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"We think that Apple could be on the brink of driving a major leveraging up," writes JPMorgan's...

"We think that Apple could be on the brink of driving a major leveraging up," writes JPMorgan's Mark Moskowitz in a voluminous note defending the stock. He believes the company will take on $15B-$20B in debt and bump the dividend yield to 4%. As far as operations, Moskowitz expects an earnings beat this quarter and upward pressure on estimates for 2013. AAPL +0.9% premarket.
Comments (43)
  • "Expects", based upon what?
    18 Apr 2013, 08:26 AM Reply Like
  • I agree, based on what? These blogs are full of similar predictions made when the stock was 100 to 200 points higher. It's way past time for a reality check, and way past time for Cook and the board members to come clean.
    18 Apr 2013, 08:39 AM Reply Like
  • Read the entire "voluminious" note to find the reason. Sheesh...do your homework before criticizing.
    18 Apr 2013, 09:58 AM Reply Like
  • No doubt, based on the level of the estimates. Clearly, they must be lower than his.
    18 Apr 2013, 10:51 AM Reply Like
  • If I were Apple I'd borrow $100b and buy back shares at $400/share. Heck you could borrow for less than the dividend yield right now.
    18 Apr 2013, 08:30 AM Reply Like
  • You are spot on.
    18 Apr 2013, 09:13 AM Reply Like
  • This would create so much value for shareholders. I much prefer a big buyback to an increase in the dividend at the moment because the stock is so undervalued it makes perfect sense. Unless management feels the stock is still overvalued for some reason only they know, there is no reason not to do this with interest rates so low.

     

    I hope you're listening Apple.

     

    Disclosure: I am long Apple (AAPL)
    18 Apr 2013, 09:35 AM Reply Like
  • I thought they had plenty in the bank, admittedly some of it offshore...
    18 Apr 2013, 08:33 AM Reply Like
  • admittedly most of it offshore.
    18 Apr 2013, 09:35 AM Reply Like
  • Borrowing at l.9% and holding your capital beats the hell out of re-patriating it and paying 40% in taxes.
    18 Apr 2013, 09:43 AM Reply Like
  • Apple has to do something next week. Especially if the quarterly results and guidance are weaker than expected.

     

    Hopefully they can beat expectations and the stock can start recovering. There are plenty of catalysts over the next few months to help Apple climb again.

     

    I just feel sorry for anyone who has been panicked into selling over the past few days/weeks. I picked up another 15 shares yesterday. Never thought I would be able to buy them this cheap again!
    18 Apr 2013, 08:35 AM Reply Like
  • Take on debt? That is assine and insane.
    18 Apr 2013, 08:54 AM Reply Like
  • edinvestor1

     

    No it is not. They would only have to pay 3-4% on debt. They would have to pay orders of magnitude more than that in taxes to repatriate the offshore money.
    18 Apr 2013, 09:13 AM Reply Like
  • Lets see...pay a dividend at 2.6% with no tax benefit whatsoever or borrow and buy back shares. Cost 1.7-1.9% and fully tax deductible reducing cost to maybe 1.2% or thereabouts. Insane? Hmmmmm!
    18 Apr 2013, 06:55 PM Reply Like
  • Taking on debt makes perfect sense. Bringing overseas money back would cost huge taxes and bb of shares at this discount makes the money practically free. They still have plenty of cash to increase dividend and use debt for bb.
    18 Apr 2013, 09:11 AM Reply Like
  • With similar logic I always see to it that my credit cards are maxed out so that I can claim the interest that I pay to the credit card companies as a tax deduction.
    18 Apr 2013, 09:37 AM Reply Like
  • sikkabooyah,

     

    Leaving aside for the moment the fact that your credit card interest is not tax deductible (hasn't been for decades), let me know which credit card company is charging 3% or so, will you please? I could use that card.
    18 Apr 2013, 12:06 PM Reply Like
  • if i was on the bod.....i would back up the truck with a 50 billion stock buyback,raise the dividend and put an order out for another 50 billion in stock after the 1st 50 billion is filled.....guess what ......earning /share go up ,return on capital is improved and the strongest player in the teck world sets the bar a lot higher for the others........remember it's the stockholders money.....we will still have all the money to develope the "best products in the world"......i don't think that the "others" can match apple in terms of products or profits,quality and user satisfaction......MATCH THIS...!!!!!!!!!
    18 Apr 2013, 09:15 AM Reply Like
  • Is it possible AAPL board knows something us mortals don't know....I.e. perhaps they're waiting to buy stock back at 375 if Apr 23 earnings are worse than expected by mkt.
    18 Apr 2013, 09:22 AM Reply Like
  • price is not an issue...."dutch auction",company announces a stock buyback,anyone who would like to sell shares summits the number of shares they will sell and at what price they would like....apple then totals up the numberr of shares tendered and buys all the shares @a price that equals $50 billion.....all shareholders will get same price.....if the ave price is $492...everyone who tenders stock get"s that price...it's that simple
    18 Apr 2013, 09:33 AM Reply Like
  • That old rumor has been flying around for over 4 weeks. What relevance does that have now versus weeks ago? IE. perhaps the earnings are bad and they will raise the dividend.
    18 Apr 2013, 09:37 AM Reply Like
  • The variance of AAPL rumors and speculation is almost humorous! This AM Digitimes reports from Asian suppliers that Apple has "stopped" ordering Mac components! Not slowed, but stopped and they don't know when Apple will start them back up again. CRUS gives a big warning yesterday, prompting rumors of drastic reductions in iP5 sales forecasts. Rumors of reductions in iPhone and iPad orders have been non-stop over the last few months. And now JP Morgan thinks Apple is on the verge of a huge upside breakout--go figure.
    18 Apr 2013, 09:33 AM Reply Like
  • Do I believe there is a conspiracy to push down the stock and shake out the "weak of stomach "? Yes I do . With the success of a breach of sub 400 I believe $370 may be in the cards. If you're waiting for 350 you will miss the bottom. The scheduled turnaround in price will be sooner rather than later as the stories I believe will magically turn 90 % positive as opposed to 95% negative as they are now. And Apple then resumes a very long sustained march upwards reinforced by a position as a safe haven stock as the market corrects in the coming months. $500 within 3 months is impression.
    18 Apr 2013, 10:12 AM Reply Like
  • I am sorry Chris but I have been doing this way too long to believe that you or anyone else can correctly guess a bottom with any regularity. You may get lucky now and them but that is about it. Buy now if your research supports a higher valuation. Do not but if it does not, but I have to laugh every time people throw numbers around like they know exactly where the stock is going.

     

    Disclosure: Long aapl and accumulating.
    18 Apr 2013, 02:55 PM Reply Like
  • Apple has now lost 260 billion in market capital and the share price has been almost cut in half over 7 months and not a word from the Apple management team. Correct me if I am wrong but didn't someone at JCP just get fired for a similar situation with the company stock.
    18 Apr 2013, 10:13 AM Reply Like
  • As much as I believe AAPL is severely undervalued, I have to ask why Apple doesn't believe the same thing.

     

    I see 3 possibilities:
    1. They have a use for the cash they have and that will likely grow (great - share your ideas, pelase!).
    2. They don't believe share buybacks are an effective vehicle to increase shareholder value.
    3. They do not believe that buying AAPL at these levels represents a bargain.

     

    #1 is my only positive - #2 indicates a BOD that doesn't seem to understand basic finance and #3 indicates very troubled times ahead.

     

    Apple seems to be trading with some serious deterioration built in - not just zero growth, but negative growth. I appreciate that the company shouldn't spend its time addressing rumours but the continued lack of any action in any way gives a great indication of just what Apple thinks of its shareholders.
    18 Apr 2013, 10:34 AM Reply Like
  • Price action not surprising: VZ iPhone sales were >50% higher last qtr, so I doubt anybody is thinking blowout anymore. Apple lost share to Android and others last qtr, too, at VZ. Not terrible, but wrong direction. Insiders still exercising and selling via prearranged plans. Nonetheless, they aren't gobbling up Apple at these levels. One senior exec sold millions last week in the low $400s, reducing his holdings to a few hundred shares. Even if prearranged, you have to wonder why these guys were prearranging to get rid of millions (and most of their stock) a short time ago.
    18 Apr 2013, 10:36 AM Reply Like
  • "were >50% higher last qtr,"

     

    No, they weren't.

     

    "the 35% Q/Q drop in sales from Q4 is bigger than the 24% drop seen last year"

     

    And iPhone increased it's percentage of Verizon activations.
    18 Apr 2013, 03:39 PM Reply Like
  • I'm not great at math, john, but they activated 4mm this qtr and 6.2mm last qtr. I'm coming up with 55% higher last qtr. They decreased the % from last qtr-i.e.-Apple lost marketshare Q/Q.
    18 Apr 2013, 04:19 PM Reply Like
  • It looks like 335 to me...tim cook is like ron johnson he could care less about stockholders..and his top talent isn't far from leaving because there retirement savings is bleeding every day down..i've said for the last 200 points down hold on and watch your money dissapear...i've done it as everyone has...this company could care less about stockholders so get a grip and wait for 335
    18 Apr 2013, 10:40 AM Reply Like
  • How refreshing – an analyst defending Apple!"
    18 Apr 2013, 10:59 AM Reply Like
  • Apparently Mr. Market doesn't believe with Mr. Moskowitz and it won't believe Mr. Cook next week. A 4% dividend will put a floor under the stock. Unfortunately, the floor will be 5% lower from where we are now. Any disappointment and we're looking at $375.
    18 Apr 2013, 11:32 AM Reply Like
  • or is it 350 or 335...the floor will be when buyers step in....as of today there is no reason to buy...and thats obvious..you need the big boys to buy not someone buying 12 shares cause they think its cheap
    18 Apr 2013, 11:59 AM Reply Like
  • This company has to be more responsive towards the daily rumors.
    At Apple silence about everything is a virtue. Every morning a so called analyst wakes up and says my sources in the supply chain tell me this and that. I admire Rim that took the analyst/brokerage to SEC on the return issue of Z10. I understand silence and secrecy on new products, but this management's silence/indifference on all the issues has led to a non stop rumors. People have got fed up with this and started to sell. Most prefer a good a quiet share like IBM.
    18 Apr 2013, 12:08 PM Reply Like
  • The best solution for Apple will be a 10 to 1 stock split. So many people will rush to buy apple at let's say $40, that the price will shoot up a lot. It is a free buyback done by people.
    18 Apr 2013, 12:11 PM Reply Like
  • I cant believe how many idiots are still holding AAPL. The first rule of investing is dont marry your stock. You are only renting them. I still have no bottom in sight on AAPL on my charts, and once that bottom is hit, I doubt it will rise more than Nokia, Samsung, Rimm, or Motorola. They are all equals now, in a very volatile, unstable fast tracking business. If you are a long term holder, buy XOM or GE etc.
    18 Apr 2013, 12:21 PM Reply Like
  • i agree fully and said that 200 points ago with people arguing about it and all i can say is that is why people give up on the market because they believe apple cant go to whatever because it can...
    18 Apr 2013, 02:37 PM Reply Like
  • At this point in time, Cook and Board have failed their basic duty as a public Company to rescue the stock. It not justified at all that in more than 3 months since stock fall to low 400, with the huge resources they have at sight in Banks, they failed to deliver an aggressive buyback plan to restore the lost value to shareholders. This is a complete negligence of this management
    18 Apr 2013, 12:21 PM Reply Like
  • they believe they are running a private company...or is it they simply dont care about the shareholders..so why invest in this kind of company and it shows people dont want to
    18 Apr 2013, 02:38 PM Reply Like
  • What to believe? I have to say, given the wide variance in opinion between "experts," I think I'm going to just follow my instincts here. Campuses are overrun with Apple products. This is a generational shift towards Mac, away from PC, and it is only accelerating, not decelerating. I myself own 6 Apple products, not because they're hip, but because they're solid and work seamlessly across devices. The Apple skunkworks are still churning away (seen any of the USPTO filings lately??) Much of the data out there might as well be tea leaves. Staying long AAPL has been a gut check for me, but I think it will pay off. I'm buying more today.
    18 Apr 2013, 12:21 PM Reply Like
  • thats how people loose so much in the market...they refuse to take a loss....
    18 Apr 2013, 02:40 PM Reply Like
  • calling all shareholders......this is an open letter to the board of directors.........get a large share buyback program now!!!!!!....put our money to work,we have too much cash,raise our dividend,...create the best products in the world and have shareholders who expect to be rewarded over time....this is why we own apple stock...all these rumors don't mean anything.....put our cash to work for us...
    18 Apr 2013, 02:41 PM Reply Like
  • The coming quarterly release is pretty meaningless imo. Bad news is in. The ability of this co to hold the investor will come with. The CC. If earth shattering plan isn't set forth then, look out below.
    19 Apr 2013, 10:38 AM Reply Like
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