Apple's stock started the week at 132 and ended the week at 128. The low for the week was 124. That was a week in which very good financials were reported. What would the stock do with bad news? What would the stock do if they had a bad quarter. What would happen with the release of a bad product. My guess is they would need far less big dump trucks to for the decreased value of the company. Seems to me that the company holds all the cards and the stockholders are at risk. Are they really in a position to demand a 50% premium?
You don't know anything about the stocks. First of all, it started the week at 130. 132 was monday's close. And it ended at 129, not 128.
So, it only dropped by $1 for the whole week. This is noise, meaningless. Secondly, there was a big run up during the last quarter which sort of anticipated a good result. Lastly, it's only been a few days after the earnings report. Watch what happens over the next month. It could still gain another 5-10%.
As for your question about what would happen if a bad news happened, what would happen if a bad news happened to google, amazon, etc? Of course they would tank!
Btw, just for a fun comparison, Google's stock price has gone no where over the last one year(sorry google employees with your stock options), whereas the Apple's stock has gone up something like 60%!
Why else would Apple be purchasing back such huge volumes of its own stock? Because it can. Loads of cash means it can invest in itself. Take away any volatility by mitigate the market's influence on it. Because it ultimately doesn't need the stock market beyond fulfilling regulatory requirements. Companies go public to allow early investor liquidation, raise cash, and/or meet regulations because of size. Only the last applies to Apple. It makes complete sense that Apple becomes its majority share holder.
I think there's a lot of confusion here. I'm a young Wall Street professional, and while I don't work in public equity markets I do know quite a bit about them. I've been long $AAPL since about $6 a share and have probably read every appleinsider article since making that investment and follow the stock very closely. When apple repurchases its shares, it retires them. Apple does not hold an "investment in apple stock" in its assets on its balance sheet. It does not "own" any part of itself. By retiring the shares, it increases the scarcity of shares in the public market. A share of Apple becomes worth "more" (% wise as a share of all total shares) through a stock buyback program because it is entitled to that much bigger of a share of the company's equity.
This is ignoring debt, which complicates things because a company is "owned" by both its debt and equity holders, debt senior to all forms of common equity.
Apple's stock started the week at 132 and ended the week at 128. The low for the week was 124. That was a week in which very good financials were reported. What would the stock do with bad news? What would the stock do if they had a bad quarter. What would happen with the release of a bad product.
This is why I fear Apple stock. I own a small amount however and probably always will, but I do buy AND sell.
The market views Apple through emotional and irrational colored glasses. Bad news gets massive overreactions and good news often gets ignored. I was concerned that Jobs death would tank the stock, but he handled the power transfer so deftly that it was avoided. Cook is really good and has probably stabilized the stock, but any actual, serious bad news might cause a very large drop in stock price. I keep telling myself to just treat such an event as a buying opportunity.
Why else would Apple be purchasing back such huge volumes of its own stock? Because it can. Loads of cash means it can invest in itself. Take away any volatility by mitigate the market's influence on it. Because it ultimately doesn't need the stock market beyond fulfilling regulatory requirements. Companies go public to allow early investor liquidation, raise cash, and/or meet regulations because of size. Only the last applies to Apple. It makes complete sense that Apple becomes its majority share holder.
Once again, for the very, very cheap seats: Apple cannot buy itself.
Apple's stock started the week at 132 and ended the week at 128. The low for the week was 124. That was a week in which very good financials were reported. What would the stock do with bad news? What would the stock do if they had a bad quarter. What would happen with the release of a bad product. My guess is they would need far less big dump trucks to for the decreased value of the company. Seems to me that the company holds all the cards and the stockholders are at risk. Are they really in a position to demand a 50% premium?
You can't judge a stock by one weeks performance! The price was predicted and baked in a long time before this "good news".
I've asked this question many times of business people but never got a clear answer. To my way of thinking a corporation is a contractual agreement. It has a board and it has shareholders. If it gets down to the point that there is only one shareholder then it has gone private.
So if Apple keeps buying back shares and I am the only one who doesn't sell then eventually I would own Apple. It would disappear from the markets as there would be no shares trading.
Alternatively, if there is a large shareholder and Apple keeps buying back shares then eventually that person owns more than 50% of outstanding shares and they can force a sale of the remaining shares, if they can come up with the cash.
I don't see this happening. There are many benefits for Apple participating in the market. I don't see the shareholders giving Apple any significant grief. The notion that Carl Icahn forced Apple to increase the buy-back program is ludicrous.
The only time I've seen the shareholders give Apple grief was a few years ago when the growth in iPhone sales was seriously trailing the growth in phones overall. Eventually we got the iPhone 6 which is a huge success. I can't make a direct link but the pressure was there and that was a good thing.
For the most part shareholders vote with Apple management at the 90+% level. The press tries to make headlines with outspoken characters like Icahn. The vast majority of shareholders are very supportive of current management.
@Kenn, what you don't realize is you only invested $13/share in the company and that money only went to Apple if you invested during their IPO. Otherwise, all you're doing is gambling your money in the Wall Street crap shoot. Unless someone can prove me wrong, after the IPO, there has been a fixed number of stocks (adjusted for splits and buy backs) that Wall Street has gambled with. Apple doesn't owe AAPL gablers/investors anything, they only owe people who've bought Apple products.
As for Apple going private, the US government wouldn't allow it because I'm sure plenty of tax money comes from the sale of AAPL stocks and plenty retirement funds include AAPL and would stand to lose a big chunk of change. Too Big to Fail becomes Too Big to Go Private.
As for the criminal institution called the SEC, I'd like to see them shut down because there are a worthless agency that does nothing to help the small time investor or companies it doesn't like.
Everything you have written here is wrong. It makes absolutely no sense. Semi-serious question; are you a member of the "occupy" movement?
Actually all they need is 50.0000001% of the voting shares then the holdouts would not matter. They just put the sale to a share holder vote and the hold outs would have no choice.
Even if they bought back 80% of them, Apple would not own part of itself. Look at it this way. If they bought back 10 million shares using cash reserves, the remaining shareholders would each own a larger stake in Apple, but Apple would have a smaller remaining amount in cash. It offers liquidity options to some of those shareholders but it doesn't transfer ownership from shareholders to Apple itself.
I've asked this question many times of business people but never got a clear answer. To my way of thinking a corporation is a contractual agreement. It has a board and it has shareholders. If it gets down to the point that there is only one shareholder then it has gone private.
So if Apple keeps buying back shares and I am the only one who doesn't sell then eventually I would own Apple. It would disappear from the markets as there would be no shares trading.
Alternatively, if there is a large shareholder and Apple keeps buying back shares then eventually that person owns more than 50% of outstanding shares and they can force a sale of the remaining shares, if they can come up with the cash.
I don't see this happening. There are many benefits for Apple participating in the market. I don't see the shareholders giving Apple any significant grief. The notion that Carl Icahn forced Apple to increase the buy-back program is ludicrous.
The only time I've seen the shareholders give Apple grief was a few years ago when the growth in iPhone sales was seriously trailing the growth in phones overall. Eventually we got the iPhone 6 which is a huge success. I can't make a direct link but the pressure was there and that was a good thing.
For the most part shareholders vote with Apple management at the 90+% level. The press tries to make headlines with outspoken characters like Icahn. The vast majority of shareholders are very supportive of current management.
Your post is mostly spot on.
Except one small detail: when a company is taken private, the shareholders are usually the private equity (PE) firm that takes them private, and in a vast majority of the cases, senior management and many mid-level managers of the company are given an equity stake in the business. Public shareholders are gone (since the company is delisted).
The ridiculousness of the private equity argument for a company the size of Apple is fairly obvious. Companies are taken private only if the PE firms are reasonably convinced that they can be sold off to a 'strategic buyer' or IPOed again 5 - 7 years down the road (which is the relevant horizon for most PE firms). That would be extremely difficult to do with a company the size of Apple.
I hope this article was intended to be tongue-in-cheek, because the entire concept is silly, as a practical matter. Also as a practical matter, public companies go private when they are in crisis and need to be out of the public eye while they figure out how to survive. Again, as with Chrysler or Dell.
It started out with a picture of Scrooge McDuck, so I think it's safe to say that it was meant to be playful.
Freediverx - the author is correct that it would probably require a price tag north of $1 trillion. $1 trillion would be a 33% premium to its current value of $750 billion and would be normal for a typical acquisition. Apple shareholders would likely require significantly more of a premium given how much value the company has created for shareholders in recent years. Let's say for the sake of round numbers $1.2 trillion is the number. There is probably not much in the way of regulatory or SEC issues, it's more a matter of coming up with the money. In answer to your question, usually a majority of shareholders can compel the rest to go along. Apple itself cannot stop its shareholders from selling (aside from the fact that senior management owns some percentage of stock, probably less than 5% though). Most go-private transactions are funded 1/3 with cash and then they raise debt for the rest. That implies someone needs $400 million in cash and can raise $800 million in debt, both of which are crazy high numbers. The largest go-private acquisitions have been in the neighborhood of $50 billion or less than 5% of the $1.2 trillion. And the largest bond deal to date was Verizon's deal to buy the 45% Verizon Wireless previously owned by Vodafone and that was only $60 billion. So, in short, can't be done... the numbers are just too big.
It started out with a picture of Scrooge McDuck, so I think it's safe to say that it was meant to be playful.
The problem with this theory is that the writer suggests that Apple could buy itself. This is just wrong, so it undercuts any supposed effort at playfulness.
Are they really in a position to demand a 50% premium?
I don't think you understood this, but Apple would be paying an additional 50% on top of the original cost to the Shareholder. Basically if a single stock is $130, 130÷2=65. 130+65=195. Apple would have to pay $195 per share back to the shareholders.
Which is exactly what happened to Dell but instead of shutting it down and returning the money to the shareholders (like he recommended for Apple) Michael Dell just bought it back from the shareholders.
And for pennies on the dollar. Lots of people were steamed at the deal. Deal/steal of the decade.
I think there's a lot of confusion here. I'm a young Wall Street professional, and while I don't work in public equity markets I do know quite a bit about them. I've been long $AAPL since about $6 a share and have probably read every appleinsider article since making that investment and follow the stock very closely. When apple repurchases its shares, it retires them. Apple does not hold an "investment in apple stock" in its assets on its balance sheet. It does not "own" any part of itself. By retiring the shares, it increases the scarcity of shares in the public market. A share of Apple becomes worth "more" (% wise as a share of all total shares) through a stock buyback program because it is entitled to that much bigger of a share of the company's equity.
Without contradicting your point, Apple does buy and retire shares but is also issues new ones for, let's say, a new VP of Retail and Online Stores. As well as stock options for lots of other employees. I believe that the net is still a reduction but it's not as much as first appears.
As for the criminal institution called the SEC, I'd like to see them shut down because there are a worthless agency that does nothing to help the small time investor or companies it doesn't like.
So ... you'd rather see Wall Street manage its own ethics ??
"Criminal institution" is harsh. Not "incompetent" or "useless". Do you happen to have any evidence to support the "criminal" charge you lay ??
Comments
It cannot happen. It is impossible.
True story. Nonsense takes on a life of its own.
Okay, one more time for the cheap seats: Apple cannot buy itself.
Apple's stock started the week at 132 and ended the week at 128. The low for the week was 124. That was a week in which very good financials were reported. What would the stock do with bad news? What would the stock do if they had a bad quarter. What would happen with the release of a bad product. My guess is they would need far less big dump trucks to for the decreased value of the company. Seems to me that the company holds all the cards and the stockholders are at risk. Are they really in a position to demand a 50% premium?
You don't know anything about the stocks. First of all, it started the week at 130. 132 was monday's close. And it ended at 129, not 128.
So, it only dropped by $1 for the whole week. This is noise, meaningless. Secondly, there was a big run up during the last quarter which sort of anticipated a good result. Lastly, it's only been a few days after the earnings report. Watch what happens over the next month. It could still gain another 5-10%.
As for your question about what would happen if a bad news happened, what would happen if a bad news happened to google, amazon, etc? Of course they would tank!
Btw, just for a fun comparison, Google's stock price has gone no where over the last one year(sorry google employees with your stock options), whereas the Apple's stock has gone up something like 60%!
This is ignoring debt, which complicates things because a company is "owned" by both its debt and equity holders, debt senior to all forms of common equity.
Quote:
Apple's stock started the week at 132 and ended the week at 128. The low for the week was 124. That was a week in which very good financials were reported. What would the stock do with bad news? What would the stock do if they had a bad quarter. What would happen with the release of a bad product.
This is why I fear Apple stock. I own a small amount however and probably always will, but I do buy AND sell.
The market views Apple through emotional and irrational colored glasses. Bad news gets massive overreactions and good news often gets ignored. I was concerned that Jobs death would tank the stock, but he handled the power transfer so deftly that it was avoided. Cook is really good and has probably stabilized the stock, but any actual, serious bad news might cause a very large drop in stock price. I keep telling myself to just treat such an event as a buying opportunity.
Why else would Apple be purchasing back such huge volumes of its own stock? Because it can. Loads of cash means it can invest in itself. Take away any volatility by mitigate the market's influence on it. Because it ultimately doesn't need the stock market beyond fulfilling regulatory requirements. Companies go public to allow early investor liquidation, raise cash, and/or meet regulations because of size. Only the last applies to Apple. It makes complete sense that Apple becomes its majority share holder.
Once again, for the very, very cheap seats: Apple cannot buy itself.
Apple's stock started the week at 132 and ended the week at 128. The low for the week was 124. That was a week in which very good financials were reported. What would the stock do with bad news? What would the stock do if they had a bad quarter. What would happen with the release of a bad product. My guess is they would need far less big dump trucks to for the decreased value of the company. Seems to me that the company holds all the cards and the stockholders are at risk. Are they really in a position to demand a 50% premium?
You can't judge a stock by one weeks performance! The price was predicted and baked in a long time before this "good news".
I've asked this question many times of business people but never got a clear answer. To my way of thinking a corporation is a contractual agreement. It has a board and it has shareholders. If it gets down to the point that there is only one shareholder then it has gone private.
So if Apple keeps buying back shares and I am the only one who doesn't sell then eventually I would own Apple. It would disappear from the markets as there would be no shares trading.
Alternatively, if there is a large shareholder and Apple keeps buying back shares then eventually that person owns more than 50% of outstanding shares and they can force a sale of the remaining shares, if they can come up with the cash.
I don't see this happening. There are many benefits for Apple participating in the market. I don't see the shareholders giving Apple any significant grief. The notion that Carl Icahn forced Apple to increase the buy-back program is ludicrous.
The only time I've seen the shareholders give Apple grief was a few years ago when the growth in iPhone sales was seriously trailing the growth in phones overall. Eventually we got the iPhone 6 which is a huge success. I can't make a direct link but the pressure was there and that was a good thing.
For the most part shareholders vote with Apple management at the 90+% level. The press tries to make headlines with outspoken characters like Icahn. The vast majority of shareholders are very supportive of current management.
@Kenn, what you don't realize is you only invested $13/share in the company and that money only went to Apple if you invested during their IPO. Otherwise, all you're doing is gambling your money in the Wall Street crap shoot. Unless someone can prove me wrong, after the IPO, there has been a fixed number of stocks (adjusted for splits and buy backs) that Wall Street has gambled with. Apple doesn't owe AAPL gablers/investors anything, they only owe people who've bought Apple products.
As for Apple going private, the US government wouldn't allow it because I'm sure plenty of tax money comes from the sale of AAPL stocks and plenty retirement funds include AAPL and would stand to lose a big chunk of change. Too Big to Fail becomes Too Big to Go Private.
As for the criminal institution called the SEC, I'd like to see them shut down because there are a worthless agency that does nothing to help the small time investor or companies it doesn't like.
Everything you have written here is wrong. It makes absolutely no sense. Semi-serious question; are you a member of the "occupy" movement?
That would be great. Tim Cook wouldn't have to put up with those 1%er conservative nutcases at stockholder events.
Actually all they need is 50.0000001% of the voting shares then the holdouts would not matter. They just put the sale to a share holder vote and the hold outs would have no choice.
Even if they bought back 80% of them, Apple would not own part of itself. Look at it this way. If they bought back 10 million shares using cash reserves, the remaining shareholders would each own a larger stake in Apple, but Apple would have a smaller remaining amount in cash. It offers liquidity options to some of those shareholders but it doesn't transfer ownership from shareholders to Apple itself.
Your post is mostly spot on.
Except one small detail: when a company is taken private, the shareholders are usually the private equity (PE) firm that takes them private, and in a vast majority of the cases, senior management and many mid-level managers of the company are given an equity stake in the business. Public shareholders are gone (since the company is delisted).
The ridiculousness of the private equity argument for a company the size of Apple is fairly obvious. Companies are taken private only if the PE firms are reasonably convinced that they can be sold off to a 'strategic buyer' or IPOed again 5 - 7 years down the road (which is the relevant horizon for most PE firms). That would be extremely difficult to do with a company the size of Apple.
I hope this article was intended to be tongue-in-cheek, because the entire concept is silly, as a practical matter. Also as a practical matter, public companies go private when they are in crisis and need to be out of the public eye while they figure out how to survive. Again, as with Chrysler or Dell.
It started out with a picture of Scrooge McDuck, so I think it's safe to say that it was meant to be playful.
The problem with this theory is that the writer suggests that Apple could buy itself. This is just wrong, so it undercuts any supposed effort at playfulness.
I don't think you understood this, but Apple would be paying an additional 50% on top of the original cost to the Shareholder. Basically if a single stock is $130, 130÷2=65. 130+65=195. Apple would have to pay $195 per share back to the shareholders.
Which is exactly what happened to Dell but instead of shutting it down and returning the money to the shareholders (like he recommended for Apple) Michael Dell just bought it back from the shareholders.
And for pennies on the dollar. Lots of people were steamed at the deal. Deal/steal of the decade.
I think there's a lot of confusion here. I'm a young Wall Street professional, and while I don't work in public equity markets I do know quite a bit about them. I've been long $AAPL since about $6 a share and have probably read every appleinsider article since making that investment and follow the stock very closely. When apple repurchases its shares, it retires them. Apple does not hold an "investment in apple stock" in its assets on its balance sheet. It does not "own" any part of itself. By retiring the shares, it increases the scarcity of shares in the public market. A share of Apple becomes worth "more" (% wise as a share of all total shares) through a stock buyback program because it is entitled to that much bigger of a share of the company's equity.
Without contradicting your point, Apple does buy and retire shares but is also issues new ones for, let's say, a new VP of Retail and Online Stores. As well as stock options for lots of other employees. I believe that the net is still a reduction but it's not as much as first appears.
As for the criminal institution called the SEC, I'd like to see them shut down because there are a worthless agency that does nothing to help the small time investor or companies it doesn't like.
So ... you'd rather see Wall Street manage its own ethics ??
"Criminal institution" is harsh. Not "incompetent" or "useless". Do you happen to have any evidence to support the "criminal" charge you lay ??
Stupid,stupid article