"Apple is selling China's vast emerging middle class technology products that, while perhaps luxurious, are broadly affordable."
but all that 'journalism' would tell you that in china they cannot afford the phone, only assemble it.
Chinese people can't afford iPhones? I think the $12.5 billion that Apple made in China in the last few months would suggest otherwise. China is now Rolls Royce's largest market. Doesn't sound like the sort of place where people can't afford an iPhone to me.
I wonder how many of the 45 million Amerikans on food stamps own an iPhone? Most of the the US population is spiraling into second world status no better than China. The Chinese market will be fine.
How can you even suggest that? The buybacks have been a waste of shareholder $$$ - total waste. Do the math for yourself:
You hold 2,000 shares. Apple takes the same $100,000,000,000 divided by the roughly 6,000,000,000 shares = $16.67/share. Distribute that to the shareholders as a special dividend. In your case 2000 shares x $16.67 = $33,340 in your pocket. That gets the money back to the investors, clears the obscene amount of $$$ on the balance sheet, share price probably not impacted.
BUYBACKS ARE NOT WORKING !!!
Um... Where do you think the buyback money goes? Also, do you understand the difference between current and capital gains tax rates?
You've got to be pretty arrogant to think that shareholders who willingly turn in their shares for cash don't know what to do with their own money.
Needlessly incurring additional taxes by bringing cash back from overseas would result in massive class-action lawsuits against the company. It would be foolish.
I doubt it would result in class action lawsuits, though I also doubt it would be popular with share holders and I agree that it would be a foolish move in the current tax environment.
If Apple were to repatriate their enormous cash hoardes to the US at the moment, they'd have to pay 35% tax on it. Why would they do so, when they, along with various other American multi-nationals have the bargaining power to push the US into declaring a "tax holiday" and lowering that rate from 35%? Bush did this in 2004, lowering the repatriation tax from 35% to 5% and opening the floodgates for waves of cash being repatriated and raising bags of cash for the US. Ok, they lost out on a massive income compared to if they'd taxed at 35%, but no-one was going to do that, were they. Problem is, in doing so, a precedent has been set and now no corporation in their right mind will repatriate at 35%. Instead, they'll lobby government for another tax holiday.
I'm not saying I agree with this approach. Personally, I think it would make much more sense to permanently lower repatriation tax to a level that would maximise tax revenue, without being so high that it motivates companies to hoard cash abroad. Perhaps somewhere in the region of 10-20%.
aspenboy ; You have it right ; apple inc can and should give out an exceptional high dividend to its share holders for its own benefit and for its partners,the share holders. This would make the stock very much in demand, raise its value,make happy the stock holders,and finely save the company from the constant acrobatics of buying back the stock. EVERY BODY WOULD COME OUT GOOD AND HAPPY IF APPLE SMARTEN UP AND TAKE THIS POLICY
aspenboy ; You have it right ; apple inc can and should give out an exceptional high dividend to its share holders for its own benefit and for its partners,the share holders. This would make the stock very much in demand, raise its value,make happy the stock holders,and finely save the company from the constant acrobatics of buying back the stock. EVERY BODY WOULD COME OUT GOOD AND HAPPY IF APPLE SMARTEN UP AND TAKE THIS POLICY
How does treating corporate profits like a personal piggy bank benefit the company or shareholders? If the rise in the value of the stock isn't enough for you, then cash out of your positions and head for Las Vegas.
Anyway we all agree that Apple is undervalued - half the PE as, say, GOOG or PG, and far more cash to boot.
But the market doesn't understand Apple and price it accordingly. And thus, now is an ideal time to do buybacks while shares are still undervalued.
And for those on this board that just can't stand it anymore, the buybacks are yet another opportunity for you to sell your shares and calm your nervous systems.
All well and good, but it's doing exactly zilch for their stock. Apple may want to consider ending this well-meaning program.
You can't say with certainty what the stock price would have been if AAPL hadn't done all of those buybacks.
I'm inclined to believe that the buybacks have helped in proportion to their share count reduction, but that we are (rightly) unsatisfied because of the fact that we are so far down from the highs and Wall Street is discounting Apple's future every chance it gets. When (1) you are in unprecedented territory (as Apple is because of the historic quarter they laid down last Xmas) and (2) a significant fraction of investors don't understand the loyalty of Apple customers, there is a meme of fear that says "this is going to end badly and soon". And we can't seem to shake that.
My hunch is that AAPL 's PE will continue to be handicapped from now on. So in order to significantly increase the share price, Apple is going to have to significantly increase earnings and/or significantly decrease share count. Neither of these are likely to happen at a rate sufficient to move to all time highs in the time frame we are all wishing for. I think this is the new normal, with periodic flash drops whenever someone successfully bashes AAPL (or Apple) in public. AAPL may be about to settle in to a long term average of 10% growth per year. (Not bad, since they are also paying dividends.) Since I bought in at less than $2 (split equivalent) l have a healthy position now, and I am OK with a 10% yearly ROI.
How can you even suggest that? The buybacks have been a waste of shareholder $$$ - total waste. Do the math for yourself:
You hold 2,000 shares. Apple takes the same $100,000,000,000 divided by the roughly 6,000,000,000 shares = $16.67/share. Distribute that to the shareholders as a special dividend. In your case 2000 shares x $16.67 = $33,340 in your pocket. That gets the money back to the investors, clears the obscene amount of $$$ on the balance sheet, share price probably not impacted.
The problem with your logic is the last 5 words. How do you know this?
On ex-div day, the share price is instantly lowered by the amount $16.67/share so that everyone who dove in for the dividend is at net zero at market open. What makes you think AAPL would recover that huge amount?
Quote:
Originally Posted by AC1234
BUYBACKS ARE NOT WORKING !!!
How do you know this? You know what the AAPL price is now compared to what it used to be (it was significantly higher before, for a while at least) and to what we all believe it should be (much higher). But you don't know what the AAPL price is now compared to what it would have been if they did't do the buybacks. It is not clear that dividends would have worked, nor acquisitions, nor just continuing to hoard.
What ails AAPL the most is that they are in unprecedented territory, so they can only be compared to themselves. Most on Wall Street can't fathom that there could be any more growth from such a lofty perch, so they are voting against it with their wallets. This is going to be true from now on, regardless of what Apple does with its capital, so you might as well get used to it.
As to the topic - I don't think so - the concept of buybacks does not work - period. Fewer shares on the market boosts eps and thus share price. Has not worked with over $100,000,000,000 wasted on buybacks and share price is barely improved over 3 years.
The fact that you use the adjective "faithless" to describe investors who sell and "loyal" for those that do not, appear to indicate that you are breaking one of the most fundamental rules of investing: You should invest based upon reasoning, not emotion. There may be (probably are) reasonable arguments for buying/holding AAPL, but its questionable whether these are actually driving your decisions, or you are presenting them just to reinforce your predetermined conclusion arrived at by another means.
Can someone help me understand: When Apple (or any company) buys back it's own stock, what happens to those shares? Do they cease to exist? Or are they still considered part of the outstanding shares of the company? Do those shares continue to earn dividends (the company pays itself)? If a company buys back 50% of the available shares, shouldn't the share price rise in proportion, by doubling?
As to the topic - I don't think so - the concept of buybacks does not work - period. Fewer shares on the market boosts eps and thus share price. Has not worked with over $100,000,000,000 wasted on buybacks and share price is barely improved over 3 years.
You don't know what the share price would have been today if AAPL had not done the buybacks. That would be the right thing to compare to, but it is of course unavailable. The bottom line is that you can't say with any certainty that the buybacks have not done any good, all else being equal.
Can someone help me understand: When Apple (or any company) buys back it's own stock, what happens to those shares? Do they cease to exist? Or are they still considered part of the outstanding shares of the company? Do those shares continue to earn dividends (the company pays itself)? If a company buys back 50% of the available shares, shouldn't the share price rise in proportion, by doubling?
The repurchased shares can either be retired (cease to exist) or be kept as a treasury stock (for possible re-issuance later). Either way, there are no more dividends paid on these shares (even if they are held as treasury) there are no voting rights, and nobody can just purchase them on the market. For all intents and purposes, they have ceased to exist.
Can someone help me understand: When Apple (or any company) buys back it's own stock, what happens to those shares? Do they cease to exist? Or are they still considered part of the outstanding shares of the company? Do those shares continue to earn dividends (the company pays itself)? If a company buys back 50% of the available shares, shouldn't the share price rise in proportion, by doubling?
When Apple buys back shares they are retired. Done with.
You don't know what the share price would have been today if AAPL had not done the buybacks. That would be the right thing to compare to, but it is of course unavailable. The bottom line is that you can't say with any certainty that the buybacks have not done any good, all else being equal.
I do know with certainty that I would have far, far more cash in my account had they distributed that amount to shareholders AND I would have the same number of shares - the value of which may be higher or lower. The $100,000,000,000 of buybacks appear to be an ineffective effort to prop up the stock which should need no "prop up" if Cook & boys could get the vision and execution and message mojo working.
There is no such example I know of, for major companies. eBay repatriated $9B last year, and there was barely a ripple amongst its shareholders.
A company that fails to maximize shareholder returns would be legally liable.
What is the reason Apple hasn't "repatriated" those profits yet? Why?
Obviously to minimize taxes, which should be anyone's objective any time.
But in this instance, it's with the hope that US tax laws change. In the meantime, there are real resources stranded abroad, and Apple is borrowing against it. I think it's runs the risk of distorting their financial decision-making. Moreover, I am coming to the conclusion that the tax laws won't change any time soon. None of the bozos in Washington DC -- on either side -- cares.
I believe that shareholders cannot sue Apple for following the tax laws of its home country. Maybe I am wrong.
Comments
"Apple is selling China's vast emerging middle class technology products that, while perhaps luxurious, are broadly affordable."
but all that 'journalism' would tell you that in china they cannot afford the phone, only assemble it.
Chinese people can't afford iPhones? I think the $12.5 billion that Apple made in China in the last few months would suggest otherwise. China is now Rolls Royce's largest market. Doesn't sound like the sort of place where people can't afford an iPhone to me.
Nice theory - not working out for shareholders. STOP wasting $$$$ on buybacks and return those $$$ DIRECTLY to the shareholders. Do the math.
How can you even suggest that? The buybacks have been a waste of shareholder $$$ - total waste. Do the math for yourself:
You hold 2,000 shares. Apple takes the same $100,000,000,000 divided by the roughly 6,000,000,000 shares = $16.67/share. Distribute that to the shareholders as a special dividend. In your case 2000 shares x $16.67 = $33,340 in your pocket. That gets the money back to the investors, clears the obscene amount of $$$ on the balance sheet, share price probably not impacted.
BUYBACKS ARE NOT WORKING !!!
Um... Where do you think the buyback money goes? Also, do you understand the difference between current and capital gains tax rates?
You've got to be pretty arrogant to think that shareholders who willingly turn in their shares for cash don't know what to do with their own money.
Needlessly incurring additional taxes by bringing cash back from overseas would result in massive class-action lawsuits against the company. It would be foolish.
I doubt it would result in class action lawsuits, though I also doubt it would be popular with share holders and I agree that it would be a foolish move in the current tax environment.
If Apple were to repatriate their enormous cash hoardes to the US at the moment, they'd have to pay 35% tax on it. Why would they do so, when they, along with various other American multi-nationals have the bargaining power to push the US into declaring a "tax holiday" and lowering that rate from 35%? Bush did this in 2004, lowering the repatriation tax from 35% to 5% and opening the floodgates for waves of cash being repatriated and raising bags of cash for the US. Ok, they lost out on a massive income compared to if they'd taxed at 35%, but no-one was going to do that, were they. Problem is, in doing so, a precedent has been set and now no corporation in their right mind will repatriate at 35%. Instead, they'll lobby government for another tax holiday.
I'm not saying I agree with this approach. Personally, I think it would make much more sense to permanently lower repatriation tax to a level that would maximise tax revenue, without being so high that it motivates companies to hoard cash abroad. Perhaps somewhere in the region of 10-20%.
A company that fails to maximize shareholder returns would be legally liable.
What is the reason Apple hasn't "repatriated" those profits yet? Why?
How does treating corporate profits like a personal piggy bank benefit the company or shareholders? If the rise in the value of the stock isn't enough for you, then cash out of your positions and head for Las Vegas.
Nice theory - not working out for shareholders. STOP wasting $$$$ on buybacks and return those $$$ DIRECTLY to the shareholders. Do the math.
Are you also pachi777?
Anyway we all agree that Apple is undervalued - half the PE as, say, GOOG or PG, and far more cash to boot.
But the market doesn't understand Apple and price it accordingly. And thus, now is an ideal time to do buybacks while shares are still undervalued.
Are you also pachi777?
Anyway we all agree that Apple is undervalued - half the PE as, say, GOOG or PG, and far more cash to boot.
But the market doesn't understand Apple and price it accordingly. And thus, now is an ideal time to do buybacks while shares are still undervalued.
And for those on this board that just can't stand it anymore, the buybacks are yet another opportunity for you to sell your shares and calm your nervous systems.
All well and good, but it's doing exactly zilch for their stock. Apple may want to consider ending this well-meaning program.
You can't say with certainty what the stock price would have been if AAPL hadn't done all of those buybacks.
I'm inclined to believe that the buybacks have helped in proportion to their share count reduction, but that we are (rightly) unsatisfied because of the fact that we are so far down from the highs and Wall Street is discounting Apple's future every chance it gets. When (1) you are in unprecedented territory (as Apple is because of the historic quarter they laid down last Xmas) and (2) a significant fraction of investors don't understand the loyalty of Apple customers, there is a meme of fear that says "this is going to end badly and soon". And we can't seem to shake that.
My hunch is that AAPL 's PE will continue to be handicapped from now on. So in order to significantly increase the share price, Apple is going to have to significantly increase earnings and/or significantly decrease share count. Neither of these are likely to happen at a rate sufficient to move to all time highs in the time frame we are all wishing for. I think this is the new normal, with periodic flash drops whenever someone successfully bashes AAPL (or Apple) in public. AAPL may be about to settle in to a long term average of 10% growth per year. (Not bad, since they are also paying dividends.) Since I bought in at less than $2 (split equivalent) l have a healthy position now, and I am OK with a 10% yearly ROI.
Thompson
How can you even suggest that? The buybacks have been a waste of shareholder $$$ - total waste. Do the math for yourself:
You hold 2,000 shares. Apple takes the same $100,000,000,000 divided by the roughly 6,000,000,000 shares = $16.67/share. Distribute that to the shareholders as a special dividend. In your case 2000 shares x $16.67 = $33,340 in your pocket. That gets the money back to the investors, clears the obscene amount of $$$ on the balance sheet, share price probably not impacted.
The problem with your logic is the last 5 words. How do you know this?
On ex-div day, the share price is instantly lowered by the amount $16.67/share so that everyone who dove in for the dividend is at net zero at market open. What makes you think AAPL would recover that huge amount?
BUYBACKS ARE NOT WORKING !!!
How do you know this? You know what the AAPL price is now compared to what it used to be (it was significantly higher before, for a while at least) and to what we all believe it should be (much higher). But you don't know what the AAPL price is now compared to what it would have been if they did't do the buybacks. It is not clear that dividends would have worked, nor acquisitions, nor just continuing to hoard.
What ails AAPL the most is that they are in unprecedented territory, so they can only be compared to themselves. Most on Wall Street can't fathom that there could be any more growth from such a lofty perch, so they are voting against it with their wallets. This is going to be true from now on, regardless of what Apple does with its capital, so you might as well get used to it.
Thompson
Bravadu - no, not that person
As to the topic - I don't think so - the concept of buybacks does not work - period. Fewer shares on the market boosts eps and thus share price. Has not worked with over $100,000,000,000 wasted on buybacks and share price is barely improved over 3 years.
Can someone help me understand: When Apple (or any company) buys back it's own stock, what happens to those shares? Do they cease to exist? Or are they still considered part of the outstanding shares of the company? Do those shares continue to earn dividends (the company pays itself)? If a company buys back 50% of the available shares, shouldn't the share price rise in proportion, by doubling?
Bravadu - no, not that person
As to the topic - I don't think so - the concept of buybacks does not work - period. Fewer shares on the market boosts eps and thus share price. Has not worked with over $100,000,000,000 wasted on buybacks and share price is barely improved over 3 years.
You don't know what the share price would have been today if AAPL had not done the buybacks. That would be the right thing to compare to, but it is of course unavailable. The bottom line is that you can't say with any certainty that the buybacks have not done any good, all else being equal.
Can someone help me understand: When Apple (or any company) buys back it's own stock, what happens to those shares? Do they cease to exist? Or are they still considered part of the outstanding shares of the company? Do those shares continue to earn dividends (the company pays itself)? If a company buys back 50% of the available shares, shouldn't the share price rise in proportion, by doubling?
The repurchased shares can either be retired (cease to exist) or be kept as a treasury stock (for possible re-issuance later). Either way, there are no more dividends paid on these shares (even if they are held as treasury) there are no voting rights, and nobody can just purchase them on the market. For all intents and purposes, they have ceased to exist.
You don't know what the share price would have been today if AAPL had not done the buybacks. That would be the right thing to compare to, but it is of course unavailable. The bottom line is that you can't say with any certainty that the buybacks have not done any good, all else being equal.
I do know with certainty that I would have far, far more cash in my account had they distributed that amount to shareholders AND I would have the same number of shares - the value of which may be higher or lower. The $100,000,000,000 of buybacks appear to be an ineffective effort to prop up the stock which should need no "prop up" if Cook & boys could get the vision and execution and message mojo working.
There is no such example I know of, for major companies. eBay repatriated $9B last year, and there was barely a ripple amongst its shareholders.
A company that fails to maximize shareholder returns would be legally liable.
What is the reason Apple hasn't "repatriated" those profits yet? Why?
Obviously to minimize taxes, which should be anyone's objective any time.
But in this instance, it's with the hope that US tax laws change. In the meantime, there are real resources stranded abroad, and Apple is borrowing against it. I think it's runs the risk of distorting their financial decision-making. Moreover, I am coming to the conclusion that the tax laws won't change any time soon. None of the bozos in Washington DC -- on either side -- cares.
I believe that shareholders cannot sue Apple for following the tax laws of its home country. Maybe I am wrong.