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Apple Announces Plans to Initiate Dividend and Share Repurchase Program

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Re: Apple Announces Plans to Initiate Dividend and Share Repurchase Program

#91

Post by njharman »

namsral wrote: post #83
andylei wrote: post #64

Earlier quoted context omitted.

> dividends signal to the market that you have no better way to spend your money than just giving it back to investors to spend elsewhere this is exactly what they're trying to signal because its true. what's wrong with that? they've been extremely profitable while not spending the $45 billion they're giving back to shareholders, and they can continue to be profitable without it. > In reality Apple could probably jus…

> the market cap on that company would be > $X. Market cap != Value assets The 550B market cap is the value of all outstanding shares of the company which is not equal to value of the combined assets like buildings and $$.

So? To "make company private" you have to buy the outstanding shares. 550B+

Re: Apple Announces Plans to Initiate Dividend and Share Repurchase Program

#92

Post by ajross »

funkah wrote: post #71
programminggeek wrote: post #47

I hate to say this is a bad idea, but dividends signal to the market that you have no better way to spend your money than just giving it back to investors to spend elsewhere. Combining a stock buyback plan is smart at least because perhaps they can balance the two and counteract the dividend effect by buying up shares. In reality Apple could probably just become a private company by buying back most/all the public sh…

> I hate to say this is a bad idea, but dividends signal to the market that you have no better way to spend your money than just giving it back to investors to spend elsewhere. The ever-present notion that the leadership team of what is now one of the largest companies in the world has no real idea what they are doing is fascinating to me. Perhaps they deserve a bit of credit.

They're riding a hit. I know this borders on heresy here, but the iPhone/iPad ecosystem is really just one very good product that hit an amazingly lucrative sweet spot in an emerging market. They're printing money with it because they got there first and best (c.f. Microsoft), not because their "leadership team" is reliably able to produce hit after hit.

Even Jobs only really got one money-printing-quality hit like this in his career. Most of "his" other stuff was great, sure, but mixed with equally great competitors (Pixar -- Toy Story was huge, but so was Titanic) or never managed to break into the market due to bad timing or market conditions (Mac OS).

Seriously: if all that Apple can do with that $100B is produce a top flight movie studio or a distant-second competitor to an established monopoly, it's not enough. They should give the cash back instead.

Re: Apple Announces Plans to Initiate Dividend and Share Repurchase Program

#93

Post by outside1234 »

The best part of this is that it is leadership for the rest of S&P 500 to start paying a dividend when they can't effectively invest parts of their income stream.

The alternative is something like Microsoft, which couldn't invest the money but still tried with all sorts of terrible acquisitions. This is a better alternative for shareholders.

Re: Apple Announces Plans to Initiate Dividend and Share Repurchase Program

#94

Post by maxerickson »

_delirium wrote: post #59
InclinedPlane wrote: post #43

Earlier quoted context omitted.

The board aren't the owners, they're just the board, the owners are the share holders. The company literally belongs to them, as does this money.

That's true, but the shareholders have delegated the decision on how to spend the money to their legal representatives on the board. There's a strong presumption that the shareholders have elected board members whose decisions they support, so if the board makes decisions and the shareholders don't vote them out, those are presumed to express the preferences of the shareholders. Note that those decisions do not have…

It's really too bad that people don't reason about small share lots as if they are very risky loans.

Re: Apple Announces Plans to Initiate Dividend and Share Repurchase Program

#95

Post by philwelch »

programminggeek wrote: post #47

I hate to say this is a bad idea, but dividends signal to the market that you have no better way to spend your money than just giving it back to investors to spend elsewhere. Combining a stock buyback plan is smart at least because perhaps they can balance the two and counteract the dividend effect by buying up shares. In reality Apple could probably just become a private company by buying back most/all the public sh…

Without either dividends or a stock buyback plan, stocks are no more an investment than baseball cards. The point of not paying dividends is so you can reinvest your cash to increase the dividends you can pay later, and Apple's dividend is so low that they're clearly planning to reinvest the vast majority of their cash even with these dividends.

I don't get the criticism that Apple has no better way to spend its money. It's been building a cash stockpile for years, so obviously they've had this "problem" for years. They're a public company that has to report the size of their cash stockpile every quarter; having a growing cash stockpile already signals they haven't found a way to somehow reinvest their cash. Paying a dividend, especially such a small one, hardly lets the cat out of the bag at this point.

Furthermore, interest rates are still rock-bottom. If Apple suddenly needed a whole bunch of cash to invest, it wouldn't be at all difficult for them to borrow at much, much lower rates than their rate of return. It might be more risky and costly than simply spending a war chest, which is a good reason to keep 55 billion around (plus whatever they pull in over the next three years) while distributing the other 45 billion.

Re: Apple Announces Plans to Initiate Dividend and Share Repurchase Program

#96

Post by namsral »

andylei wrote: post #84
namsral wrote: post #83

Earlier quoted context omitted.

> the market cap on that company would be > $X. Market cap != Value assets The 550B market cap is the value of all outstanding shares of the company which is not equal to value of the combined assets like buildings and $$.

if the market cap of the company fell below the cash (net of debt obligations) of that company, the investors could liquidate the company, take the cash, and make a profit. thus, it's pretty atypically for market cap to dip below asset value, and even more atypical for market cap to dip below cash holdings.

Apple came pretty close in 1997 when they had $380 in cash and a market cap of 2.2B but their LT debt was growing fast. ~1B at the time.

Source: http://www.businessweek.com/1997/34/roster34/aapl.htm

Re: Apple Announces Plans to Initiate Dividend and Share Repurchase Program

#97

Post by nikcub »

veyron wrote: post #85
nikcub wrote: post #40

Earlier quoted context omitted.

the Wall St logic is that since Apple are not spending the cash and it is just sitting there and earning almost nothing then you are better off giving it back to investors to invest for themselves (buying t-bills isn't hard, we can do that ourselves). the century old idea of stocks (and what buffet et al subscribe to) is about generating a yield from profits. the secondary effect is that now those types of investors…

They were pressured by wall street to actually do something with the money. I for one would have liked to see apple carry the cash balance. Sure they aren't making much from the cash, but I'm pretty sure there are better uses of the money. For example, why not buy a few suppliers?

the 'wallstreetification' of apple is complete

Re: Apple Announces Plans to Initiate Dividend and Share Repurchase Program

#98

Post by ceejayoz »

ajross wrote: post #92
funkah wrote: post #71

Earlier quoted context omitted.

> I hate to say this is a bad idea, but dividends signal to the market that you have no better way to spend your money than just giving it back to investors to spend elsewhere. The ever-present notion that the leadership team of what is now one of the largest companies in the world has no real idea what they are doing is fascinating to me. Perhaps they deserve a bit of credit.

They're riding a hit. I know this borders on heresy here, but the iPhone/iPad ecosystem is really just one very good product that hit an amazingly lucrative sweet spot in an emerging market. They're printing money with it because they got there first and best (c.f. Microsoft), not because their "leadership team" is reliably able to produce hit after hit. Even Jobs only really got one money-printing-quality hit like t…

Pixar wasn't a "money-printing-quality hit" because other studios make a lot of money on some movies too?

Titanic's studios have had plenty of flops and shitty movies to offset their successes. Pixar has had a string of commercial and critical successes.

Re: Apple Announces Plans to Initiate Dividend and Share Repurchase Program

#99

Post by beatle »

onemoreact wrote: post #81
funkah wrote: post #71

Earlier quoted context omitted.

> I hate to say this is a bad idea, but dividends signal to the market that you have no better way to spend your money than just giving it back to investors to spend elsewhere. The ever-present notion that the leadership team of what is now one of the largest companies in the world has no real idea what they are doing is fascinating to me. Perhaps they deserve a bit of credit.

Getting good returns from a 100 billion dollar investment is hard . Just as an idea of scale that's enough money to more than double world wide fusion research spending for the next 30 years. Suppose they started down that path and 20 years from now started building useful and highly profitable fusion reactors that beat coal power plants. Now what if that failed. Measuring the risk / benefit curve on such an investme…

You're right. Apple has so much cash that the only thing that makes sense is to both pay out quarterly dividends AND buying back their stock. Even though AAPL is still considered a GROWTH stock.

NOTE:

Apple earned ~$13b profit last quarter and it's only going to grow. $15b x 4 quarters = $60b PROFIT PER YEAR.

They can easily afford $45b over the next 3 years considering they have more money than God.

Re: Apple Announces Plans to Initiate Dividend and Share Repurchase Program

#100

Post by philwelch »

shingen wrote: post #33
nikcub wrote: post #24

Earlier quoted context omitted.

I can't think of a single business that Apple could buy (note: could buy, not 'look at the market cap and assume that is what it costs to buy the company') that would give it a level of control in an industry that the government would care about.

HP, Dell, Facebook, ARM Holdings, TXI, Cisco, Google, Amazon, Oracle, Intel, AT&T, Verizon. Apple could buy any one of them, either through friendly or hostile means. Not a single one of those would make it through anti-trust. Shareholders for Cisco would love to get $200 billion for their company; the US Government would never allow it in a million years. Shareholders for Amazon would love to get $200 billion, and t…

Furthermore, except for AT&T, Verizon, and possibly ARM, none of those acquisitions would be strategic for Apple. Intel is doing exactly what Apple would want them to do anyway, HP and Dell offer nothing Apple doesn't already have and a bunch of stuff Apple doesn't even want, Facebook and Amazon are overpriced, Google is probably overpriced and doesn't fit into Apple's strategy, and Oracle, Cisco, and TXI don't fit into Apple's strategy either.
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