carnegie

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  • Apple's valuation will fall to less than $3 trillion for the worst reasons

    carnegiecarnegie
    Xed said:
    doggone said:
    Mike Wuerthele said:
    gatorguy said:
    Apple has continuously been buying back stock for the last seven years, and
    retiring most of it...
    Hasn't every share acquired under the repurchase program been retired? They can, of course, create new shares someday and sell them, but AFAIK every share in Apple's Repurchase Program has been effectively burned, it no longer exists. 
    In the early days of the buy-back they did some other things with a small portion of the shares they re-acquired. For the last four years, as far as I can tell, every share has been completely retired.

    When I say "most of it," that's like conservatively 96% have been retired.
    Buybacks do retire shares.  But also remember Apple employees have a share option program. Those shares have to be reserved somehow particularly for the bonus programs for executives.  I remember reading a while ago that Apple will announce when they carve out a portion of the shares for this. I don’t know if they create new shares or simply buy existing ones on the open market.  
    Not inherently. A company buying back the shares has to choose to retire them v reallocating them. As Mike previously mentioned and later state in your comment, Apple has taken some of the shares it repurchased to distribute to employees as options.
    Apple doesn't grant stock options anymore. But for its vesting RSU awards, it issues new shares.
    watto_cobramuthuk_vanalingamFileMakerFeller

  • Apple's valuation will fall to less than $3 trillion for the worst reasons

    carnegiecarnegie
    waveparticle said:
    doggone said:
    Mike Wuerthele said:
    gatorguy said:
    Apple has continuously been buying back stock for the last seven years, and
    retiring most of it...
    Hasn't every share acquired under the repurchase program been retired? They can, of course, create new shares someday and sell them, but AFAIK every share in Apple's Repurchase Program has been effectively burned, it no longer exists. 
    In the early days of the buy-back they did some other things with a small portion of the shares they re-acquired. For the last four years, as far as I can tell, every share has been completely retired.

    When I say "most of it," that's like conservatively 96% have been retired.
    Buybacks do retire shares.  But also remember Apple employees have a share option program. Those shares have to be reserved somehow particularly for the bonus programs for executives.  I remember reading a while ago that Apple will announce when they carve out a portion of the shares for this. I don’t know if they create new shares or simply buy existing ones on the open market.  
    Most employees will keep the shares as option so to avoid paying taxes when redeemed. This will not increase total shares. 
    Employees receiving shares from vesting RSU awards (Apple doesn't issue stock options anymore) have tax liability (based on their value at the time of vesting) whether they sell those shares or not. It's treated as ordinary income. And those vesting shares (net of tax withholding) do increase the number of Apple shares outstanding. Apple issues new shares (again, net of tax withholding) for them.
    watto_cobramuthuk_vanalingamFileMakerFeller

  • Apple's valuation will fall to less than $3 trillion for the worst reasons

    carnegiecarnegie
    gatorguy said:
    Xed said:
    doggone said:
    gatorguy said:
    Apple has continuously been buying back stock for the last seven years, and
    retiring most of it...
    Hasn't every share acquired under the repurchase program been retired? They can, of course, create new shares someday and sell them, but AFAIK every share in Apple's Repurchase Program has been effectively burned, it no longer exists. 
    In the early days of the buy-back they did some other things with a small portion of the shares they re-acquired. For the last four years, as far as I can tell, every share has been completely retired.

    When I say "most of it," that's like conservatively 96% have been retired.
    Buybacks do retire shares.  But also remember Apple employees have a share option program. Those shares have to be reserved somehow particularly for the bonus programs for executives.  I remember reading a while ago that Apple will announce when they carve out a portion of the shares for this. I don’t know if they create new shares or simply buy existing ones on the open market.  
    Not inherently. A company buying back the shares has to choose to retire them v reallocating them. As Mike previously mentioned and later state in your comment, Apple has taken some of the shares it repurchased to distribute to employees as options.
    When did that happen? From every bit of research I've done there's not a single share of Apple stock acquired in the Apple Share Repurchase Program that's been converted to Treasury stock, at least since 2016which is as far back as I've checked. Those shares are 100% retired, ie burned, from everything I'm able to find, and which Above Avalon also states. If you have evidence that indicates otherwise I'd love to see it. 
    Yes, dating back to the August 2012 ASR (which started this decade plus of Apple share repurchases) Apple has stated in various filings that it retires the shares it receives from both its ASR agreements and from its open market repurchases. A few years back Apple stopped explicitly referring (e.g. in its 10-Ks) to the retirement of shares repurchased in the open market, but there's been no indication that it isn't still retiring all such shares. It doesn't, e.g., report anything regarding treasury stock.

    There would be some differences when it comes to accounting, but in Apple's case it's largely inconsequential that repurchased shares are retired. It can reissue shares with the snap of a finger; it already has authorization in place for more than 50 billion outstanding shares. And it does routinely issue new shares - in the ballpark of 100 million annually - for, e.g., vesting RSU awards and its employee stock purchase plan. You are correct in that it doesn't put aside repurchased shares to be distributed for such things, it issues new shares for them.
    gatorguyforgot usernameJanNLmuthuk_vanalingamFileMakerFeller

  • Apple's valuation will fall to less than $3 trillion for the worst reasons

    carnegiecarnegie
    twolf2919 said:
    Apple's price isn't going down because Apple missed some arbitrary consensus figure in iPhone sales.  I believe on the conference call someone mentioned that it has been 3 quarters of iPhone sales declines YoY.  You mention analyst "missing" the growth of services and Apple's journey to diversify away from being a one-trick (iPhone) pony.  Since that has been going on for years now, I don't think any analyst missed such an obvious thing.  But even now - almost a decade after services began to contribute to Apple's bottom line, they still only contribute 20%.  Yes, that's much better than just a couple years ago, but Apple still gets most of its revenue from iPhone sales.

    And the growth in services has definitely slowed.  Just a couple years ago, I think that segment was growing at 20%?  I think they said in the last quarter it was 8%.

    So with iPhone sales slowing, services revenue growth slowing, and no new growth drivers on the horizon for several more years (until Vision Pro becomes a set of affordable glasses people would actually want to wear), analysts are coming to the realization that Apple doesn't deserve its current 32 P/E valuation.

     think Apple is a great company - we have every conceivable Apple device and are happy inhabitants of Apple's walled garden - but I agree with the analysis that AAPL doesn't deserve its current valuation.  It would have been a different story if the Vision Pro announcement had been more compelling than the technical tour-de-force it was and previewed something that could actually take iPhone's place as the next major growth driver.

    Services likely contributes more than 20% to Apple's bottom line. For FY2023 it's contributed 21% to Apple's revenue (i.e., Apple's top line). We don't have definitive numbers for bottom line contribution, but we do have them for gross margin contribution and there for FY 2023 Services has made up 35%. The gross margins for Services are about twice what they are for Products.

    Just looking at this past quarter, Services accounted for 26% of Apple's revenue and 41% of its gross margin.
    muthuk_vanalingamgatorguytwolf2919roundaboutnowwatto_cobraFileMakerFeller

  • Apple finally reaches one billion paid subscriptions milestone

    carnegiecarnegie
    applebynature said:
    Your headline and the first two sentences are FALSE. It's subscribers, not subscriptions. They likely have had several billion subscriptions for quite a while. This new milestone is stating that there are 1 Billion individual people who have at least one subscription of some kind through Apple. It's an important distinction and one that I'm not surprised AI got wrong in the freakin headline itself.
    That's not what Apple said in both its SEC filing and in its conference call yesterday. Apple says that it passed one billion paid subscriptions, not one billion paid subscribers.
    muthuk_vanalingamdesignrwatto_cobra