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Apple (AAPL) says it will hold a conference call tomorrow at 9AM ET to discuss its plans for its...
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Sunday, March 18, 2012, 6:21 PM ETApple (AAPL) says it will hold a conference call tomorrow at 9AM ET to discuss its plans for its massive cash balance, which is likely above $100B at this point. Remarks from Tim Cook about how Apple is discussing uses for its cash, as well as other hints, has led to fervent speculation that a dividend and/or buyback will soon be announced.
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A 20% spike in the price would give you an extra $120 per share.
I wonder how the HFT algos would handle that move?
They could go further and do a Tilson/MSFT maneuver and issue bonds at 2% and retire another 20% of the outstanding float.
http://bit.ly/xKhTW5
:::We recommend that Microsoft take the following steps to greatly enhance shareholder value: 1) issue $40 billion of debt (targeting net debt on the balance sheet of zero); 2) use net proceeds from the debt offering to conduct an aggressive one-time share buyback; 3) use 100% of ongoing domestic free cash flow of $10 billion for payment of common dividends; and 4) borrow against ongoing international free cash flow of $15 billion to buy back shares each year. We estimate this recapitalization would enable the company to repurchase approximately 20% of its shares outstanding.:::
As a long you should be praying for this because it would most likely mean early retirement.
Assuming your own moniker represents your investment views, why would any company management in its right mind purchase its own shares at all-time record prices, when they could, alternatively, purchases one or more other companies, whose shares are judged to be undervalued? Or, they could find new projects and/or other investments to make that, likewise, are seen as high return. If they say they can't find any good projects or investments, what does this say about management, and Apple's future value, too?
Purchasing Apple's own shares at present levels makes as much sense as rushing to buy Treasuries, also, at the highest prices in history. Simply put, it doesn't.
That's a matter of opinion because Apple's recent historical growth rates may have little to do with its future growth rate, especially in absence of its principal oracle, Mr. Jobs. He was profoundly a unique individual, I believe, not remotely duplicable by some "appointed" successor, any more than Thomas Edison could have appointed his own.
The very fact that they suddenly think that disgorging capital may be the highest use seems rather indicative that they may be short of vision on its internal use. And, even if the internal-growth route were cloudy, heavens, there must be valuable companies out there, or venture-capital opportunities, rather than merely returning capital to shareholders, in whatever form. To me, if they admit that they can find no better uses of capital for growth, that's a signal that the incredible period of growth we've observed may be over, and, hence, the valuation metrics change substantially.
Thanks for your enlightened, reasoned and logical rebuttal. I'm sure it helped many better understand Apple.
AAPL can grow rapidly with little capital investment - that is a hallmark of a great company with excellent business economics - one with a very high ROIC and FCF conversion.
Since minimal cash is needed to grow the business, the vast majority of FCF ends up in a bank account, although a small % may be used to fund small technology tuck-in acquisitions. So you think a bank account earning 0.5% provides a good return on capital? Plus a dividend will allow many value and pension investors to buy AAPL shares.
Maybe you need to take a basic investing course before you make any more comments.
your example of Edison was actually support against your argument. Edison was known for collecting many inventors under himself. He was the master of multiplying his own abilities not just relying on his own inventiveness. Jobs was indeed unique, but likewise, was very good at developing a culture of innovation, creativity, and perfectionistic standards into Apple. There is much that he has done that still remains as part of the fabric and philosophy of Apple. You may want to read up on these guys a little, prior to using them as reasons to question Apple's longevity. Also, historical growth is what is generally accepted as reasonable approximations of a businesses future growth. There are other things to consider, but that is the starting point. I think that PEG ratios are probably of more value than your personal anxiety about the loss of SJ.
Apple stock is safer than Treasuries.
When you back out the cash Apple is trading in a single digit p/e ratio.
Retiring 40% of the public shares is their #1 option and stockholders would be richly rewarded.
My statement stands and is not a matter of opinion.
All time his is not the same as overvalued.
They can be both at the same time, or only one, or neither.
Now I agree with you that buying Apple now not making sense is a matter of opinion.
A $5-10/share dividend combined with the authorization of a substantial share buyback program or a large tender offer at a reasonable premium is far better from a corporate finance perspective.
Either way, having an extra $100 billion lying around must be an awesome problem to have.
What I find even more funny is that whatever is done it will cause some to sell the stock div, buyback, or nothing, because somehow AAPL is ruined.
They had ABC an movies an parks,but, ESPN is their earnings driver.
AAPL needs to grab content ! Plain an simple. Crap, buy DIS !
You and I are thinking a like on this one. Apple is currently a content distribution company. They should consider leveraging that role and preparing for the future when their current business model flattens out.
I would also recommend they donate some money to the ultimate Burning Man party in the desert.
Apple has more than enough cash to do a large acquisition AND pay a dividend.
If I hear that tomorrow or anyhting like it I sell my 350 shares an go find the next winner.
Cook already said they're a h/w company, so you might as well sell first thing in the morning. I don't think Tim will notice.
I think it's safe to say things they aren't going to say...
1. We decided to sit on the cash ... [They're on a Sunday scheduling a conference call for 1/2 hour before the market opens to say we decided to do nothing [or decide at a later date]
2. We're buying xyz or abc .... they don't announce acquisitions, they do them and let you know after the fact.
3. Special dividend ... the only time a special dividend makes sense is if you're the target of a hostile takeover and you're unloading your cash to be less attractive. I don't think anyone can afford to buy the entire company.
The company's product future is entirely separate from it's dividend policy. Even with giving a $10/share dividend, the company will grow cash by $30 billion per year, on top of it's current $100+ Bn cash hoard, so AAPL can acquire pretty much any content or tech company it wants, if that is even necessary.
Get a clue before you make any other comments.
Given the odd timing of announcing on Sunday night a pre-market Monday conference call, it could possibly entail buying a big company as deals often get done over the weekend.
Whatever they announce, its about time that the cash sitting there gets put to use.. how is putting cash into a pile helping growth??
Using it to buy programming is a very low return proposition C
Content is fickle, and EXCLUSIVE programming is no longer viable..the cable guys learned that or we'd all be watching the same 2 cable channels..
I have been hoping for a while for just a modest dividend/stock split/buyback to increase the number of accounts that can buy the shares both large and small. A buyback is a great signal if we get that tomorrow..
The problem with a dividend is that $60 billion sits offshore and if brought onshore is subject to a 35% tax.
Bringing that cash pile onshore is a misallocation of capital.
Would Apple buy a company with a gross margin of pffft 20%?
We all will see soon,so, they won't repatriate their mega holdings overseas,so, lets see if I should be running AAPL.
My crystal ball has been cracked for awhile so lets see if it is working again.
Maybe they can send me a check also....but just me, nobody else. :)))
I with help of you an others will find something else !
Of course, they wouldn't announce it before securing the bullion.
The gold will be around a LOT longer than iTunes.
This company prides itself on innovation. I can't try to predict, but something 'creative' sounds appropriate.
Splitting certain divisions. Putting $50 Bil into a trust to honor Steve J. Funding a new R&D effort named after Jobs...i just don't see it being mundane, nor necessarily a huge booster for a stock which is already flying.
Too bad for the monthly call option owners that this announcement was made just after expiration. Ouch!
pssst Incluye NOK... por favor
Just a thought.
Being long AAPL, I am hoping for a dividend announcement. Looks like $600 will be eclipsed for more than a few minutes:)
This illustrates, to me at least. the utter stupidity of IRS regulations that penalize American companies severely for bringing money back to the USA where it could be put to use productively for the benefit of all stake holders in the Company, ultimately including the USG. .But then, this Administration collectively has the economic acumen of the average first grade kid, so I expect that no matter what Apple does, the tax code limits and thus prohibits the best use of the funds. And as share holders, folks, that's our money.
Part of the deal could be a donation to the Obama SuperPAC of say $200 million dollars (chump change to the Kings of Cupertino).
Obama could give a speech at the White House with Cook at his side promoting the $40 billion "injection" into the American economy to help the recovery.
Win-win.
Do you need my trading acct number to deposit some of your unused cash? I am ready whenever you are. This is how you can cheer on your fans base.
:)
Ron
1. A dividend. Intel pays dividends, IBM does, Microsoft does and so should Apple.
2. Stock buybacks.
3. A Steve Jobs memorial foundation for some charitable purpose - education, mentoring entrepreneurs, something like that.
The fourth thing might be a donation to some human rights organization. They've taken a lot of heat on the Foxconn issues and I think they'll put some money into some organization that's working in this area and is "politically correct."
1) 2% Dividend
2) Stock buyback
I actually hope they don't pay back too much in dividend (tax reasons), I would rather have the stock buyback.
will vanish off SA for at least 30 minutes.
Even with neophytes making the financial decisions the business is terrific. The valuation looks cheap, but it rests on a monster earnings number 5 years out. Options are going nuts, that's probably the best way to move in and out here.
Good luck!
4% special dividend
Regular dividend of 2%
Authorize a small buyback, and suggest that they will be selective on buyback price
AAPL trades up big tomorrow.
We are all appleites an AAPL runs all the country an schools. Our children become high tech math monsters an were reborn as a country.
Tic tic tic the medeting is getting closer. Who will have nailed the gig ?!
So, lets see what they buy. They will buy someting.