I don't think the stock would be worth less today if they didn't do the buyback.
They would have over $300 billion in net cash if they didn't do the buyback.
Sans cash the company's market cap would only be $264 billion. Do you seriously think Apple would be worth less net of cash than Facebook, which is worth $300 billion? I don't think so.
IMO, Apple should hoard the cash right now. If the economy gets worse they can buy and acquire foreign and domestic companies for cheap.
Part of the pressure on AAPL stock price is due to large institutions view that AAPL is shifting from a growth stock to a value stock, and the growth funds have been selling at a higher rate than the value funds are adding positions. I still see AAPL in the growth phase, as the 2015 holiday quarter and following quarter iPhone sales were an anomaly and should have been treated as outlier data points - but, it doesn't matter what I, or you think as they will do what they will do. However, at some point they will have such large YOY comps to deal with AAPL will no longer fit any of the institution's growth funds definitions and their rules will force them to sell.
It is what it is, regardless of whether the institutions have pulled the trigger early or not. But, at some point the buy/sell rates will equalize, and the buybacks effects will be seen. At this point, any positive effects of the buybacks have been obscured by the transition.
Look at the reported activity for the Fidelity funds and you can see the imbalance buy/sell pressure. And, Fidelity is just one of the institutions transitioning.
Fidelity Capital Appreciation fund sold all of its 2.48 million Apple shares since June
while at the same time Fidelity Series Equity-Income fund bought 1.05 million shares (after having no previous stake)
When you look at the 20 year view of AAPL, you see the latest drop (over the last 9+ months) as a 50% retracement - this has occurred multiple times with AAPL. AAPL appears to have bottomed out in Feb, and in the past have resumed their trajectory either one or two month after they have bottomed. Unexpected events can change things, but I have no reason to expect this retracement to be any different.
Good guess, But don't forget that most if not all tech stocks has seen a big troubles in their share value when they have been listed in the DJIA. At least Microsoft, Intel, Cisco and IBM had a rough time just after starting to trade in the DJIA, and probably is due to that, today,as I have read here, MSFT trades at 37 P/E, but is obvious nobody remembers the bad times it had after starting to trade in DJIA. For the few of you not stock market illustrated DJIA is Dow Jones Industrial Average or commonly know as Dow Jones.
True, but Apple hasn't been finding many attractive targets so the pile has just been growing.
And if it keeps growing then Apple becomes a target for vultures. The way to prevent that is to buy back some stock (which reduces the supply and makes it more valuable) and pay a bigger dividend (which makes the return more attractive and therefore increases the price). A higher price means that the valuation goes up, reducing the attraction as a takeover target.
What Apple is saying here is that the best investment it can make ... is in itself.
Takeover target for who? Apple needn't worry about a takeover as there is are no vultures, companies, banks, funds or venture capital firms that could raise the funds to even begin to think about a takeover.
Last year when AAPL was in the $120-$135 range, I never though I'd be happy (today) that AAPL is "up" to $103. But given the past few months, I'll take the positive momentum.
i'd love to see them put 30-50% of profits into a dividend. At $9.40/share (according to yahoo) this would be $2.82-$4.70/yr or $0.71-$1.18/share per quarter. There doesn't seem to be a very good reason to keep increasing the cash pile. Obviously repatriation is an issue but it would let shareholders benefit from their strong cash flow and profitability and not worry so much about wall street or the wildly fluctuating stock price.
I'm all for the buybacks. If the stock price doesn't go up much, and they can dedicate $50bn/year plus their existing cash to buybacks, less than a decade from now they will have bought back all outstanding shares--except mine, of course, so I will own the whole company. Then I will demand my $50bn/year dividend.
I'd also be OK if they want to stop buybacks when they are at the point of being able to afford giving us all 100% annual dividends. But I guess that might be enough to wake up even Wall Street.
Dividends are great, and I do very much enjoy mine, but they do take value out of the stock, converting it to cash. We haven't yet seen as much of a result from the buybacks as we all might like, but at a certain point the shares are going to have to bounce up.
Easy guess, ten percent more is around 0.052 more, the usual rounding below five is to less so 0,05 more, next time it would be 0,06. So this year 0,57, next 0,63
There have been three consecutive annual dividend increases in recent years. The average increase was 11%. I have no reason to expect that next month's dividend announcement will be substantially different, but it could be.
People seem to be missing the fact that buybacks drive up the stock price, relative to what it would be without the buybacks.
Part of the pressure on AAPL stock price is due to large institutions view that AAPL is shifting from a growth stock to a value stock, and the growth funds have been selling at a higher rate than the value funds are adding positions. I still see AAPL in the growth phase, as the 2015 holiday quarter and following quarter iPhone sales were an anomaly and should have been treated as outlier data points - but, it doesn't matter what I, or you think as they will do what they will do. However, at some point they will have such large YOY comps to deal with AAPL will no longer fit any of the institution's growth funds definitions and their rules will force them to sell.
It is what it is, regardless of whether the institutions have pulled the trigger early or not. But, at some point the buy/sell rates will equalize, and the buybacks effects will be seen. At this point, any positive effects of the buybacks have been obscured by the transition.
Look at the reported activity for the Fidelity funds and you can see the imbalance buy/sell pressure. And, Fidelity is just one of the institutions transitioning.
Fidelity Capital Appreciation fund sold all of its 2.48 million Apple shares since June
while at the same time Fidelity Series Equity-Income fund bought 1.05 million shares (after having no previous stake)
When you look at the 20 year view of AAPL, you see the latest drop (over the last 9+ months) as a 50% retracement - this has occurred multiple times with AAPL. AAPL appears to have bottomed out in Feb, and in the past have resumed their trajectory either one or two month after they have bottomed. Unexpected events can change things, but I have no reason to expect this retracement to be any different.
Good guess, But don't forget that most if not all tech stocks has seen a big troubles in their share value when they have been listed in the DJIA. At least Microsoft, Intel, Cisco and IBM had a rough time just after starting to trade in the DJIA, and probably is due to that, today,as I have read here, MSFT trades at 37 P/E, but is obvious nobody remembers the bad times it had after starting to trade in DJIA. For the few of you not stock market illustrated DJIA is Dow Jones Industrial Average or commonly know as Dow Jones.
The Dow-Jones Industrial Average is just an index. It's not the stock market.
I want 0,60 per share. Is a practical issue, my government takes 20% of what is left after yours take a 15% so I want to get 1.000€ net consistently even if there are some swings in exchange rates. In theory, I can claim US government the tax, but in real terms, unless I was getting several times more money per quarter the bank fees takes all the money.
It might be better for you to buy some of the debt (securities) that Apple sells outside the US in order to finance share repurchases next time they issue bonds denominated in Euros. Actually, you'd probably have to buy into some fund that buys the securities: I don't think they're traded retail.
The yield on Apple's € denominated bonds is very low.
The yield on Apple's € denominated bonds is very low.
The low yield on Apple's bonds reflects the confidence the market has that Apple will be able to repay the debt. Other than governments, with the power to tax, the markets consider Apple the most reliable borrower in the world. Higher risk borrowers have to pay higher interest to cover the risk.
You are also forgetting that buy repurchasing shares, Apple can boost their "Earnings Per Share" number. This creates the illusion of growth for the increasingly fickle Wall Street analysts and journalists.
Comments
Good guess, But don't forget that most if not all tech stocks has seen a big troubles in their share value when they have been listed in the DJIA. At least Microsoft, Intel, Cisco and IBM had a rough time just after starting to trade in the DJIA, and probably is due to that, today,as I have read here, MSFT trades at 37 P/E, but is obvious nobody remembers the bad times it had after starting to trade in DJIA. For the few of you not stock market illustrated DJIA is Dow Jones Industrial Average or commonly know as Dow Jones.
I'd also be OK if they want to stop buybacks when they are at the point of being able to afford giving us all 100% annual dividends. But I guess that might be enough to wake up even Wall Street.
Dividends are great, and I do very much enjoy mine, but they do take value out of the stock, converting it to cash. We haven't yet seen as much of a result from the buybacks as we all might like, but at a certain point the shares are going to have to bounce up.
People seem to be missing the fact that buybacks drive up the stock price, relative to what it would be without the buybacks.
https://en.m.wikipedia.org/wiki/Dow_Jones_Industrial_Average
What's so confusing?
The increase is the delta on a per share basis independent of the share price.