• Quoth the Raven
    $AAPL valued around $453 if buyback were to take place today, all at $400/share.
    4/24/13
    Reply (15)
    • The Count of Cristo: It will go up shorts will be crushed
      4/24/13
    • Zhang Fei: At about 2% of the float, shorts are practically non-existent. The downdraft is due to growth investors getting out of a -ve growth stock.
      4/24/13
    • goferit: $453 is min value. Other variables come into play. Earnings per share goes up. Dividend attracts big money. PE demand multiple goes up.
      4/24/13
    • MrSheepish: I am not sure I understand how you make that conclusion. I am guessing you are increasing the value proportional to the decrease ...
      4/24/13
    • Zhang Fei: The assumption is that earnings level out. If AAPL continues with 18% earnings declines quarter after quarter...
      4/24/13
    • MrSheepish: ... in share count. But a proper calculation would also decrease the value proportional to the decrease in cash reserves, wouldn't it?
      4/24/13
    • MrSheepish: @Zhang: ok, but I also don't see how the conclusion makes sense even if earnings are flat. The above effects should ~cancel to lowest order.
      4/24/13
    • Zhang Fei: You're right. I was merely soft pedaling my objections.
      4/24/13
    • MrSheepish: Thanks, just checking to make sure that I am not missing something obvious :)
      4/24/13
    • Vegas Ben: Raven's comment implies that the P/E ratio stays the same. However, the P/E ratio could adjust downward to offset the buyback, but this
      4/24/13
    • Vegas Ben: seems unlikely since the P/E ratio is already so low.
      4/24/13
    • MrSheepish: But the P/E ratio should be lower if the company has less cash (all other things being equal)? Yes, I agree it is surprisingly low.
      4/24/13
    • Vegas Ben: You're correct. Einhorn believes that part of the reason the P/E is low is because investors see the cash as a liability. Take the cash
      4/24/13
    • Vegas Ben: out of the picture, and the P/E could rise to normal levels.I agree with Einhorn.
      4/24/13
    • Quoth the Raven: P/E ratio will not adjust downward.
      4/24/13