Apple Inc. shares reach ex-dividend as it gears up to distribute $2.9 billion to shareholders

Posted:
in AAPL Investors
On February 11, Apple will pay shareholders of record a quarterly dividend of $0.52 per share, but investors must have had settled ownership of the company's stock by Monday February 8 in order to qualify. Apple will pay out $2.898 billion in dividends on its outstanding shares for the quarter.

cash


Apple has been paying its shareholders a dividend about a month and a half after the end of each fiscal quarter ever since it declared its modern dividend plan in the summer of 2012.

The February dividend will be the seventh to occur since the company issued a 7-for-1 stock split. That split also converted the dividend from $3.29 per share to 47 cents per share.

It will be the fourth 52 cent dividend Apple has paid since it announced plans to increase its dividend from 47 cents during its Q2 2015 earnings conference call.

Apple is likely to increase its dividend before the next quarter's distribution in May, as is indicated in its statements in 10K filings that note, "the Company also plans to increase its dividend on an annual basis, subject to declaration by the Board of Directors."

Over the past four quarters, Apple has paid out around $11.5 billion in dividends to its shareholders, distributing close to $3 billion every quarter, although that number has decreased slightly in tandem with the company's stock buybacks.

AAPL Buybacks



Dividends are a minority portion of Apple's shareholder capital return program, the majority of which has been earmarked for buying back outstanding shares.

Buybacks increase the scarcity, and therefore value, of Apple's stock by taking shares off the market and retiring them. Removing shares from circulation also enhances the company's closely-watched earnings per share metrics. Over the last four quarters, Apple has repurchased $34 billion worth of its stock off the market or via accelerated repurchase programs.


Capital Return AAPL Q1 2016


In total, Apple has spent $110 billion on stock buybacks since initiating its capital return program, including an opportunistic $14 billion share grab initiated after the stock plunged more than 8 percent last January following the company's holiday Q1 release which detailed its highest ever quarterly revenues and operating profits--results that the tech media depicted as "disappointing."

This happened again last summer after Apple announced record earnings in June but market players raised the fearsome prospect of weak sales in China. Apple's shares again tanked, enabling the company to opportunistically snatch up $14 billion of its own shares at what was then the lowest point in 2015.

Apple subsequently announced blockbuster earnings for Q4, particularly in China where revenue nearly doubled and iPhone sales grew by 87 percent in a market that only grew by 4 percent (meaning that outside of Apple, the market for smartphones actually contracted). Apple also guided for growth higher than analysts were expecting. That correction in intelligence sent Apple's stock up a relatively meager few percent, followed by a massive collapse resulting from new rumors of supplier cuts that were interpreted as representing a massive decline in iPhone demand.

However, those rumors did not materialize in Q1 results. Instead, Apple provided guidance for Q2 to indicated a much smaller decline year over year than the rumors had anticipated. Even so, Apple's shares have continued to fall to levels not seen since the summer of 2014, before iPhone 6--the most popular and massively successful computing device ever sold--appeared.

iPhone 6s is currently achieving similar sales, while Apple's valuation has returned to the days of iPhone 5/5s.

Combined with dividend payments and net share settlements, Apple has spent about $153 billion on capital return since mid 2012; it plans to return a total of $200 billion over the next five quarters. Because that total is already allocated, Apple has nearly $47 billion to spend on buying back its stock immediately at today's extremely low prices.

AAPL Buyback History



Prior to its 2014 stock split, Apple spent about $50 billion buying back shares at prices ranging from around $50 to $90. Since the stock split, Apple has repurchased shares at prices from $100 to $130 per share, significantly higher than the current stock price of $94.02--indicating that Apple expects its stock to recover and appreciate to much higher levels.

Those post-split buybacks include a surprising $17 billion of its own stock in the September 2014 quarter; $5 billion of stock in open market purchases during its December 2014 quarter (Apple's Fiscal Q1 2015); another $7 billion of stock in open market purchases during its March quarter (Apple's Fiscal Q2 2015); another $4 billion of stock in open market purchases and $6 billion in Accelerated Share Repurchase in the June quarter (Apple's Fiscal Q3 2015); followed by an astounding $14 billion of stock in open market purchases in the September quarter (Apple's Fiscal Q4 2015) and 6.9 billion in the most recent December quarter.

The relatively conservative (for Apple) $6.9 billion spent on buybacks in the December quarter suggests that the company hesitated to buy up large numbers of shares, and instead reserved its allocated buyback funds to spend in the current quarter instead, in anticipation of much lower stock prices.

As of January 8, 2016, the company now has 5.545 billion shares outstanding.


Apple shares outstanding Q1 2016. Source: YCharts.com


Since the beginning of 2014, Apple shares are up 17.51 percent, compared to Microsoft's 34.5 percent gain or Google's 22.35 percent gain in nonvoting GOOG C class shares and 25.73 percent gain in standard GOOGL A class shares.

Since the start of 2015, Apple shares are down 14 percent, compared to Microsoft's 7.26 percent gain or Google's 30.25 percent gain in nonvoting GOOG C class shares and 32.89 percent gain in standard GOOGL A class shares. Google split its shares into the two classes and awarded investors one of each, effectively stripping investors of half their voting rights through the "dividend" dilution.

Apple MSFT GOOG Q1 2016


Despite massive buybacks, Apple still has a growing pile of cash



Apple is currently using much of its domestic U.S. cash flow to finance stock buybacks and dividend payments, and is also issuing bonds at extremely low interest rates to help pay for its capital return programs.

It currently holds $200 billion of its total $216 billion cash reserves overseas; spending those funds domestically would incur a substantial tax penalty unless the U.S. Congress approves a tax break to enable and incentivize American firms to invest their foreign earnings in America.

In October 2013, after four months of investigation of Apple's foreign earnings and taxes, the U.S. Securities and Exchange Commission ended its inquiry without plans to take any further action after finding no evidence of wrongdoing by the company.

Investors generally view cash as bad for companies to hoard (due to low returns from conservative investments), but Apple can't currently distribute more cash to shareholders without incurring a substantial U.S. tax penalty.

That has made Apple's vast cash holdings a convenient problem to have, because it enables the company to borrow at interest rates very close to zero for domestic investment and capital returns to shareholders while still maintaining vast market power to make long term component deals and strategic investments ranging from acquisitions to expansions of its retail network and its production capabilities.

Apple expects to invest $15 billion in infrastructure, tooling, retail and other capital expenditures in fiscal 2016.
«1

Comments

  • Reply 1 of 21
    doggonedoggone Posts: 319member
    Here's a question. Apple has spent $110B in stock buyback but how much have they saved in dividend costs.  I doubt it is $110B and it could be a few decades before they recoup the cost.  Sure its better to borrow than repatriate the foreign cash but there is a point where the numbers start getting silly.  The market has already forgotten about the reduce share number and priced aapl where they want it.
    My wish is that Apple significantly increase the dividend and create demand for the stock based on the long term value of the stock.
    cnocbui
  • Reply 2 of 21
    radarthekatradarthekat Posts: 3,487moderator
    doggone said:
    Here's a question. Apple has spent $110B in stock buyback but how much have they saved in dividend costs.  I doubt it is $110B and it could be a few decades before they recoup the cost.  Sure its better to borrow than repatriate the foreign cash but there is a point where the numbers start getting silly.  The market has already forgotten about the reduce share number and priced aapl where they want it.
    My wish is that Apple significantly increase the dividend and create demand for the stock based on the long term value of the stock.

    You are precisely correct. None of the analysts or pundits ever stops to do the math which reveals that Apple at $700 in 2012 is not equal to Apple at $100 today, but instead Apple would need to rise to the $116-118 range in order to have the $660 billion market cap its $700 2012 stock price equated to. So, zero credit in the marketplace for a reduced share count.
  • Reply 3 of 21
    jonljonl Posts: 210member
    Now for the quarterly lesson on what "ex-dividend" means, because once again the AI article misleads by using the term in its title and then uses "record date" in its body. They aren't the same things. The ex-dividend date is the day such that if you haven't already bought the stock, you are excluded from the dividend. You can buy the stock the day before it goes ex-dividend, and as long as you don't sell it that same day, you get the dividend. However, you can sell it on the ex-dividend date, and you still get the dividend. AAPL went ex-dividend on Feb 4. The record date is Feb 8. There are 3 business days in between, and that is the "settlement time".
    cityguide
  • Reply 4 of 21
    doggonedoggone Posts: 319member
    jonl said:
    Now for the quarterly lesson on what "ex-dividend" means, because once again the AI article misleads by using the term in its title and then uses "record date" in its body. They aren't the same things. The ex-dividend date is the day such that if you haven't already bought the stock, you are excluded from the dividend. You can buy the stock the day before it goes ex-dividend, and as long as you don't sell it that same day, you get the dividend. However, you can sell it on the ex-dividend date, and you still get the dividend. AAPL went ex-dividend on Feb 4. The record date is Feb 8. There are 3 business days in between, and that is the "settlement time".
    Hence the term ex(cluded)-dividend.  I kinda understood before but now it is crystal clear.  Cheers.
  • Reply 5 of 21
    Rayz2016Rayz2016 Posts: 6,957member
    Is this why Apple doesn't waste time arguing with Wall Street over the company's share price? Because it makes the buyback cheaper? Aside from the fact arguing wouldn't do any good

    edited February 2016
  • Reply 6 of 21
    "Despite massive buybacks, Apple still has a growing pile of cash"

    DED, you should be honest with investors. The truth is that Apple net assets (cash and investments excluded debts) are basically flat since 3 years (not piling at all). You know that massive buybacks had beed funded with massive debts (billions of dollars in issued bonds).

    The graph below shows that profits of the last three years have been basically destroyed by speculators exploiting sistematic buybacks.
    So, AAPL is an extremely strong company, but as a stockholder, I would prefer to stop buybacks at all to avoid burning profits.



    anantksundaram
  • Reply 7 of 21
    Rayz2016Rayz2016 Posts: 6,957member
    bradipao said:
    "Despite massive buybacks, Apple still has a growing pile of cash"

    DED, you should be honest with investors. The truth is that Apple net assets (cash and investments excluded debts) are basically flat since 3 years (not piling at all). You know that massive buybacks had beed funded with massive debts (billions of dollars in issued bonds).

    The graph below shows that profits of the last three years have been basically destroyed by speculators exploiting sistematic buybacks.
    So, AAPL is an extremely strong company, but as a stockholder, I would prefer to stop buybacks at all to avoid burning profits.



    I thought one reason for the buyback was to reduce the cash pile, which just loses value while it's sitting there. 
    latifbp
  • Reply 8 of 21
    cnocbuicnocbui Posts: 3,613member
    Rayz2016 said:
    bradipao said:
    "Despite massive buybacks, Apple still has a growing pile of cash"

    DED, you should be honest with investors. The truth is that Apple net assets (cash and investments excluded debts) are basically flat since 3 years (not piling at all). You know that massive buybacks had beed funded with massive debts (billions of dollars in issued bonds).

    The graph below shows that profits of the last three years have been basically destroyed by speculators exploiting sistematic buybacks.
    So, AAPL is an extremely strong company, but as a stockholder, I would prefer to stop buybacks at all to avoid burning profits.



    I thought one reason for the buyback was to reduce the cash pile, which just loses value while it's sitting there. 
    That is not the case.  The buybacks are being funded by borrowings, so have no effect on the cash pile, they just create a pile of debt.

    "Buybacks increase the scarcity, and therefore value, of Apple's stock by taking shares off the market and retiring them."

    NO they don't.  That is just a 'theory' which has been disproven by reality.  Tim Cook should never have listened to Carl Icahn.  If he had instead announced significantly increased dividends I strongly suspect Apple's share price would be way higher than it currently is.

    I do not understand this APPL shareholder glee at a huge cash pile or their seemingly adamant view that overseas profits shouldn't be repatriated, have the due tax paid on it and then be disbursed to shareholders as dividends. The cash pile doesn't do investors or Apple any good beyond bragging rights.  Apple don't need that much in order to grow or pursue new business opportunities.

    I do think the US government should introduce franking of dividends, like Australia has, as it is not appropriate to have profits taxed twice.   I wonder what individual investors would choose if Multinationals were allowed to repatriate overseas profits, not pay any tax on it, distribute it to shareholders who then would have to pay the 38% or whatever the tax owing on it.  If a shareholder could tick a box and say, yes, pay me the dividend or tick no, leave it in the pile, who in their right mind would tick 'no'?  I would rather pay the 38% and have money I could actually make use of.  The US economy would benefit greatly.  The government wouldn't be so indebted and more money would be in the hands of consumers to consume or invest with.
    edited February 2016 pjanders
  • Reply 9 of 21
    josujosu Posts: 217member
    cnocbui said:
    Rayz2016 said:
    I thought one reason for the buyback was to reduce the cash pile, which just loses value while it's sitting there. 
    That is not the case.  The buybacks are being funded by borrowings, so have no effect on the cash pile, they just create a pile of debt.

    "Buybacks increase the scarcity, and therefore value, of Apple's stock by taking shares off the market and retiring them."

    NO they don't.  That is just a 'theory' which has been disproven by reality.  Tim Cook should never have listened to Carl Icahn.  If he had instead announced significantly increased dividends I strongly suspect Apple's share price would be way higher than it currently is.

    I do not understand this APPL shareholder glee at a huge cash pile or their seemingly adamant view that overseas profits shouldn't be repatriated, have the due tax paid on it and then be disbursed to shareholders as dividends. The cash pile doesn't do investors or Apple any good beyond bragging rights.  Apple don't need that much in order to grow or pursue new business opportunities.

    I do think the US government should introduce franking of dividends, like Australia has, as it is not appropriate to have profits taxed twice.   I wonder what individual investors would choose if Multinationals were allowed to repatriate overseas profits, not pay any tax on it, distribute it to shareholders who then would have to pay the 38% or whatever the tax owing on it.  If a shareholder could tick a box and say, yes, pay me the dividend or tick no, leave it in the pile, who in their right mind would tick 'no'?  I would rather pay the 38% and have money I could actually make use of.  The US economy would benefit greatly.  The government wouldn't be so indebted and more money would be in the hands of consumers to consume or invest with.
    You are wrong, as long as the pile of cash outgrows the pile of debt, debt is no issue. And the size of the debt is 53.4 billion when the size of the buyback has been around 150 billion, so hardly financed by debt. 

    And I will tick no, thanks but I right now am paying 35-36% for the dividend Apple gives me, and thank you but I simply prefer buybacks because they are not taxed, and any overseas private investor paid to the US and to their country. OK in theory your government refund the money US government takes, but I have tried several times and the answer is "got to the US and ask for the money," you must go to your bank, and they get the money, but all goes in management fees. SO thanks I prefer buybacks, they are not mathematics but sooner or later they make the trick, not good for impatient investors, but for me Ok. Well, to be fair, the real problem is that here in Spain we got five different tax bodies, a general one, affecting most of the country and four other that affects to four former provinces, now forming two autonomous regions, I am in one of them. So if in theory my dividends are with the national system free of taxes, here I am taxed. End result I pay 36% tax, so as if my income where much higher than it is.
    edited February 2016
  • Reply 10 of 21
    ac1234ac1234 Posts: 138member
    josu said:
    cnocbui said:
    That is not the case.  The buybacks are being funded by borrowings, so have no effect on the cash pile, they just create a pile of debt.

    "Buybacks increase the scarcity, and therefore value, of Apple's stock by taking shares off the market and retiring them."

    NO they don't.  That is just a 'theory' which has been disproven by reality.  Tim Cook should never have listened to Carl Icahn.  If he had instead announced significantly increased dividends I strongly suspect Apple's share price would be way higher than it currently is.

    I do not understand this APPL shareholder glee at a huge cash pile or their seemingly adamant view that overseas profits shouldn't be repatriated, have the due tax paid on it and then be disbursed to shareholders as dividends. The cash pile doesn't do investors or Apple any good beyond bragging rights.  Apple don't need that much in order to grow or pursue new business opportunities.

    I do think the US government should introduce franking of dividends, like Australia has, as it is not appropriate to have profits taxed twice.   I wonder what individual investors would choose if Multinationals were allowed to repatriate overseas profits, not pay any tax on it, distribute it to shareholders who then would have to pay the 38% or whatever the tax owing on it.  If a shareholder could tick a box and say, yes, pay me the dividend or tick no, leave it in the pile, who in their right mind would tick 'no'?  I would rather pay the 38% and have money I could actually make use of.  The US economy would benefit greatly.  The government wouldn't be so indebted and more money would be in the hands of consumers to consume or invest with.
    You are wrong, as long as the pile of cash outgrows the pile of debt, debt is no issue. And the size of the debt is 53.4 billion when the size of the buyback has been around 150 billion, so hardly financed by debt. 

    And I will tick no, thanks but I right now am paying 35-36% for the dividend Apple gives me, and thank you but I simply prefer buybacks because they are not taxed, and any overseas private investor paid to the US and to their country. OK in theory your government refund the money US government takes, but I have tried several times and the answer is "got to the US and ask for the money," you must go to your bank, and they get the money, but all goes in management fees. SO thanks I prefer buybacks, they are not mathematics but sooner or later they make the trick, not good for impatient investors, but for me Ok. Well, to be fair, the real problem is that here in Spain we got five different tax bodies, a general one, affecting most of the country and four other that affects to four former provinces, now forming two autonomous regions, I am in one of them. So if in theory my dividends are with the national system free of taxes, here I am taxed. End result I pay 36% tax, so as if my income where much higher than it is.
    That has to be one of the most ill informed posts I have read on any forum.  You would prefer buybacks that generate ZERO income to you / shareholders?
    cnocbui
  • Reply 11 of 21
    I think long-term goal might be to increase dividend for long-term investors.  Right now, 70 to 80 billion in cash flow, they use 50 billion for dividend and buyback.   I'd first do the buyback for two to 4 years, maybe get the outstanding shares down to 4 billion.  Then use the cash flow exclusively and maintain a 5 to 6% dividend.   You can analyze and debate ad nauseam, the plain fact is if Apple continues to perform this all gets very interesting.  I would not rule out tax reform either.
  • Reply 12 of 21
    Maybe it is time for Apple to put brakes on buybacks and use the money to add more to dividend. People are talking about a large special dividend to pump up the shares. Though I think it will only have short term impact. Maybe instead increate dividend every 2/3 quarters.
  • Reply 13 of 21
    eriamjheriamjh Posts: 1,366member
    Apple definitely needs to boost its dividend to help its stock.
  • Reply 14 of 21
    It is going to be interesting how committed Apple remains to increasing the dividend on a year by year basis. They say they are and they also say that they are going to increase the capital return program.

    On the overseas cash pile, considering that it is regularly debated if there should be a tax amnesty which would allow the return of capital to the U.S. without tax consequences, Apple is smart to continue to park cash overseas. The Republican party would probably do a tax amnesty if they retook the Whitehouse and continued to hold the Senate and the House. Since there is a fairly decent chance of that being the situation in 2017, Apple may not have to wait long on this issue. And even if Clinton wins the Presidency she might not veto a tax amnesty because the influx of overseas cash into the U.S. would probably do a bit to stimulate the U.S. economy. Less than the pundits and politicians say it would, but I can't see it hurting. 

    Anyway, the issue with the stock price is that the market's view is that eventually iPhone sales will peak and then decline. Or alternatively (and this has the same effect), Apple will have to lower its prices and take reduced margins. Now the fact is that as 12/31/2015 iPhone sales have not decreased. But Apple has guided that they will decrease year over year in the current quarter. So the prediction of iPhone peak sales has basically come true. The question is if this is going to be a long term trend or just a blip that iPhone 7 corrects. And also will the decrease in sales be dramatic or a leveling off. 

    One issue that Apple has with the iPhone and maintaining the absolutely vast sales numbers it has done to date is that to do those sales Apple has to produce a GREAT phone. And because Apple does make such a phone, those phones are lasting a long time. The iPhone 4 and 4S are still regularly sold in the aftermarket producing no hardware profits for Apple. And these aren't just sales on eBay and Craigslist, these are sales by robust businesses which refurbish the phones before sale. The 5 and 6 models will presumably have even longer lifespans. The 6s, for example, has such a powerful processor that I could see it being a phone that regularly gets used for five or even more years. It might go through multiple owners during that period of time, but only the initial sale will produce hardware revenue for Apple. 

    Now in my view there is still a huge market for smartphones which Apple can grow into. China and India still buy far less iPhones than those markets could. And the iPhone seems to be very popular and compelling. I also think that Apple is going to grow its services revenue (which is high margin) as the shear number of powerful iOS devices in service continue to increase. That is the flip side of making iPhones and iPads with long lifespans. But those service revenues need to come from App sales and subscription services. Apple has done well in getting revenue from App sales but less so from subscriptions. And in subscription services (Apple Music for example), Apple competes against companies which price their services at barely break even costs. Or they compete against Google and Amazon's free services which are supported by ad revenue and data mining revenue which Apple won't do. Those are tough competitors and headwinds to work against. 

    And finally it is very hard to predict the impact of the car. It might be a huge new source of profit. But it also might be a failure while sucking up tens of billions of R&D dollars and capital investments. Basically if you think Apple's stock is overpriced now it would be because you think the iPhone revenue will decline and the car will produce losses. Both of these views seem plausible. I'm betting in the other direction, but I at least get the arguments that are out there. 
  • Reply 15 of 21
    cnocbuicnocbui Posts: 3,613member
    JonCBK said:
    Now in my view there is still a huge market for smartphones which Apple can grow into. China and India still buy far less iPhones than those markets could. And the iPhone seems to be very popular and compelling.
    The average annual income in those markets is but a small fraction of that in the US.  The potential market in those countries is actually small.  Apple has already reduced prices of products in India several times, but I doubt it will have much impact as even the reduced prices are still only affordable to those on locally high incomes.

    iPhones are too expensive for people in Spain (8.7%), let alone India.   It takes an average 27.2 hrs to earn the cost of an iP6 in los Angeles.  It takes 360.3 hrs in New Delhi and 217.8 hrs in Beijing.
  • Reply 16 of 21
    It makes sense to accelerate buybacks when shares get cheaper, because that makes the buybacks cheaper.

    Just my 2 cts.
    edited February 2016
  • Reply 17 of 21
    cnocbui said:
    JonCBK said:
    Now in my view there is still a huge market for smartphones which Apple can grow into. China and India still buy far less iPhones than those markets could. And the iPhone seems to be very popular and compelling.
    The average annual income in those markets is but a small fraction of that in the US.  The potential market in those countries is actually small.  Apple has already reduced prices of products in India several times, but I doubt it will have much impact as even the reduced prices are still only affordable to those on locally high incomes.

    iPhones are too expensive for people in Spain (8.7%), let alone India.   It takes an average 27.2 hrs to earn the cost of an iP6 in los Angeles.  It takes 360.3 hrs in New Delhi and 217.8 hrs in Beijing.

    The average annual income in those countries is much smaller than the U.S. But you have to look at purchasing power of that income to factor in who can afford an iPhone. I've got friends in China and their salary goes a long way there. When going out to eat, shopping for groceries, or paying for childcare is just a fraction of the cost in the U.S. at the end of the day they have a lot more disposable income than you would guess looking at just their salary. For example, a family of four with a salary of $100k in the U.S. would describe themselves as middle class. In China that family has a live in cook and maid. Utilities like electricity and cable TV will be super cheap to that $100k family in China, while in the U.S. they will be a big part of the monthly budget. So there might be more purchasing power in these countries than you realize.

     I think we will see a lot of growth in these countries because Apple's phones are better than android phones and the Apps on them are better as well. It will never be the majority. But if you look at just the top 10% of folks in India and China, we are talking about 300 million people. I know the top 10% in China has no trouble paying for an iPhone. I believe India is poorer, but I bet their top 10% also is financially capable. In India's case there just hasn't the stores out there. But that is changing.
  • Reply 18 of 21
    There is some irresponsible posting here. Some shills. Buybacks allow the dividend to rise in the long term without siphoning the domestic cash pile, which is apparently all that matters (according to Wall Street).

    As for the 200 billion off-shore, keep it invested off shore. There is no reason to reduce the company's purchasing power simply because America wants Amazon or Google to rule the world. Fuck them. Buy some land in China and make a new transportation system without restrictions. This is the path that America chose. Pro data-collection fucktards. There is no guarantee whatsoever that Apple's money gets used in the states. And it's time to make a move.
  • Reply 19 of 21
    JonCBK said:
    cnocbui said:
    The average annual income in those markets is but a small fraction of that in the US.  The potential market in those countries is actually small.  Apple has already reduced prices of products in India several times, but I doubt it will have much impact as even the reduced prices are still only affordable to those on locally high incomes.

    iPhones are too expensive for people in Spain (8.7%), let alone India.   It takes an average 27.2 hrs to earn the cost of an iP6 in los Angeles.  It takes 360.3 hrs in New Delhi and 217.8 hrs in Beijing.

    The average annual income in those countries is much smaller than the U.S. But you have to look at purchasing power of that income to factor in who can afford an iPhone. I've got friends in China and their salary goes a long way there. When going out to eat, shopping for groceries, or paying for childcare is just a fraction of the cost in the U.S. at the end of the day they have a lot more disposable income than you would guess looking at just their salary. For example, a family of four with a salary of $100k in the U.S. would describe themselves as middle class. In China that family has a live in cook and maid. Utilities like electricity and cable TV will be super cheap to that $100k family in China, while in the U.S. they will be a big part of the monthly budget. So there might be more purchasing power in these countries than you realize.

     I think we will see a lot of growth in these countries because Apple's phones are better than android phones and the Apps on them are better as well. It will never be the majority. But if you look at just the top 10% of folks in India and China, we are talking about 300 million people. I know the top 10% in China has no trouble paying for an iPhone. I believe India is poorer, but I bet their top 10% also is financially capable. In India's case there just hasn't the stores out there. But that is changing.
    China has more billionaires than the US and they have more millionaires than all other countries except for the US:  http://money.cnn.com/2015/10/15/investing/china-us-billionaires/
  • Reply 20 of 21
    ac1234 said:
    josu said:
    You are wrong, as long as the pile of cash outgrows the pile of debt, debt is no issue. And the size of the debt is 53.4 billion when the size of the buyback has been around 150 billion, so hardly financed by debt. 

    And I will tick no, thanks but I right now am paying 35-36% for the dividend Apple gives me, and thank you but I simply prefer buybacks because they are not taxed, and any overseas private investor paid to the US and to their country. OK in theory your government refund the money US government takes, but I have tried several times and the answer is "got to the US and ask for the money," you must go to your bank, and they get the money, but all goes in management fees. SO thanks I prefer buybacks, they are not mathematics but sooner or later they make the trick, not good for impatient investors, but for me Ok. Well, to be fair, the real problem is that here in Spain we got five different tax bodies, a general one, affecting most of the country and four other that affects to four former provinces, now forming two autonomous regions, I am in one of them. So if in theory my dividends are with the national system free of taxes, here I am taxed. End result I pay 36% tax, so as if my income where much higher than it is.
    That has to be one of the most ill informed posts I have read on any forum.  You would prefer buybacks that generate ZERO income to you / shareholders?
    That is both a harsh and ill informed response. Now, at face value, the buybacks seem to be having a limited impact. It's disappointing to see the current price below recent buy back costs, but there are many other purchases that have been achieved at much lower costs. I think patience and foresight is required here. Something that few of the people commenting here seem to have. I think AC1234 is correct in that eventually the buy backs will work. If Apple continues to scoop up shares there is going to come a point where the impact of share contraction will favour investors. It's classic economics - supply & demand. Buffet also states that the stock market is a voting machine in the short term and a weighing machine in the long term. Let Apple scoop up shares at a discount while it is unpopular now, and long term investors will benefit greatly.

    I'm surprised this is not more discussed but probably has to do with people's impatience and inability to think like Apple - objectively and long-term. It doesn't take a genius to do some simple maths on what an extension of the buy back program will do over another 5 years - the share count will reduce even more dramatically, even if Apple does have no growth (which I doubt). I do understand the knee-jerk reaction to the BB program and the desire to see cash in hand via dividends. However, I personally just reinvest my divi back into Apple, especially when it is sitting at these ridiculous prices. So for me scraping the divi and using that money for buy backs would be far more tax efficient. That is also the case for a lot of mid and long term investors. I do wish we could see some more detailed projections on this as I think a lot of investors would see the light at the end of the tunnel if this was spelt out. My gut tells me Tim knows exactly what he is doing here, and long time investors will be richly rewarded.
Sign In or Register to comment.