dividends and that from sales and profit growth. With companies that are not growth companies, dividends can make the stock rise faster than average.
But we can look at MS. Until recently, MS's stock had been very low for a long time, despite their giving a dividend. Windows 7 resulted in their stock rising for the first time in what, six or seven years? A better product caused that.
So what should Apple do? Cook said that they do look at major acquisitions, but haven't found any good ones.
Spending tens of billions isn't easy, if it's to be done properly. We can all complain, but none of us are privy to what they are thinking, and at this time, I think they know best.
I notice that you didn't come up with any suggestions.
You don't know anything about their program, that's clear.
You can also replace the batteries. They aren't glued to the inside. Plenty of companies sell replacement batteries, and you can do it yourself. If you're too lazy, or afraid to, Apple will do it.
Guys like you make me laugh. Before you come on and make incorrect statements, learn something about the facts first.
I've been inside every ipod ever made. You are very wrong. But don't let that stop you from laughing at me.
I hear you, and thankfully you are correct, these decisions are not made by AI readers. But then again, human beings are human beings, and it's in the nature of of human beings to do things just because they can. Impulsively, if you will. My fear is that of all that spare cash will start to speak for itself. This happened to Microsoft during the '90s -- they were placing bets left and right without any obvious strategic plan behind it. None of that paid off AFAIK, and look where they are today.
Also, Apple has made strategic investments in parts suppliers in the past, and I'd expect them to continue to do so. These investments have been in the several hundred million dollar range however, which obviously begs the questions of what they'd do with the $40 billion they've got to work with today, and far more than that in a year's time.
It's tough to figure out a way to spend money that's coming in faster than beer spilling from a keg with a broken spigot.
I also believe that Apple is wary of getting involved with other companies in dual management roles. The Samsung deal is the only one I'm aware of, and that could have soured them on the whole idea. There is no way Apple will involve themselves with companies that MAY have problems like that.
So, expanding their campus for a billion or so. Adding communications and network centers for a billion apiece is where I see the money going. Expanding the stores by 50 a year, takes money, but they won't go much faster, because they want to make certain they do it right.
Will they ever build, or buy an advanced manufacturing plant? Who knows. But it would have to either offer better security, better efficiency, higher quality, or some combo. Otherwise, there's no point.
As I'm totally against stock buybacks, I'm happy they seem to see it the same way. I'm not opposed to dividends, but I don't see it making a difference, and it wouldn't soak up that much cash.
Quite frankly, I'm stumped! The cash is getting to the point where there won't be anything they can do with it. No matter what they do, there will be analysts who will see a downside, or regulators won't approve it. Even if they bought Adobe, a popular notion, it might not get approved. And even if it did, Apple would be forced in selling more than two thirds of the products to the Windows and Linux markets. They couldn't discontinue most of that stuff, including Flash, as there would be lawsuits all over the place.
Canada is the second largest nation in the world behind Russia. You can ask most people about world geography and elicit a correct answer.
I've been vacationing in Canada for the last ten years. We regularly meet Canadians who can't give you adequate directions across town, let alone know what's going on where in other parts of the world.
Considering the entire population of Canada is not quite 33.4 million -- the equivalent of Los Angeles, New York, Chicago and Miami combined -- the few dozen Canadian elitists who can actually afford to get online and continually bark about how marvelously special they are, should realize that most of the country is underdeveloped and their youth uneducated beyond that of any other industrialized country. Furthermore, their vaunted health care system only works because they live just across the border from the good doctors, their standard unemployment rate is typical of a bad recession in the USA, and they pay monstrous taxes and additional product prices to have all of their road signs and food containers printed in a second language less than one tenth of them can actually speak.
Canada is so culturally impoverished that even when hosting the Winter Olympics, they used an American reformed drug addict skier from Colorado, USA to compete for them, and then he fell and lost a guaranteed medal in his race.
It's true, we met a lot of very polite people when vacationing in Canada. Most of them were from Australia, working the jobs the Canadians wouldn't, while ranting about how bad their economy was and trying to blame the USA for it.
I've been inside every ipod ever made. You are very wrong. But don't let that stop you from laughing at me.
So? What's the point? Are you now claiming to be an expert? If you've been inside every iPod, you should also be inside every iPhone, and every iPodTouch. Things change over the years. Apparently, you're not aware of the batteries you can buy.
And as for their programs, even Greenpeace now agrees that Apple is doing more than other companies in this regard.
I've been vacationing in Canada for the last ten years. We regularly meet Canadians who can't give you adequate directions across town, let alone know what's going on where in other parts of the world.
Considering the entire population of Canada is not quite 33.4 million -- the equivalent of Los Angeles, New York, Chicago and Miami combined -- the few dozen Canadian elitists who can actually afford to get online and continually bark about how marvelously special they are, should realize that most of the country is underdeveloped and their youth uneducated beyond that of any other industrialized country. Furthermore, their vaunted health care system only works because they live just across the border from the good doctors, their standard unemployment rate is typical of a bad recession in the USA, and they pay monstrous taxes and additional product prices to have all of their road signs and food containers printed in a second language less than one tenth of them can actually speak.
Canada is so culturally impoverished that even when hosting the Winter Olympics, they used an American reformed drug addict skier from Colorado, USA to compete for them, and then he fell and lost a guaranteed medal in his race.
It's true, we met a lot of very polite people when vacationing in Canada. Most of them were from Australia, working the jobs the Canadians wouldn't, while ranting about how bad their economy was and trying to blame the USA for it.
Ok, let it go guys!
A dividend would spend some of the money, but this is a growth company. There's no evidence that stock prices rise for growth companies when dividends are given. Not long term; and it becomes difficult to separate out the stock growth from dividends and that from sales and profit growth. With companies that are not growth companies, dividends can make the stock rise faster than average.
I was with you right up to this point. The idea that a growth company should not pay a dividend is an arbitrary one, or at least, an antique concept. It comes from the days of heavy industrial companies throwing off a lot of cash in sectors that don't grow very much. The company generates a big cash flow which it can't reasonably reinvest in expansion, so they give some it back to the stockholders. The key is whether the capital generated can be reinvested in growth -- and not whether the company is growing.
As you pointed out, Apple is growing by expanding their product line. This is where the cash comes from. So the reality is, they can continue this pattern of growth provided they keep coming up with the ideas. This is not a capital-intensive way of growing a business. I have seen no scenario where they could spend even a small fraction of $40 billion on growth, without making a major acquisition, which I think both of us agree would be very risky.
So they should give some of that cash back to the stockholders, not because it makes the share price grow, but because there isn't any other responsible use for it.
I was with you right up to this point. The idea that a growth company should not pay a dividend is an arbitrary one, or at least, an antique concept. It comes from the days of heavy industrial companies throwing off a lot of cash in sectors that don't grow very much. The company generates a big cash flow which it can't reasonably reinvest in expansion, so they give some it back to the stockholders. The key is whether the capital generated can be reinvested in growth -- and not whether the company is growing.
As you pointed out, Apple is growing by expanding their product line. This is where the cash comes from. So the reality is, they can continue this pattern of growth provided they keep coming up with the ideas. This is not a capital-intensive way of growing a business. I have seen no scenario where they could spend even a small fraction of $40 billion on growth, without making a major acquisition, which I think both of us agree would be very risky.
So they should give some of that cash back to the stockholders, not because it makes the share price grow, but because there isn't any other responsible use for it.
As I said, I have no philosophical reason to disagree. I mentioned the stock price because giving a dividend is often given as a major reason to have a dividend. MS only gave one this century because their stock was stuck. It didn't help. They did give a one time $30 billion back when they had a $63 billion hoard. Gates, Ballmer, and a few others mostly benefitted from that.
If Apple's numbers get to $50 billion before they spend a good part of it, there will be clamor for that too. Personally, I wouldn't turn it down, as I have a fair amount of stock, but most stockholders have little stock, and will get little. Mostly, institutional investors would benefit.
I was with you right up to this point. The idea that a growth company should not pay a dividend is an arbitrary one, or at least, an antique concept. It comes from the days of heavy industrial companies throwing off a lot of cash in sectors that don't grow very much. The company generates a big cash flow which it can't reasonably reinvest in expansion, so they give some it back to the stockholders. The key is whether the capital generated can be reinvested in growth -- and not whether the company is growing.
As you pointed out, Apple is growing by expanding their product line. This is where the cash comes from. So the reality is, they can continue this pattern of growth provided they keep coming up with the ideas. This is not a capital-intensive way of growing a business. I have seen no scenario where they could spend even a small fraction of $40 billion on growth, without making a major acquisition, which I think both of us agree would be very risky.
So they should give some of that cash back to the stockholders, not because it makes the share price grow, but because there isn't any other responsible use for it.
Personally, I foresee them riding out the recession/depression in fine shape, continuing to make smart small company acquisitions, and continuing a moderate growth curve. Let other companies risk their existence on big risks for now, many of them won't survive this downturn. Apple will.
Personally, I foresee them riding out the recession/depression in fine shape, continuing to make smart small company acquisitions, and continuing a middle of the road growth curve. Let other companies risk their existence on big risks for now, many of them won't survive this downturn. Apple will.
At the beginning of the recession, Jobs was asked what Apple would be doing to get through the recession. His answer was that they would put more money into R&D so that when the recession ended they would have these great new products while their competitors would be rebuilding their R&D departments.
I think we can see that it's exactly what's happened.
At the beginning of the recession, Jobs was asked what Apple would be doing to get through the recession. His answer was that they would put more money into R&D so that when the recession ended they would have these great new products while their competitors would be rebuilding their R&D departments.
I think we can see that it's exactly what's happened.
I forgot about that statement.
My personal hope is that they come out with a new AppleTV and Home Server, both based on ARM and iPhone OS. The latter product I think would be very popular. HP is coming out with a $25 OS update to their Media Smart server. I'll have to read some reviews before seeing if it's worth it for me.
At the beginning of the recession, Jobs was asked what Apple would be doing to get through the recession. His answer was that they would put more money into R&D so that when the recession ended they would have these great new products while their competitors would be rebuilding their R&D departments.
I think we can see that it's exactly what's happened.
I thought this comment was older and did not refer to our current recession, and I was right. Found the quote: "We decided to innovate our way through this downturn, so that we would be further ahead of our competitors when things turn up."
It was in 2001, but it's just as valid today.
http://www.huffingtonpost.com/tim-ch..._b_290831.html
I thought this comment was older and did not refer to our current recession, and I was right. Found the quote: "We decided to innovate our way through this downturn, so that we would be further ahead of our competitors when things turn up."
It was in 2001.
http://www.huffingtonpost.com/tim-ch..._b_290831.html
That's a different one. I remember him saying what I posted somewhere around early 2008, or thereabouts.
As I said, I have no philosophical reason to disagree. I mentioned the stock price because giving a dividend is often given as a major reason to have a dividend. MS only gave one this century because their stock was stuck. It didn't help. They did give a one time $30 billion back when they had a $63 billion hoard. Gates, Ballmer, and a few others mostly benefitted from that.
If Apple's numbers get to $50 billion before they spend a good part of it, there will be clamor for that too. Personally, I wouldn't turn it down, as I have a fair amount of stock, but most stockholders have little stock, and will get little. Mostly, institutional investors would benefit.
I wouldn't think bumping the stock price is a good reason by itself, though I suspect it would help some if only because cash assets are not factored into the valuation of the company by investors, but dividends are. I do think dividends would if nothing else reduce volatility, because they reward long term investors while volatility rewards active traders. And as you say, I don't see them doing it for little guy investors like you and I. Nobody does anything for people like us. But that doesn't mean we wouldn't benefit.
The clamoring for a dividend started a long time ago. It's a question that gets asked at every annual stockholder's meeting, and I've seen plenty of commentaries from investment experts saying that Apple should do this, going back at least a year. In any event at the present rate of accumulation, that magic $50 billion number will be reached by the middle of this year, so I don't think it's any too soon to ask the question.
I don't argue that the Microsoft-style one time dividend makes sense. The number I've always had in mind is $1.00 a share annually, which works out to about two weeks of free cash flow. So that means they reach $50 billion a few days later. Big deal.
Personally, I foresee them riding out the recession/depression in fine shape, continuing to make smart small company acquisitions, and continuing a moderate growth curve. Let other companies risk their existence on big risks for now, many of them won't survive this downturn. Apple will.
Well yes, I don't see them needing multiple billions for anything they could do responsibly. But whenever the question is asked at the stockholder meetings, we get flimflammed by Steve. He should save that art for flogging product instead of sandbagging investors.
In my opinion, AAPL is being too conservative with its cash. With $40B in the bank, I'd expect them to be aggressive in using it (even more than they are). While they have continued to expand by opening retail stores, develop new products, etc, it is evident that AAPL is still growing the cash account. Given that AAPL has both relatively small (Mac) and large (iPod/iPhone) markets across its product lines, I'd think they should open the spigot and let the cash flow a bit more. And if I were an investor, I'd be raising my eyebrow at their $0 debt. Debt is a double-edged sword in that yes, debt creates obligation to others, but is also a sign of healthy growth and business expansion. To me, this says that AAPL could be doing so much more with what they have. Whats the point of hording all that cash if it's just going to sit there? With $40B in reserves, you'd think that AAPL should be around $300 or higher per stock, but its not. I think the reasons I state above contribute at least somewhat to their seemingly under-valued stock- investor apprehension.
I think part of the problem is that expanding to a very wide market means moving into much lower margin business, and in some ways, over reaching. Apple can't be all things to all people.
A lot of that money is invested and they seem to make a fair amount of money from that, it's not as if it's just sitting there, rotting.
Why have debt if you can just pay it off? Also, debt isn't just an obligation to others. There is a certain amount of control that is lost, especially if a loan gets called in, which can and does happen even if all bills are paid 100% and on time. If there isn't anything else to cover the value of the called loan by the deadline, then that can be crippling, if not a death blow.
I thought this comment was older and did not refer to our current recession, and I was right. Found the quote: "We decided to innovate our way through this downturn, so that we would be further ahead of our competitors when things turn up."
It was in 2001, but it's just as valid today.
http://www.huffingtonpost.com/tim-ch..._b_290831.html
I think that makes sense. Too many people lose perspective in a recession and make problems even worse than it needs to be. Some people behave as if it just stops everything, when it's really a slowdown, usually a moderate one at that. This time, it's not as moderate, but a sense of perspctive is still needed.
I think your name might be more appropriately titled illogic.
Apple's next purchase
That's a different one. I remember him saying what I posted somewhere around early 2008, or thereabouts.
I must have missed that comment. At any rate...
http://www.youtube.com/watch?v=95fNgx8aCS8