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

121–130 of 183 posts

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

#121

Post by beatle »

andylei wrote: post #64
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…

> 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…

Even with the dividend and share buyback plan, Apple is expected to continue to add significant amounts of money to its cash balance, which stood at $97.6 billion at the end of 2011.

If Apple consumes about $15 billion a year in cash for its stock buybacks and dividends, it is generating so much new cash from its business that its total cash balance at the end of fiscal 2013 could be around $180 billion, estimated Gene Munster, an analyst at Piper Jaffray.

http://www.nytimes.com/2012/03/20/technology/apple-to-use-ca...

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

#122

Post by arn »

rmc wrote: post #111
arn wrote: post #72

Earlier quoted context omitted.

Are you suggesting there is no upper limit amount of cash that Apple could accumulate that it wouldn't make sense to distribute some of it? Apple has hit that limit, where it has plenty of money to do all that (safety net) and more.

Are you suggesting there is no upper limit amount of cash that Apple could accumulate that it wouldn't make sense to distribute some of it? No that sounds silly. But I don't know how much is enough and how much is too little. How do we know Apple has too much?

It was meant to sound silly. I think Apple is in a position to know if it has too much.

Note:

Apple's cash increased by $40 billion last year alone.

Apple's dividend plan will spend only about $45 billion in the next 3 years.

that means their cash savings will still be growing despite the dividend.

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

#123

Post by [deleted] »

tonyx wrote: post #114

My intuition doesn't feel good about this. Whatever Tim Cook says, if apple draw attention away from product innovation into optimizing for financial markets and pleasing shortsighted loyalty-less public market investors, it would no longer be the Apple that we have come to know over the past decade.

[deleted]

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

#124

Post by WiseWeasel »

drawkbox wrote: post #102

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 hoa…

Apple has only become this profitable by abandoning their early days' Not Invented Here syndrome, when they used to design and build their products from soup to nuts, and instead riding the wave of innovation by specialized third party suppliers with off-the-shelf solutions. They have long discovered that it's much less risky and much more profitable to let others do the fundamental component development work, and focus on integration of third party solutions, with occasional guidance towards meeting their goals. Even for a company the size of Apple, it can be difficult to predict where the industry will go, and a few mistakes can leave you dependent on some expensive proprietary technology dead-end while the rest of the industry passes you by with lower prices and superior functionality. It's much cheaper and just as effective against competitors to tie up the world's supply of DRAM than to build a foundry and make all those chips yourself.

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

#125

Post by ChuckMcM »

padobson wrote: post #113
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…

I just want to point out that the amount of cash it takes to take a public company private is not equal to Shares * Market Price. It's actually Float Shares * Market Price. This doesn't make much of a difference in Apple's case, because most of their market share is floating on the public market. Quick calculations: 932.37M Shares Outstanding x ~$600/share = $559.4B Mkt Cap 931.79M Float Shares x ~$600/share = $559.0…

But you only have to have 50.1% of the shares to force the other 49.9% to let you go private :-)

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

#126

Post by beambot »

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 disagree with your assessment of dividends vs. share buybacks. My opinion mirrors that of Mark Cuban. A few choice quotes from [1]:

Dividends offer _true_ returns:

They send a message to shareholders that you want them to stay as shareholders and are rewarding them for their committment to your company. Its a reminder to shareholders that the business investments you have made have actually worked and the reward is that cash can be returned to shareholders . That profits are more important to shareholders over the long term than trying to convince wall street to increase your PE [via buybacks].

Meanwhile... buybacks just perpetuate insider dilution:

Companies continuously issue new shares to their managers without asking their existing shareholders. Those managers then leak that stock to the market a little at a time. It’s unlimited dilution of existing shareholders’ stakes, death by a thousand dilutive cuts. If that isn’t a scam, I don’t know what is. Individual shareholders have nothing but the chance to sell it to the next sucker. A mutual fund buys one million shares of a company with your and your coworkers’ money. You own 1 percent of the company. Six weeks later you own less, and all that money went to insiders, not to the company. And no one asked your permission, and you didn’t know you got diluted or by how much till 90 days after the fact if that soon.

[1] http://blogmaverick.com/2006/07/22/executive-pay-and-stock-p...

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

#127

Post by karamazov »

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.

Actually, finding companies whose market cap is less than asset value is a great way of insuring you're buying shares at a discount. This is pretty rare in technology companies, which are generally valued far above assets, but it's possible to find this sort of thing in more predictable sectors.

For more information, you could look at Benjamin Graham's "The Intelligent Investor". This is a very good introduction to investment, but it's also quite a long read.

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

#128

Post by karamazov »

beambot wrote: post #126
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 disagree with your assessment of dividends vs. share buybacks. My opinion mirrors that of Mark Cuban. A few choice quotes from [1]: Dividends offer _true_ returns: They send a message to shareholders that you want them to stay as shareholders and are rewarding them for their committment to your company. Its a reminder to shareholders that the business investments you have made have actually worked and the reward is…

This is an interesting point of view, but the article you linked to misses a fundamental point of the "golden parachute" offered to CEO's: if a leading executive messes up, you want to incentivize them to come forward, not to cover up their mistake for fear of losing their jobs.

Is a golden parachute ideal for this? Perhaps not, as it does introduce some strange incentives overall; but I'm not aware of anything better.

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

#129

Post by mjwalshe »

beambot wrote: post #126
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 disagree with your assessment of dividends vs. share buybacks. My opinion mirrors that of Mark Cuban. A few choice quotes from [1]: Dividends offer _true_ returns: They send a message to shareholders that you want them to stay as shareholders and are rewarding them for their committment to your company. Its a reminder to shareholders that the business investments you have made have actually worked and the reward is…

Yes your right apart from the endge cases of Investment trusts where you can use buy backs and issusing shares to manage the discount/premium.

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

#130

Post by Cushman »

Osiris wrote: post #101

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…

It's the first one that excites me. Apple could completely upend the wireless market by selling data service at cost as a loss-leader for their devices-- or even building lifetime unlimited data into the price of every Apple device. Compared to the cost of building the network, what's $100 million on lobbying to nab some free spectrum?

Alas, I think the current arrangement is working too well for Apple to want to take that kind of insane risk. Shame.

Post reply on HN