Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Apple Announces Plans to Initiate Dividend and Share Repurchase Program

apple.com

Post reply on HN
Print view View original

101–110 of 183 posts

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

#101

Post by Osiris »

With $100B in the bank, I keep thinking that Apple could do a lot more to disrupt of lot of industries.

They could afford to build an entirely new wireless carrier, from scratch (I understand spectrum might be an issue). They could create an entire newly kind of music label that redefines how artists are compensated and how labels make money. Or they could create their own new book publishing company that breaks with the traditions of the big publishers to make e-Books the focus and more affordable. They could probably buy up most of their entire supply chain.

So they must have good reasons for not wanting to use those funds to distrupt those other industries more than they already have. I'm sure they don't want to get out of their core competencies, but setting up subsidiary businesses would seem like a good way to get what they want.

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

#102

Post by drawkbox »

The only time Apple had a dividend before was the time when Jobs was not there and innovation left (87-mid 90s). Let's hope this does not signal that.

As a shareholder I'd preferred if they just kept and invested the money in new products. Why not use that money to speed up the real Apple TV? Screen tech? Storage? There are still lots of advancements left in handheld and this levels the playing field a bit. Apple hoarding cash was intimidating to competitors.

Jobs would not have done this. It was the first thing they did when he left in the late '80s and the first thing he ended when taking back over in the mid 90's.

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

#103

Post by sliverstorm »

smackfu wrote: post #12
nikcub wrote: post #4

The expectation of a larger dividend is what has been driving the share price up recently (which is why it will probably fall today). I don't know where that expectation came from. First Apple had the problem of repatriating international funds, so this was never going to be a $30, $50 or $100 (some crazy estimate) dividend. Second all precedent from similar companies issuing a first dividend (well not first for Appl…

For MSFT, they started dividends in Feb 2003, but then did a huge one time dividend in Nov 2004, $3.08 / share or about 11% of their stock price at the time. So there is precedent for tech companies issuing large dividends to get rid of cash stockpiles.

a huge one time dividend in Nov 2004, $3.08 / share or about 11% of their stock price at the time.

That's what I don't get about the excitement over this dividend. It's like 0.5% of the cost of a share.

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

#104

Post by ajross »

ceejayoz wrote: post #98
ajross wrote: post #92

Earlier quoted context omitted.

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.

Pixar didn't enjoy iPhone-like profitability (edit: that's not the same as revenue, everyone knows that, right?). And the reason is that it had very successful competitors. The Mac likewise. That's not good enough. Apple investors can make their own decisions about buying into new products like that. The GP post was implying that the "leadership team" was likely to do better.

My point is that (1) no, they really can't product another iPhone-like hit (that's a once-a-generation thing) and that (2) Jobs is dead, so there's a serious question about the "leadership team" that investors need to see as a risk. Is it really "safer" to leave your share of that $100B egg in one basket, or just to put it into a mutual fund?

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

#105

Post by tedunangst »

huggyface wrote: post #39
dpcx wrote: post #28

Earlier quoted context omitted.

Actually, I think that money is theirs. It's not part of their stock, it's cash that they have in reserve.

I think they're saying that it's the shareholder's money, which is absolutely true. However that doesn't preclude them from doing good with it, even in money-losing investments, beyond perhaps shareholder revolt ousting the board. There's an oft claimed belief that corporations are somehow bound by corporate law to do everything in their abilities to increase profits/returns for their shareholders. That is not and ha…

Nothing prevents the shareholders from taking the dividend and investing it in cold fusion or flying cars. Then you don't even need to take a vote. You just give people their money and they decide what to do with it.

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

#106

Post by allwein »

Everyone here is missing the real goal of this dividend: removing uncertainty;

In much the same way that the stock was held back while Steve was alive because there was so much uncertainty about his health, but since his death the stock has been on a $200+ rampage. There's been speculation about what Apple might do with it's cash hoard for so long and the uncertainty has always been weighing on some investor's minds. By actually doing something with some of it, they've laid a path and removed the uncertainty.

Investor psychology is a really crazy thing.

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

#107

Post by qdog »

veyron wrote: post #89
onemoreact wrote: post #81

Earlier quoted context omitted.

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…

> Getting good returns from a 100 billion dollar investment is hard. You don't play with 100B in the same way that you play with 100K. There are few times when a really compelling buyout opportunity emerges. And it is at those times that you want the warchest. Until then, you need to keep the dry powder. As an example, Buffett wouldn't be able to negotiate the really sweet deal with BofA last year (5B, paper profit ~…

I don't think this hits their warchest at all. The # I heard on NPR this morning was about 2.5B/Quarter, but their profit is about 13B/quarter. Even with a 10B stock buyback plan, that's not quite a quarter of profits. Disregarding the buyback, they should still be adding to their warchest. I believe it's only when they announce a special, one-time type of dividend that it signals they don't think they will have anything to do with the money. For example, Ford basically did that a few years ago (although in retrospect 10B in electric research or something might have been wiser).

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

#108

Post by ValG »

philwelch wrote: post #95
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 mone…

Well put, I think that Apple has been working on this for months and they have a pretty good idea of what they're doing. They have worked out a very conservative amount of money to give back, and still have plenty to keep in the warchest for any R&D or M&A. With $55 billion around, they could outbid Microsoft on any acquisitions that they want (I think MSFT has close to $40 in their chest, but don't quote me on that). And before you mention that Apple is not known for acquisitions, they're also not known for buy-backs and dividends; Tim Cook might be shaking things up how Apple is doing this from a business perspective

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

#109

Post by ceejayoz »

ajross wrote: post #104
ceejayoz wrote: post #98

Earlier quoted context omitted.

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.

Pixar didn't enjoy iPhone-like profitability ( edit: that's not the same as revenue, everyone knows that, right? ). And the reason is that it had very successful competitors. The Mac likewise. That's not good enough. Apple investors can make their own decisions about buying into new products like that. The GP post was implying that the "leadership team" was likely to do better. My point is that (1) no, they really ca…

> Pixar didn't enjoy iPhone-like profitability.

Personally, I'd say Pixar seems to be the Apple of the movie industry. A few products, done right, and hugely profitable:

> As of February 2012, its films have made over $7 billion worldwide, with its $602 million average gross by far the highest of any studio in the industry. In addition all the films produced by Pixar are among the fifty highest grossing animated films of all time, with Finding Nemo (#26), Up (#43) and Toy Story 3 (#7) all in the top 50 list of highest-grossing films of all time. - http://en.wikipedia.org/wiki/Pixar

> My point is that (1) no, they really can't product another iPhone-like hit (that's a once-a-generation thing)

They've already put out three in a generation - iPod, iPhone, and iPad. Lumping those three distinct systems into one is intellectually dishonest.

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

#110

Post by tedunangst »

smackfu wrote: post #88
InclinedPlane wrote: post #50

Earlier quoted context omitted.

The dividend and buyback has been an attempt to mitigate the stock price flatness problem. It's a very serious issue for the company, especially at the employee level (what's the use of stock grants and options if they have no value beyond mere cash payments?

On the other hand, employee options are actually hurt by dividends since the option holder takes the price hit on their outstanding options, but does not receive the dividend value.

Market options are sometimes adjusted for exceptional dividends, but I don't know about employee options.
Post reply on HN