2%-3% dividend suggested as best use of Apple's $100B in cash

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  • Reply 161 of 227
    Quote:
    Originally Posted by Mikeb85 View Post


    It will return money to the economy, which, as it gets spent again, will in turn drive more consumption or investment, which helps out the economy.



    Most of it would be reinvested into Apple shares.
  • Reply 162 of 227
    Quote:
    Originally Posted by drobforever View Post


    There's money and there's money. The money AAPL earned within US have a lot of potential use, so that worth a lot more than the money earned in e.g. Japan. That's why they're not gonna use the money earned in US to pay dividend or do buybacks. I mean, they want to be able to, at any time, e.g. to engage in bidding war against some hot tech companies, and judging from how much GOOG paid Motorola, they could need 10s of $B in US as reserve for that. The overseas money, they'd have to pay tax to bring it back, which they'd never do unless there's a tax holiday (the hit in earnings would be so big it's not happening).



    I am in general agreement with this!



    Though... I read somewhere, after the last earnings call, that Apple Apple has provided for the taxes to repatriate some overseas $ in their earnings.



    It may be that Apple will do this going forward -- as a cost of doing business.



  • Reply 163 of 227
    jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by kaiser_soze View Post


    You keep making these claims, but you do not back any of it up. A 2%- 3% dividend from Apple is not going to have a negative impact on the value of the stock. In fact, it will have precisely the opposite effect. There is widespread agreement among informed shareholders that this would be the effect on share value, yet you assert the opposite. And how would it reduce future growth, given that Apple has not yet even figured out what else they would do with it? This obviously does not make a whit of sense. And again you talk about repatriating the dividend, yet you still have not explained just what this entails and have not said anything definitive about just how much money would necessarily be forfeited to pay a meager 2% - 3% dividend.



    I REALLY wish that people who don't understand finance would stop cluttering this (and other) forum(s) with their drivel.



    The bolded is 100% wrong. The share value is a combination of the value of the cash and the investor's appraisal of the value of the underlying value of the business. If Apple has $100 in cash per share and the stock is trading at $500, then the investors consider the underlying business to be worth $400 per share.



    Now, if you give away 50% of the cash as a dividend, the owner has $50 in cash and a share worth $450. The share price would drop by approximately the amount paid out in dividends. If it didn't work that way, you could create value by simply giving money away - which is absurd.



    Quote:
    Originally Posted by kaiser_soze View Post


    AAAARRRRRGGGGGHHHHHHH!



    I hate to shout, BUT BY WHAT RATIONALE DO YOU REGARD STOCKHOLDERS AND ANALYSTS AS TWO MUTUALLY EXCLUSIVE CLASSES OF PEOPLE???????????????????????????



    I never said any such thing. You claimed that the analysts were speaking for the shareholders. My statement is that they are two entirely unrelated groups. There may be some overlap, but analyst do not speak for the shareholders.



    Quote:
    Originally Posted by syracuse View Post


    jragost gives way too much credit to the Board. Most Boards are puppets for Senior Mgmt that meet a few times a year. I'm sure when Jobs was Chairmen he ran the Board with an iron fist. 99.9999% of Apple's success was/is driven by their Sr Mgmt, engineers and all of their employees', certainly not the Board.



    Even if that were true (it isn't, btw), it doesn't change the argument. The fact is that Apple has people who are responsible for finding the best use for the cash on hand. It doesn't matter if it's the board or the management. The people who are responsible for deciding what to do with the money have decided that the best use right now is to hold onto it.



    Since those people (whether management or the board) have access to a great deal more information than anyone here, it is the height of arrogance to argue that they're wrong.
  • Reply 164 of 227
    Quote:
    Originally Posted by Sacto Joe View Post


    Maybe they should become a bank. Or a charity. Or a foundation.






    you think way too small.



    Apple needs sovereignty.
  • Reply 165 of 227
    Quote:
    Originally Posted by jragosta View Post


    I REALLY wish that people who don't understand finance would stop cluttering this (and other) forum(s) with their drivel.



    The bolded is 100% wrong. The share value is a combination of the value of the cash and the investor's appraisal of the value of the underlying value of the business. If Apple has $100 in cash per share and the stock is trading at $500, then the investors consider the underlying business to be worth $400 per share.



    Now, if you give away 50% of the cash as a dividend, the owner has $50 in cash and a share worth $450. The share price would drop by approximately the amount paid out in dividends. If it didn't work that way, you could create value by simply giving money away - which is absurd.







    I never said any such thing. You claimed that the analysts were speaking for the shareholders. My statement is that they are two entirely unrelated groups. There may be some overlap, but analyst do not speak for the shareholders.







    Even if that were true (it isn't, btw), it doesn't change the argument. The fact is that Apple has people who are responsible for finding the best use for the cash on hand. It doesn't matter if it's the board or the management. The people who are responsible for deciding what to do with the money have decided that the best use right now is to hold onto it.



    Since those people (whether management or the board) have access to a great deal more information than anyone here, it is the height of arrogance to argue that they're wrong.



    I'm not sure who you think you are, except a guy that trolls this site and posts a bunch. But you should try reading "Security Analysis" by Graham and Dodd. Maybe then you could grasp how Fund Managers view a dividend payment, cash on a balance sheet and the impact they have on a share price.



    Yikes talk about arrogance.



    BTW The Board may very well be in agreement with paying a dividend after reaching $100bn in cash equivilants on the balance sheet. We should have some clarity on this by Feb. 23rd
  • Reply 166 of 227
    jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by syracuse View Post


    I'm not sure who you think you are, except a guy that trolls this site and posts a bunch. But you should try reading "Security Analysis" by Graham and Dodd. Maybe then you could grasp how Fund Managers view a dividend payment, cash on a balance sheet and the impact they have on a share price.



    Yikes talk about arrogance.



    BTW The Board may very well be in agreement with paying a dividend after reaching $100bn in cash equivilants on the balance sheet. We should have some clarity on this by Feb. 23rd



    Why the heck should I bother? You don't have any intelligent argument and everything you post is contrary to standard business practice. Even if you found one book which supports you (which you haven't done since you have't quoted anything that supports your claim), I've been an investor of enough money and run enough public companies that it's clear that your claims are wrong - and I gave the reasons.



    By your logic, it makes absolutely no difference whether Apple has $100 B in the bank or nothing - or $100 B in debt, for that matter. Clearly, that is completely illogical and contrary to rationality.
  • Reply 167 of 227
    herbapouherbapou Posts: 2,227member
    Quote:
    Originally Posted by FriedLobster View Post


    Absolute non sense. You dont know what you're talking about.

    Youre comparing netflix and amazon to Apple? Haha youre nutz!

    Look at their revenue/profit/etc growth. THERE is no comparison.

    Do you even know what youre talking about? Rofl



    Well there are lots of people here that obviously don't understand finance at all. I am not going to keep arguing with you, its a waste of time. btw I have a college degree in both IT and business administration and I work for a major bank on the ATM systems. So I think I know a thing or 2 about the subject.



    But luckily for me, money talks and bullshit walks, so I will keep using my understanding of finance and turn in profits and you keep doing whatever you do...
  • Reply 168 of 227
    Quote:
    Originally Posted by Mikeb85 View Post


    And Wall St. will dump Apple stock and go buy something else if they don't pay a dividend. And the stock price will crash, then all you bagholders will be stuck with paper equities that you can never convert to cash.



    Dividends are a good idea, trust me, if anyone here actually owns Apple stock, you want a dividend.



    Odd, Warren Buffett doesn't seem to agree with you.



    In any case, there aren't many AAPL shareholders. As of late December 2011, there were 28,500 shareholders of record and 70+% were institutional investors.



    If the guys at FMR, BlackRock, etc. wanted AAPL dividends, they would have elected a board of directors that supports such a move.



    Your understanding of blue-chip investing is tragically comical.



    I will point out that grossly undervalued AAPL blows doors on the S&P 500, and that has been the case for almost ten years.
  • Reply 169 of 227
    Quote:
    Originally Posted by jragosta View Post


    Why does anyone pay attention to Shaw Wu?



    As bad as most analysts are, Wu probably has the record for being wrong about Apple more than anyone.



    In some realms, getting a prediction completely wrong is referred to as "Pulling a Wu"
  • Reply 170 of 227
    jeffdmjeffdm Posts: 12,951member
    Quote:
    Originally Posted by geoffrobinson View Post


    What do people have against dividends?



    Taxes. IIRC, dividends are taxed as unearned income, holding the stock and selling it after a set period of time is taxed by capital gains, often taxed at 20 points less.



    Quote:
    Originally Posted by syracuse View Post


    They haven't "maximized shareholder value". If the Board had authorized any kind of stock buy back last year instead of sitting on so much cash yielding .25%, that would have been maximizing shareholder value.



    You're saying the largest company in the US by market cap haven't maximized shareholder value?



    Also, it's not all cash, only a small portion is - they are in a large part liquid assets, earning much better than the rate you suggest. It looks to me like they've invested the money pretty well.
  • Reply 171 of 227
    Quote:
    Originally Posted by jragosta View Post


    Why the heck should I bother? You don't have any intelligent argument and everything you post is contrary to standard business practice. Even if you found one book which supports you (which you haven't done since you have't quoted anything that supports your claim), I've been an investor of enough money and run enough public companies that it's clear that your claims are wrong - and I gave the reasons.



    By your logic, it makes absolutely no difference whether Apple has $100 B in the bank or nothing - or $100 B in debt, for that matter. Clearly, that is completely illogical and contrary to rationality.



    Wow, Your out of control guy.



    Where did I ever say cash on the balance sheet makes no difference?



    The whole reason Apple can afford a dividend now is their pristine balance sheet, retained earnings generated in the US and their growing revenue stream.



    You have on three different occasions made up something in your head and then claimed it was my POV.



    I'm sorry I suggested you read Security Analysis, its not for you.



    Don't let the FACTS get in the way of your opinions.
  • Reply 172 of 227
    Quote:
    Originally Posted by williamh View Post


    Great way to distribute that cash horde to the proletarians. Only problem is that if packing fruit is work that "Americans don't want to do," how do you think you'll get people to put together iPhones?



    You do the same thing the fruit farmers do. You secretly hire illegals. And then you get slammed for that. Or you contract to hire prison labor (that you can pay like 25 cents an hour) and you get slammed for that.



    Personally I like the idea of making welfare recipients work at least 12 hours a week at some kind of job to keep getting their benefits. These factories could be a place they could get a job.
  • Reply 173 of 227
    Quote:
    Originally Posted by JeffDM View Post


    Taxes. IIRC, dividends are taxed as unearned income, holding the stock and selling it after a set period of time is taxed by capital gains, often taxed at 20 points less.







    You're saying the largest company in the US by market cap haven't maximized shareholder value?



    Also, it's not all cash, only a small portion is - they are in a large part liquid assets, earning much better than the rate you suggest. It looks to me like they've invested the money pretty well.



    dividends and long term gains are taxed at the same rate. 15%
  • Reply 174 of 227
    Quote:
    Originally Posted by poke View Post


    How would this help them make great products?



    Exactly.



    Acquisitions or new product development would be better use for the money. How much does Sharp cost?
  • Reply 175 of 227
    Quote:
    Originally Posted by AppleZilla View Post


    I think the best use of this money would be to buy up several hundred acres of former factory sites in the United States, move All production here, and slap 'Made in USA' stickers on every product box.



    Awesome -- +1
  • Reply 176 of 227
    Quote:
    Originally Posted by Mikeb85 View Post


    It will return money to the economy, which, as it gets spent again, will in turn drive more consumption or investment, which helps out the economy.



    it wont increase share holder value.
  • Reply 177 of 227
    Quote:
    Originally Posted by I am a Zither Zather Zuzz View Post


    Neither of them count.



    The corporation is there to return maximum value to the shareholders. The customers and staff are used to feed maximum value to the shareholders.



    which is exactly what Apple is doing when not paying a dividend.
  • Reply 178 of 227
    Quote:
    Originally Posted by charlituna View Post


    In some realms, getting a prediction completely wrong is referred to as "Pulling a Wu"



    Whoa
  • Reply 179 of 227
    Quote:
    Originally Posted by I am a Zither Zather Zuzz View Post


    Neither of them count.



    The corporation is there to return maximum value to the shareholders. The customers and staff are used to feed maximum value to the shareholders.





    "The corporation is there to return maximum value to the shareholders."




    If true... When? How?



  • Reply 180 of 227
    jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by syracuse View Post


    Wow, Your out of control guy.



    Where did I ever say cash on the balance sheet makes no difference?



    The whole reason Apple can afford a dividend now is their pristine balance sheet, retained earnings generated in the US and their growing revenue stream.



    You have on three different occasions made up something in your head and then claimed it was my POV.



    I'm sorry I suggested you read Security Analysis, its not for you.



    Don't let the FACTS get in the way of your opinions.



    ROTFLMAO. I'm still waiting for your facts. So far, there's been nothing but your unfounded opinions - almost entirely wrong. You claimed (repeatedly) that Apple would increase shareholder value by giving a dividend. That is based on nothing but myth.



    I don't know why I bother trying to educate obnoxious teenagers, but maybe you'll learn something.



    Let's look at it factually and historically (instead of your insistence on appeals to authority - but you refuse to even provide quotes from your 'authority' that are useful).



    A dividend can affect share price in two ways:

    1. A dividend might have a psychological impact on the customer's perception of value. There are people who argue that customers would pay more for a dividend paying stock. OTOH, there are people who argue that customers would not pay as much because it would indicate that the company has run out of ideas for wisely investing the money. There is no science to predicting this - it comes down to opinion. It IS, however, possible to look at history. Consider Microsoft - historically Apple's main 'enemy'. In the 90's, Microsoft was not giving dividends. Shares were growing at double digit rates. Early this century, Microsoft started giving a dividend - and share prices have been stagnant or falling since then.



    There is absolutely no financial rule that says that shares automatically go up if a company pays a dividend. Sometimes it works that way and sometimes it doesn't. In fact, one of the most successful investors of all time (Warren Buffett) doesn't believe that dividends increase shareholder value because he believes the company can better invest the money than the shareholder - and history has shown that to be right for Buffett and for Apple.



    2. A dividend has an IMMEDIATE impact on the underlying value of the stock. When you take billions of dollars off the balance sheet, the value of the company (and therefore the stock) drops. This effect is usually minor, but what is being proposed for Apple is a $10-15 per share special dividend which is substantial. If you look for examples where companies offered this kind of special dividend, they almost always show a share drop roughly equal to the value of the dividend. For example, look at Microsoft for 2004 when they implemented a $3 per share special dividend. The day before the ex distribution date, the shares were at $29 and change. The day after, they were at $26 and change. The shares dropped by very close to the amount of the distributions - which is exactly what would happen if Apple gives a distribution.



    The same thing happens with mutual funds all the time. Follow any mutual fund you choose. If they give out significant dividends (either as cash distributions or as dividend reinvestment), there is always a drop roughly equal to the distribution amount on the ex-distribution date.



    So, history shows clearly that I am right. When a company or mutual fund gives out a large dividend, there is an immediate drop in the share price comparable to the dividend that they give out. In other words, you can't create value out of thin air by giving a dividend.



    For the long run, dividends may or may not affect share price, but there's no way to predict. What we DO know is that Apple has been the greatest success story in creating shareholder value for the past decade (maybe for all time, but I'm not going to look it up). And they did it without a dividend. Unless someone can provide clear and convincing evidence that a dividend would increase shareholder value, Apple has no obligation to do so. And the people who are being paid to run the company don't agree with you.



    Now, I do believe that at some point, Apple will have to either pay a dividend or buy back stock (with the latter being preferable for tax reasons). I don't see any investments on the horizon that make any sense. But even then, it will have an immediate negative impact on share price (as shown above) with some unknown impact on future share price.
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