Apple's buybacks exploited stock dips to generate billions in shareholder value

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Comments

  • Reply 61 of 99
    tbelltbell Posts: 3,146member
    rgh71 wrote: »
    Apple can't afford to take itself private

    Apple can't take itself private even if it could afford it. It can buy and retire shares, but at the end of the day somebody would have to buy Apple. Ironically, Apple buying the shares would make it less expensive to buy.
  • Reply 62 of 99

    Apple isn't playing by the rules and ultimately doesn't care what Wall Street and its apologists think.  They're not just marching to the beat of their own drum, they're executing a 10-25 year strategy while Wall Street remains focused on the next product launch.

     

    And while Google gets rewarded for making bad investments and burning billions, nobody seems to notice that the biggest acquisition in Apple's history (themselves) just took place.

     

    Apple has the makings of a super-company.  Because Apple doesn't give a crap about Wall Street, Apple the stock and Apple the company have become radically different things.  To invest in Apple is to make a bet on the world's first super-company.

  • Reply 63 of 99
    nhtnht Posts: 4,522member
    asdasd wrote: »
    Yeah. Far from showing confidence it shows an inability to do anything else with the money. I remember when people here were all opposed to buy backs. And Apple has retired these stock so where's the money? Prior to the earnings they were where they are in stock price but they had more outstanding stock and a bigger capitalisation. More importantly, if you look at the company, divorced from its shareholders it has less money.

    Still opposed...but it does have some marginal value in dividends and investor relations.

    Large acquisitions are also great at destroying value. I prefer this route over buying something like Motorolla. Or Nest.
  • Reply 64 of 99
    Quote:
    Originally Posted by chrismarriott View Post

     

    Apple isn't playing by the rules and ultimately doesn't care what Wall Street and its apologists think.  They're not just marching to the beat of their own drum, they're executing a 10-25 year strategy while Wall Street remains focused on the next product launch.

     

    And while Google gets rewarded for making bad investments and burning billions, nobody seems to notice that the biggest acquisition in Apple's history (themselves) just took place.

     

    Apple has the makings of a super-company.  Because Apple doesn't give a crap about Wall Street, Apple the stock and Apple the company have become radically different things.  To invest in Apple is to make a bet on the world's first super-company.


     

    Here is a man that uses it's brain! What staggers me is that this isn't some very complicated logic but at the same time most people (especially those working in the financial dept) fail to recognize this or to understand it.

     

     

    Quote:
    Originally Posted by Cash907 View Post

     

    lol. "Irrational stock dips." The market was less than impressed with Apple's performance, and reacted accordingly. That's not irrational, that's the stock market doing its thing. What's "irrational" is Apple saying its stock is worth what it says it's worth. That's not how it works, Tim. If you want to take your ball and go home, that's fine, but this Apple apologist "article" is just silly.


    The market? What defines the market? Some financial institutions that give periodic specialized 'advise' to the market? Or 'players' that establish some targets for traded companies, based on their 'analysis' or based on 'inside rumors'? 

     

    If that is the case, and we all know the truth, then how absurd it is to think that the 'market was less impressed' considering that most of their reports have been positive and shown growth. Oooh so it was not exactly the growth "the market" expected (shoot straight from the market's ass)?! Then it may be better for those short minded players to bail out on aapl, and let the true stockholders bet on the future.

  • Reply 65 of 99
    crowleycrowley Posts: 10,453member
    Quote:

    Originally Posted by TBell View Post



    Yes, brilliant indeed. Apple spends billions on its stock. The stock barely budged as a consequence

     

    As expected.

     

    Quote:
    Originally Posted by TBell View Post



    in the long term neither Apple or investors get anything from the move.


     

    Bit early to be judging that, don't you think?  Investors gain a higher proportional ownership, which is a good thing if you are optimistic about Apple's future.

  • Reply 66 of 99
    crowleycrowley Posts: 10,453member
    Quote:

    Originally Posted by jwdav View Post



    Buying back shares increases the earnings per share which will increase the value of the shares.

     

    Only if earnings exceed expectations.  Future earnings expectations are accounted for in the share price.

  • Reply 67 of 99
    Quote:

    Originally Posted by sflocal View Post

     

    Those people just try milking a company dry, then move on to the next victim with zero regard to these companies actually trying to make a long-term difference.


    Its disgusting.  Apple is trying to change the world, and all these guys just want to use it to make money. 

  • Reply 68 of 99
    cash907 wrote: »
    lol. "Irrational stock dips." The market was less than impressed with Apple's performance, and reacted accordingly. That's not irrational, that's the stock market doing its thing. What's "irrational" is Apple saying its stock is worth what it says it's worth. That's not how it works, Tim. If you want to take your ball and go home, that's fine, but this Apple apologist "article" is just silly.

    Sounds like you buy into Wall Street religion. Wall Street long ago abandoned the valuation of stock based on fundamentals for technical trading and the "psychology" of the market.
  • Reply 69 of 99
    crowleycrowley Posts: 10,453member
    Quote:
    Originally Posted by SudoNym View Post

    Its disgusting.  Apple is trying to change the world, and all these guys just want to use it to make money. 

     

    Blame Michael Scott and Steve Jobs for taking Apple public back in 1981.  They got into the game.

  • Reply 70 of 99
    Quote:

    Originally Posted by wessew View Post



    As Apple continues to buy in shares and if the price continues to stagnate, the cost to take the company private declines. At some point, the company will be worth more to management and principal investors private than public. When that threshold is crossed you may get a leveraged buyout proposal for the remaining shares outstanding at what amounts to a bargain to management and whoever else is providing seed capital. Apple has a very strong balance sheet. Apple is cash and cash flow rich. It's earnings are underpriced and underappreciated in the market. Either the stock will go up dramatically over time or something like the above will eventually occur.

     

    The first steps in taking a company private is to reduce the number of outstanding shares / shareholders over time to avoid it looking like a tender. Then the board and majority shareholders can vote to delist the company. A private company can still have stock and shares that they can trade amongst themselves or others. Usually these investors pony up the capital to buy out the other public shareholders that don't want to go along for the ride. 

  • Reply 71 of 99
    Quote:

    Originally Posted by aspenboy View Post

     

    the price of aapl shares is so disconnected from fundatmentals that if the outstanding shares dropped by 25%, I wonder if the share price would rise at all.

     

     

     


    Nothing on Earth short of Apple acquiring Tesla can make the stock rise.   Hardly any investor with any sense at all wants to own Apple when they can buy almost any tech stock on the planet and get quicker returns.  Apple's share price momentum collapses every financial quarter like an elevator going up and down between a few floors.   Good for short-term traders, but lousy for long-term shareholders.  There's almost no hope at all of Apple gaining any appreciable smartphone market share as long as Samsung is offering dozens of new smartphone models at every price point possible on every carrier in the world.  For every one product Apple offers, Samsung offers 10 similar products.  That's an almost impossible strategy to beat.

  • Reply 72 of 99
    Quote:
    Originally Posted by Constable Odo View Post

     

    Nothing on Earth short of Apple acquiring Tesla can make the stock rise.   Hardly any investor with any sense at all wants to own Apple when they can buy almost any tech stock on the planet and get quicker returns.  Apple's share price momentum collapses every financial quarter like an elevator going up and down between a few floors.   Good for short-term traders, but lousy for long-term shareholders.  There's almost no hope at all of Apple gaining any appreciable smartphone market share as long as Samsung is offering dozens of new smartphone models at every price point possible on every carrier in the world.  For every one product Apple offers, Samsung offers 10 similar products.  That's an almost impossible strategy to beat.


    I smell a troll. Period. Not even going to bother to reply to that vomit of a text.

     

    PS: When vomit appears, one should always read instead of "investor" "speculator".

  • Reply 73 of 99
    Quote:

    Originally Posted by Crowley View Post

     

     

    As expected.

     

    Bit early to be judging that, don't you think?  Investors gain a higher proportional ownership, which is a good thing if you are optimistic about Apple's future.


    Almost no one is optimistic about Apple's future which is the fundamental reason why Apple's share price is in the toilet.  Google is seen as having a bright future but Apple's future is pretty much in doubt since the iPhone market has dried up thanks to the continual flood of Android devices day after day, week after week, ad infinitum...  and Steve Jobs untimely death isn't helping much, either.

     

    If Apple took all $159 billion of its reserve cash and bought its stock back, the share price still wouldn't rise.  There'd just be a hell of a lot less shares to go around and it still wouldn't change Wall Street's perception that Apple is a turd investment with no future.  Shareholders would simply have greater ownership in a company of falling value.  Which is pretty much what we have now.

  • Reply 74 of 99
    asdasdasdasd Posts: 5,686member
    andreid wrote: »
    I smell a troll. Period. Not even going to bother to reply to that vomit of a text.

    PS: When vomit appears, one should always read instead of "investor" "speculator".

    He's been here since 2007. In any case this place started as a forum for investors hence the insider term.
  • Reply 75 of 99
    crowleycrowley Posts: 10,453member
    Quote:

    Originally Posted by Constable Odo View Post

     

    Almost no one is optimistic about Apple's future which is the fundamental reason why Apple's share price is in the toilet.


     

    Which makes it a great time to buy.  Wall Street is hyper aware of every Apple weakness, but don't appear to be recognising Apple's potential for disruption.  It's very conservative.  Meanwhile, Apple's phone business is mature and generating stable revenues, and Apple has other things cooking.

     

    The old wisdom for trading is to buy when everyone else is selling and sell when everyone else is buying.

     

    Quote:
    Originally Posted by Constable Odo View Post

     

    If Apple took all $159 billion of its reserve cash and bought its stock back, the share price still wouldn't rise.


     

    Of course not.  Instant return is not the intent of a buy back.

  • Reply 76 of 99
    Quote:

    Originally Posted by asdasd View Post





    He's been here since 2007. In any case this place started as a forum for investors hence the insider term.

    I didn't argue against his creation date of the account. Nor about if his comments were related to the activity of investing or not.

     

    I didn't see a single argument of support in his claims. Considering his claims are so razor sharp in conviction without any proper evidence of the so called convictions, in contrast to the article and to the general consensus on this thread, i consider this trolling. 

  • Reply 77 of 99
    MarvinMarvin Posts: 15,320moderator
    Apple's efforts to take advantage of irrational stock dips in order to buy back its own shares at a discount has transferred billions of dollars from panicked speculators to its long term investors.

    The stock sellers were paid for their stock by Apple so the value transfer is really from Apple's cash to remaining investors, not from panicked sellers to the remaining investors. They have also been buying back from what they describe as a financial institution with only a small amount from the open market. I'm not sure if that happened on this occasion though but if it did, it was more likely an agreement of some sort rather than a panic sell. If it was on the open market then it would be more panic selling but again, they were paid for the shares. Unless the market cap increases, the sellers haven't lost anything.
    crowley wrote:
    If it's Apple buying them then theoretically it shouldn't do, except as a temporary fluctuation because of the trade volume.

    The share price should rise on buying back the shares and retiring them if the market cap stays the same. If not, the market cap would drop without reason.
    mvigod wrote:
    Apple's weak buyback stance makes me constantly wonder if they are not as confident in their future as we would hope they are.

    It depends on what you mean. They can remain as the most valuable company in the world and not grow any more. Microsoft's stock has been almost flat for 14 years yet they make billions every year in income.

    It's not that they'd lack confidence in their future, they'd lack confidence in growth. Lacking growth is not particularly important if you remain highly profitable.
    Apple is retiring these shares? I thought they were just buying them back?

    They are retiring them, which is why suggestions that they are buying them back cheap are not as meaningful as if they were to sell them later on or offer them to staff. Retiring them is equivalent to giving the cash used for the buyback to the remaining stockholders, most of which are institutions: index funds, banks, insurance companies etc but it also benefits staff holding stock.
    asdasd wrote:
    Far from showing confidence it shows an inability to do anything else with the money.

    Especially when they do such a large buyback so quickly. That was a pretty irrational move for Tim, who authorized it. Not that it was the wrong thing but it's a distraction for them and clearly they are making decisions outside of their comfort zone.
    andreid wrote:
    Oooh so it was not exactly the growth "the market" expected (shoot straight from the market's ass)

    Stockholders and analysts are like film critics. They don't make the films, they wouldn't even know how, they just express their own reaction to the performance and assume it's indicative of who they try to represent.

    The problem with the market is not stockholders, it's second-hand stockholders. It's people who buy into a company from the outside. At the beginning, when it was the 3 founders, the shares were split between them. The 3rd guy who you don't hear about much bailed out early because he had assets that could have been taken from him if the company went into debt:

    http://www.macworld.co.uk/news/apple/apples-third-founding-partner-tells-his-story-3301603/

    These people (the two Steves) were the essence of the company, they had the drive to turn it into something of value. Over the years, the shares become valuable to other people and when they are split out to the public, it's these second-hand stockholders that are the problem because they are removed from the motive of the company founders to create value and the motive is to create profit. Value and profit are not the same thing. Traders seem to believe this at times but not always. Tesla and Amazon create value but almost no profit. Google creates profit with advertising but advertising is hated by almost everyone. Where they are seen as creating value by some is with the likes of Chrome, Android, even search where they don't make profit directly, the profit all comes from the ads and tracking - the valueless pursuit.

    With Apple, I think they've struggled the whole way to get people to believe that it's not just about profit. There's a cynicism and resentment towards what Apple does but it's strange because they're one of the companies that creates both value and profit from the same pursuit. Maybe that's why traders think that if the profit goes down, it means they aren't as valuable a company.

    Still, traders place more value on Apple than every other company just now and I'd say the uncertainty causing the fluctuations is from not having a reliable enough reference point to determine the intrinsic value easily. Now that the smart device market is saturating, it's becoming more clear.
    The first steps in taking a company private is to reduce the number of outstanding shares / shareholders over time to avoid it looking like a tender. Then the board and majority shareholders can vote to delist the company.

    This kind of thing might be best for Apple but their shares are worth so much that I don't think they can narrow down the interested parties enough without those parties individually being extremely wealthy. Tim said before that they weren't interested in doing this. He mentioned something about it being less appealing to leadership candidates and that it's best for the stock to be spread widely. It avoids the possibility of having few individuals (like Carl Icahn) getting too much control. You can imagine if Tim took so many shares off the table that Carl could pull another TWA. If he could get enough of his Wall Street cronies to loan him enough to buy up a controlling interest, he could replace the board, drain all their cash and make his exit.
  • Reply 78 of 99
    crowleycrowley Posts: 10,453member
    Quote:

    Originally Posted by Marvin View Post



    The share price should rise on buying back the shares and retiring them if the market cap stays the same. If not, the market cap would drop without reason.

    The market cap will drop because the company has less cash (or more debt), which they've used for the buy back.  The share price as part of that equation will stay exactly the same.

  • Reply 79 of 99
    Originally Posted by Crowley View Post

    Blame Michael Scott


    image

  • Reply 80 of 99
    crowleycrowley Posts: 10,453member

    That's simply not true.

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