brucemc

christopher126 said:

This may sound ethnocentric, but I'm glad I don't live in China and it is steadily moving down my list of places I'd like to visit.

Best

As a Canadian, I will not be visiting China anytime in the planned future (work or leisure), as the Chinese gov't has been detaining / imprisoning Canadians (13 so far) since the Huawei CFO was arrested on Canadian soil, based upon an arrest warrant from the USA (with whom we have an extradition treaty).  Funny how China is extracting is revenge (how mature of them) on Canadians, but not on Americans who issued the arrest warrant.

I don't understand the controversy.  In-app purchasing is there as an option for those that find value in customer acquisition via Apple, and others can choose to not have it if their brand / marketing $$ can drive customers to the service without that one-click ease.  Amazon has always had signup outside app store.  Netflix is quite capable of managing around this.  And Apple gets lots of value by providing free apps, provided that there is appropriate $$ from paid apps to make it viable as a whole.

For those that argue Apple shouldn't be charging 30%/15% for paid services, have you ever asked why the competition does the same?  Why does the great Google Play store have the same values?  Why is Google Play not significantly lower?  When mobile application stores offered by the mobile operators where a (small) thing back in the 2000's, the % were the other way around - operator takes 70% and developer gets 30% (use of apps and type of apps limited prior to iPhone, so not much of a business, but something to note).  Apple was ground breaking when the introduced this model, and was quickly copied by Google.

I do believe that with the App Store at the scale it is now, Apple should consider some reduction in fees as a way to continue to grow the business.  Meaning it is in Apple's best interest - not a statement that taking a cut of such sales is wrong.  Moving to say 25% in general, and 10% for long-term subscriptions, can help to grow the paid apps & stave off potential class actions in the future.

A few things to consider:
- Apple started to return cash to shareholders as a result of generating so much of it.  Their net cash position was well over $100B.  The iPhone phenomenon was bigger than anything before, and it was after the Jobs era when the bucket loads of cash started to pore in (for those who want to focus on Jobs' view)
- A focused company - which, if you know anything about Apple, you know they strive for this - can only invest in so much at one time.  More money, past a certain point, does not solve a problem faster.  Anyone who understands product development and engineering knows this.  Things take time, regardless of money.
- So there is excess, or free cash, and as you should know with Apple, it is a lot - about $50B/year.  Believe it or not, but high amounts of cash on a companies balance sheet is *not* considered a good thing.  People don't invest in Apple to gain a share of cash earning little money.  So that cash has to be dealt with.
- Some would argue that Apple should go around buying numerous large companies (Netflix, Disney, Tesla) - and spend all of their money that way.  But for such shrewd investors, they should look at the history of large acquisitions to see how they turned out for company value.  Hint - it isn't pretty (something like 80% are value destructive).  Now think about Apple's culture and how that would work.
- Or there is returning it to shareholders.  That can be with dividends (taxable in the year received) or buybacks with retirement, which reduce the count and increase ownership %.  Apple does both.  Apple has been raising their dividend on average greater than 10% each year, which is considered a gold standard.
- Some may look at the buybacks as "burning money", but at the end of the day it is increasing the % ownership in Apple for remaining shareholders, and if you think Apple is a well run company, with great products, which generate money, and have a solid future - then that is a good thing.

Melgross appears to be a successful investor, and as such his opinion has value, but while he has been skeptical of buybacks, I can't recall him making any suggestions as to how Apple should manage their excess cash.  For the cash levels that Apple is making, the choice is really huge dividends each year, buybacks, or large company acquisitions.

Apple is not like many other companies performing buybacks, who are borrowing huge money to do so (arguing that it is OK with rates so low).  Apple only borrowed effectively against foreign cash, to have domestic funds for buybacks.  Their net cash position was, and is, strong.  With tax changes, Apple has access to its foreign cash at an acceptable rate, and no longer needs to borrow to fund its shareholder return programs.  Apple's buybacks are funded from free cash flow - not increasing net debt.  Hopefully people can understand the difference.

But...but....but...

kruegdude said:

brucemc said:

Apple is a bad investment.  Please sell your shares.

Hopefully no one will follow your ill advised advice of selling low without first seeking out someone who knows what their talking about, investment wise. 

If you don't sell your shares, how can I buy them?  Please sell your shares.