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David Einhorn likes Apple's (AAPL) feisty share buyback : "We applaud Apple's decision to borrow...

David Einhorn likes Apple's (AAPL) feisty share buyback : "We applaud Apple's decision to borrow money and return excess capital to shareholders, an idea that was off the table only months ago. This positive development represents a more shareholder friendly capital allocation policy and demonstrates the conviction of Apple's management and board in the Company's future."
Comments (102)
  • criticalbear
    , contributor
    Comments (81) | Send Message
     
    you can't spin good news for aapl. they're buying back shares because they are going bankrupt, DUH
    23 Apr 2013, 06:24 PM Reply Like
  • MrAllister
    , contributor
    Comments (114) | Send Message
     
    If show, then how could they afford to buy back shares?
    23 Apr 2013, 06:26 PM Reply Like
  • losmarinos
    , contributor
    Comments (24) | Send Message
     
    Which planet are you on?
    23 Apr 2013, 07:46 PM Reply Like
  • jebworks
    , contributor
    Comments (143) | Send Message
     
    Another idiotic comment on Apple. They seem to never cease to come up with 'em around here.
    23 Apr 2013, 08:13 PM Reply Like
  • gizmorocka
    , contributor
    Comment (1) | Send Message
     
    Yeah, they only have $147,000,000,000 in cash. Nearly bankrupt!
    23 Apr 2013, 08:50 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8139) | Send Message
     
    Apple could issue bonds rated higher than Treasuries and use the proceeds to retire HALF of the float.

     

    It would cost them only $2 billion per $100 BILLION of stock!!!

     

    The EPS would shoot through the roof and the uncompressed p/e would send AAPL past $1000 per share crushing the shorts in the process.

     

    And to think...Apple only has a 7% penetration into the Chinese smartphone market.

     

    The future is so bright for Apple they are going to need shades.
    23 Apr 2013, 09:28 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    Accounting tricks to artificially boost share levels. Why wouldn't you rather see funds going towards increased research & development spending, or towards introducing new products instead?
    23 Apr 2013, 09:50 PM Reply Like
  • berylrb
    , contributor
    Comments (2179) | Send Message
     
    Good question Herr? But, I thought the R&D spending easily outpaces competitors, eh?
    23 Apr 2013, 09:57 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8139) | Send Message
     
    Share buybacks are "accounting tricks" now?

     

    Borrowing money to buy back shares is very common among corporations in all industries and has been so for many decades.

     

    I think Apple has PLENTY of income for a major R&D budget.

     

    I am also *quite* sure that Apple will introduce a new product or two over the next decade or so.
    23 Apr 2013, 09:59 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    http://cnet.co/MCa4u2

     

    That is one article about R&D spending through 2011, though viewed as percentage of revenues put into R&D. On an overall monetary basis, Apple is spending more than some competitors.

     

    http://buswk.co/17Q212V

     

    Low R&D expenses have seemed to be justified through good sales numbers, but don't declining sales suggest more R&D spending may be a good idea?

     

    http://bit.ly/12GR2cB

     

    That appears to be what happened in 2012 as Samsung took the lead in smartphone sales, and Apple increased R&D spending. So considering the latest sales numbers decline, why use borrowed funds to prop up share levels? Are we just going to see different screen sizes and thinner devices in the future as the only innovations?
    23 Apr 2013, 10:11 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    It is not common amongst companies that are growth companies. Granted that Apple may no longer be considered a "growth" stock, but to me this move now seems like an admission that Apple is out of ideas, or at least Tim Cook is out of ideas.
    23 Apr 2013, 10:13 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8139) | Send Message
     
    Herr Hansa:

     

    What, specifically, is going on (day to day) @ Apple, Inc. R&D?

     

    I see these comments year in and year out about Apple between product refreshes and yet, somehow, Apple thrives.

     

    The cash just keeps on coming in through the door and piles up.
    23 Apr 2013, 10:16 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8139) | Send Message
     
    Apple has been "out of ideas" every year since 1980.

     

    But, magically, they are still here.
    23 Apr 2013, 10:18 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    At what level is the iPhone market at saturation?

     

    I bet you still believe those $1000+ price targets analysts were tossing around a year ago. What precise year will that happen?
    23 Apr 2013, 10:22 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    I disagree. There have been times, like 1986 through 1997, when Apple did not fair so well, and the choices made then appear to be all too familiar.
    23 Apr 2013, 10:26 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8139) | Send Message
     
    I believe that Apple is generating cash hand over fist and the Apple bears can't stand it.

     

    I'd rather buy a cash generating machine @ $400 than @ $1000.

     

    Do you like to spend more money to buy a cash machine or less?
    23 Apr 2013, 10:30 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8139) | Send Message
     
    ...Except the part where Apple is generating ~$165 BILLION in revenue.
    23 Apr 2013, 10:32 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    Apple is far from the only choice on the market and does not appear to be as good an investment choice as last year, or even the year prior to that. If you dig through enough comments, or my early articles, I suggested buying AAPL shares about a year ago, and I suggested taking profits when shares were near $700.
    23 Apr 2013, 10:37 PM Reply Like
  • Samuelkirz
    , contributor
    Comments (5) | Send Message
     
    Going bankrupt? They have 145 Billion on the books and they make about 9 Billion a quarter. If that's going bankrupt, I'd like to go bankrupt too.
    23 Apr 2013, 10:46 PM Reply Like
  • scott trader
    , contributor
    Comments (4511) | Send Message
     
    sorry that is yesterdays news....aapl is a whole different machine now...
    23 Apr 2013, 10:53 PM Reply Like
  • Eric Dee
    , contributor
    Comments (807) | Send Message
     
    Herr, Some of the report covered the fact that AAPL is allocating more money toward R&D. This was a Wall Street report. All WS cares about is how solid is the company. As for innovation, you'll have to wait until just b4 Christmas. Great timing for a company with a great marketing team.
    23 Apr 2013, 11:33 PM Reply Like
  • Eric Dee
    , contributor
    Comments (807) | Send Message
     
    Herr, again you miss the point of all the other posters, R&D is up. AAPL is an innovator, even the new intros by Samsung and others have not driven AAPL iOS phones down. Get a life. AAPL will continue to do things the RIGHT way.
    23 Apr 2013, 11:37 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    "Get a life"? Really? Seems that you have an emotional attachment to your shares in Apple. How about an adult level response next time? Okay that your opinion differs from mine, but is that a reason to have no manners?

     

    I have over 18 years continuously of using Apple laptops. What have they done lately there: solder everything so that upgrades are impossible and repair is difficult and time consuming. What have they done with the iPhone: larger screen, tighter component grouping for thinner construction, and still they got it wrong enough on quality control on the iPhone 5 to the point that complaints were easy to find. What about the iPad: make a smaller one, though not with a Retina display, and definitely something that Steve Jobs hinted he felt would be dead on arrival, though it does appear the iPad Mini has taken some sales from the iPad. Considering all that "innovation", we can guess at changes in screen sizes to continue, more soldered together devices that need to be replaced instead of repaired, and a few moves that copy things already in the market amongst competitors.

     

    Nice that you have so much confidence in Apple, but I find it difficult to like much of anything that Tim Cook has done. I even find it tougher to recommend Apple products to friends of mine, because now I get the same "why" questions I got ten years ago.
    24 Apr 2013, 12:30 AM Reply Like
  • VictorHAustin
    , contributor
    Comments (793) | Send Message
     
    It's simply the reverse of a new stock offering. Sheesh! Our schools must have got way worse than I thought.

     

    Apple has more capital than it needs. So it will retire some stock. The way that is done in the civilized world for the last couple of centuries is by buying on the open market and then holding the shares as treasury shares.

     

    Would the heel nippers be happier if Apple offered to buy voluntarily tendered shares? It's the same difference.

     

    By letting so many shares represent a share of idle cash, Apple dilutes the earnings performance for its shareholders. Think of it as selectively buying back only the shares that represent idle cash. Then the full earnings get to be split among fewer of us. This does not reduce the capital at work nor the total earnings. All the same earnings can be produced with fewer shares.

     

    You must be an AAPL shareholder during the buy back period in order to benefit. My favorite part.
    24 Apr 2013, 12:45 AM Reply Like
  • VictorHAustin
    , contributor
    Comments (793) | Send Message
     
    I think they are borrowing to defer taxes. They have plenty to execute the buyback without borrowing.

     

    I will have to say, though, that this o called spll or rector is bout to drive me over the ege. Apple software totally s&)is. The only thing worse is everyone lse's.

     

    My particular gripe about Apple for decades is they don't come back and fine tune their products to a well oiled machine. They just move on like so many over indulged teenagers.
    24 Apr 2013, 12:50 AM Reply Like
  • chrtrbrkr
    , contributor
    Comments (8) | Send Message
     
    You have got to be KIDDING!!!!!
    24 Apr 2013, 01:22 AM Reply Like
  • XIV_TRADER
    , contributor
    Comments (4) | Send Message
     
    I hope that was sarcasm?
    24 Apr 2013, 01:24 AM Reply Like
  • faramarz
    , contributor
    Comments (240) | Send Message
     
    @ Herr Hansa.
    I hope u did it & what do u suggest now: Buy, hold or sell ?
    Apple's problem is not their level of earning now. Apple's problem is the level of Q1 & Q2 2012 (& +/- also Q3 2012) Margins & subsequently EPS relative to Revenue which were exceptional & can never be beaten.
    We will see a return to a moderate Growth (+/- 10%) both on Revenue & EPS with Q4 2013 or Q1 2014 & thereafter. +/- 10% for a large cap is a fantastic achievement.
    But if Apple comes with a new disruptive product, then the growth on Revenue & EPS could be much higher (+/- 20%).
    The ratio of Software to Hardware related Revenue is very important.
    24 Apr 2013, 04:54 AM Reply Like
  • Michael D.
    , contributor
    Comments (173) | Send Message
     
    I think I understand, that they may borrow from the US banks based on foreign deposits they have with these banks' foreign operations. This way there is no tax, and foreign capital is collateral.
    24 Apr 2013, 07:05 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (8139) | Send Message
     
    Herr Hansa:

     

    It looks like you're a momentum "investor". That is O.K.; you buy when stock prices go up and sell when stock prices go down without regards to fundamentals.

     

    Some of us, however, are VALUE investors. We care about earnings power and the price one must pay to buy that earnings power.

     

    To us, Apple is a massive bargain and we love being able to buy such gigantic earnings power for a fraction of its worth.

     

    Its no crime to be a momo chaser...just don't confuse it with value investing.
    24 Apr 2013, 09:02 AM Reply Like
  • Eric Dee
    , contributor
    Comments (807) | Send Message
     
    No Herr know it all, I just remember being afraid to sell Samsung in the day, as half of all sets sold were returned for one reason or another. Unfortunately your post does not ring true as many AAPL buyers are returning to buy again and again. It's called owner loyalty and is great for marketing.

     

    What is the problem here. AAPL is a very good company that is not going away anytime soon, has a boat load of cash and is learning to play the Wall Street game.
    24 Apr 2013, 02:14 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    Wild guessing DVL? I thought you were sharper than that. I have never done any momentum investing, and I highly advise against investing in that manner.

     

    I was 100% cash in February 2009 and I started buying the afternoon the S&P 500 hit 666 in early March 2009. I doubled my original investment base in 20 months. I now have six times my original 2009 investment base. I'm a bottom feeder, and I like seeing the markets drop so I can buy.

     

    If I don't like a company, or the direction of a company, then I don't invest. My time period is event driven, meaning that I look at what a company states as guidance and what planning they have for the future, then I continue to monitor progress through stated event timelines. When indications suggest share price levels have no more room to advance, and if macro market indications suggest a pullback, then I consider taking profits.

     

    Some of you like to watch P/E levels, but you miss that stock price levels often go on supply and demand, driven by sentiment. The institutional investors control the market, and the rest of us are simply along for the ride. Hopefully we get on the right train, and don't end up in a train wreck.
    24 Apr 2013, 03:34 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    The problem Eric, is that I don't like these moves and changes by Tim Cook. My preference was for the way Steve Jobs ran Apple. Obviously no one can be Steve Jobs, and Tim Cook will mold the company along his expertise level, which is supply chain management. So we have seen cost saving measures and production efficiency, but why are the profit margins falling?
    24 Apr 2013, 03:38 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    Hi faramarz. I held AAPL much longer ago than the current run, and other than a fund that was heavily invested in AAPL, I sold at a substantial profit prior to the $700 mark.

     

    I'm not sure I like the Jim Cramer style buy, hold, or sell question. If I held shares of AAPL right now, then I would hold through the next major product release and the holiday buying season into at least January 2014. I would suggest waiting for macro market changes prior to buying, because whenever the market goes down AAPL shares have decline greater most of the time. That was the basis of my first article. While we have not had a true market correction, the basis is still intact. Always try to buy as near a bottom as possible, and don't ignore overall market conditions.

     

    Late 1990s through early 2000s one could buy and sell AAPL shares timed on earnings reports, then maximize profits. This was one of my first ever investment moves. Shares use to run up heading towards major product cycle updates, and towards earnings. About a month after earnings, shares would be near bottom levels. All this also depended upon somewhat normal macro market conditions, which we do not have at the moment. So for now this is a strategy of the past, and not one to use currently.

     

    Software has better profit margins, though I would like to see Apple do something with iAd to take on Google. In some ways it appears that Apple may follow the path of Sony in the past. If we see some major media buys, or a move into movie production and more direct involvement in music, then I'm not so sure I would like the company anymore. Sony became a confusing mess with too many directions, so I would hope Apple avoids that. I think they need to create excitement again, because at the moment it is not so special to have an iPhone.
    24 Apr 2013, 03:50 PM Reply Like
  • Edbaraniecki@mac.com
    , contributor
    Comment (1) | Send Message
     
    Hmmm, I'm bankrupt; what should I do with my paultry $143 Billion? Pay the rent or put food on the table? Hard to make those decisions when you only have enough $ to do so for the entire planet.
    24 Apr 2013, 03:54 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8139) | Send Message
     
    :::I was 100% cash in February 2009 and I started buying the afternoon the S&P 500 hit 666 in early March 2009. I doubled my original investment base in 20 months. I now have six times my original 2009 investment base.:::

     

    I love how on the Internet EVERYBODY buys at the absolute bottom.

     

    Funny how that works!
    24 Apr 2013, 05:55 PM Reply Like
  • Sam Liu
    , contributor
    Comments (3864) | Send Message
     
    "My preference was for the way Steve Jobs ran Apple. "

     

    Even more opaque and bullying.
    24 Apr 2013, 05:57 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    DVL - I have the records to prove what I stated. If you happen to be in Houston or San Diego (the two cities I most frequent), I would be happy to meet you in person and pull up those records. I seriously doubt you would be as willing to share your investment history, but I offer you that chance too. I have zero need to prove myself to people, but if you are that curious, I will reveal my investments to you, in person.

     

    I have zero reason to lie about this, yet you choose to call me a liar. You are a prime example of how conversation breaks down on the internet, and how people go out of their way to show a lack of manners.

     

    If you are extremely bullish about AAPL that may explain these baseless accusations, but I am tired of this sort of sh*t from people emotionally tied to their investments. In the interest of keeping this civil, I will remove myself from this discussion here, if you would prefer that I do so. All you need to do is reply once, and I will cease from replying to you. It's your choice now.
    24 Apr 2013, 06:06 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    Sam, if you think my statement was "bullying", then use the Report Abuse link under that comment. It was not intended as bullying.

     

    In fact, if anyone thinks any of my comments were inappropriate, then use the Report Abuse link under any of those comments. I will abide by the decisions made here by the moderators of Seeking Alpha, and if those comments are pulled, then it is their decision.
    24 Apr 2013, 06:29 PM Reply Like
  • Sam Liu
    , contributor
    Comments (3864) | Send Message
     
    "my statement was "bullying"

     

    I was referring to Steve Jobs management style in contrast to Tim Cook's.
    24 Apr 2013, 06:37 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    Okay Sam, thanks for the clarification. Agree with you on Steve Jobs management style in contrast to Tim Cook. Jobs also had a company to turn around when he returned to Apple, while Tim Cook was handed a company that was already successful. Perhaps that success guides the approach?
    24 Apr 2013, 06:41 PM Reply Like
  • Sam Liu
    , contributor
    Comments (3864) | Send Message
     
    "Jobs also had a company to turn around when he returned to Apple"

     

    I'm just referring to the last few years of Jobs' reign.

     

    The people he sued and imprisoned were the people, not companies. Whereas Cook doesn't hassle to the same extent people that have violated its IP.

     

    COOK: What I am referring to is the kid who was making white IPhone 4s (before Apple did), with a cease and desist, whereas

     

    JOBS: sloppy employee loses his IPhone 4 prototype and Apple sues and hassles the "finder" and Endgadget employees who found it.

     

    This is one illustration of Jobs' and Cook.

     

    Also Cook does pander to its shareholders much more than the former.

     

    Don't get me wrong, I crave Apple products and service.

     

    Also notice AAPL shot up primarily under Cook reigns ...
    24 Apr 2013, 06:52 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    Okay, do you think the increase in share value was a result of new policies by Tim Cook, or moves already in place prior to the death of Steve Jobs? The lawsuits were a legacy of Steve Jobs, and Tim Cook appeared to indicate that he was not favorable to that strategy. I think the move by the "Apple Police" in trying to get that iPhone prototype were handled very poorly, though it did not gain too much negative sentiment, though perhaps there was some luck in that episode.

     

    My take on events was that products and policies under Steve Jobs were the main driver of Apple sentiment, which created a demand for shares. Those shares then went into a cult-like desire level, much like we saw in the run-up of Cisco years ago, and with Qualcomm and Microsoft. The sentiment and run-up of Apple was very similar.

     

    I also still like my MacBook Pro, and my older but still running PowerBook, though I am less enthusiastic about more recent product releases. I'm still hopeful that future product changes will take some of the good aspects of past products and bring them forward.
    24 Apr 2013, 07:33 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (8139) | Send Message
     
    Herr Hansa:

     

    The fact that you so desperately want to prove to a stranger that you just happened to go all in on the day of the March 2009 low just makes me more suspicious.

     

    You aren't the only person on SA claiming to have jumped in at the very bottom so don't feel too bad.

     

    If you feel that Apple is such a poor company with no future then why even comment about it at all? What do you care?
    24 Apr 2013, 08:28 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    So you would fault me for standing up against you calling me a liar? Would you not do the same?

     

    As to why I should discuss Apple at all: it is one of the largest companies in equities markets, and a huge portion of many funds. The sways of AAPL share prices affect far more than just those who hold shares in the company. I feel all investors should continue to watch Apple, as well as watching several other very large listed companies. Just to add more disclosure, I don't have any short position in AAPL, nor in any other individual company.

     

    I never stated Apple was a "poor company with no future". Once again those are your words that you are trying to project upon others. I've used  Apple products for many years, prior to the iPhone becoming the dominant product. I liked what Apple accomplished after Steve Jobs returned, and I don't agree with policies that Tim Cook is initiating. Unlike some people, I did not drink the Koolaid that makes me think Apple can do no wrong; instead I feel the opposite, that only Apple can adversely derail the success they have seen in recent years. If Apple became complacent or slowed the pace of innovation, then I see that as hindering future success. I have no need to "hate" a company to think they are moving in the wrong direction.

     

    You've been quite the troll in this comment thread, so I should be questioning your motives at your emotional defense of Apple. I have no idea who you are beyond a link to blogspot to what appears to be some sort of banking scam. If you feel like sharing why you feel so strongly about Apple, feel free to respond.
    24 Apr 2013, 09:37 PM Reply Like
  • jbcm
    , contributor
    Comments (234) | Send Message
     
    Sam, try to understand the sentence about Apple:s buy back program and what that means fore us shareholders please! From my banks information about Apple:s share number have I got
    939 058 000 shares fore a couple of months ago and the same number yesterday. And Apple have said that they start the by backs share in 2013 and I don´t now the result of that yet. But I don´t now were to find and official running update how many Apple shares is outstanding today for example. I count at number of shares is like above: 939 058 000. Total decided money fore buybacks at this moment $100 000 000 000, which
    $10 000 000 000 already my bee used. I don´t now the result about that. $90 000 000 000 shares divide with for example shares price Apple $400 give me the result 225 000 000 shares less. Only that is 24% less shares under this circumstances. "Relative" good fore shareholders I think! (smile!) And the first $10 000 000 000 make the result even more interesting and good fore Apple:s shareholders. I am long in Apple, Cisco, Microsoft, Intel and Actions Semiconductor CO. Ltd (ACTS) and a lot of other share:s and trust:s.
    25 Apr 2013, 05:06 AM Reply Like
  • Sam Liu
    , contributor
    Comments (3864) | Send Message
     
    Thanks for your explanation JBCM.

     

    Not sure I understand it though, concerning the buyback that reduces the shares outstanding to increase the earnings per share or PE ratio.

     

    But I am glad other's share my pain "Cisco, Microsoft, Intel "

     

    Sam
    25 Apr 2013, 06:39 AM Reply Like
  • jbcm
    , contributor
    Comments (234) | Send Message
     
    Sam, less shares after buy backs gives more dividend money to each share left. That´s so easy! (smile!) A lot of tech company and of course others too have a lot of cash, maybe to lot of cash, and I think it is time to give back money to shareholders as soon as possible.
    25 Apr 2013, 06:58 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (8139) | Send Message
     
    Herr Hansa:

     

    I'm sorry you can't handle strangers not believing that you went all in on the VERY DAY of the 2009 low. But when you and others make such unverified, outrageous claims on a website then you should be prepared for the skepticism that such claims cause.

     

    Regarding Apple, it seems someone who has no interest in Apple but to attack those of us that do is the troll. Again, what did you expect when you came in here to attack value investors?

     

    If you reply to this then I know you have no problem "feeding the trolls" as it were.

     

    ...or perhaps you know I am right.
    25 Apr 2013, 07:21 AM Reply Like
  • sws1967
    , contributor
    Comments (97) | Send Message
     
    It's probably safe to say that they are out of ideas that would boost earnings by 100% from here yoy.
    25 Apr 2013, 12:38 PM Reply Like
  • sws1967
    , contributor
    Comments (97) | Send Message
     
    That's right! The iPhone 5 was a revolutionary device that finally put Samsung and that Andriod thingy to rest! This is why shares hit the $1000 PTs in December and continue to climb.

     

    And the iPad Mini!? Who could have ever dreamed up such a unique device - I mean how could a competitor possibly keep up with such rapid advances in technology?

     

    Still long and wrong.
    25 Apr 2013, 12:47 PM Reply Like
  • Philip Marlowe
    , contributor
    Comments (918) | Send Message
     
    That was the purpose of the lawsuit. Einhorn can now claim credit for the divident.
    23 Apr 2013, 06:28 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    Brilliant. ;)
    23 Apr 2013, 06:29 PM Reply Like
  • Vegas Ben
    , contributor
    Comments (216) | Send Message
     
    This is many times better than the lame iPrefs idea IMO!
    23 Apr 2013, 06:35 PM Reply Like
  • Private Joker
    , contributor
    Comments (7) | Send Message
     
    " they are going bankrupt" ? AAPL just reported that they have $144 bln in cash and they just kicked off $15.3 bln in cash in the last quarter. DUH!
    Tim Cook is brutal. He should be a COO and not a CEO. Cook is the inverse of Jobs. A successful Apple has always had a design visionary at the helm.
    We want Jonny Ive!
    23 Apr 2013, 06:36 PM Reply Like
  • criticalbear
    , contributor
    Comments (81) | Send Message
     
    I don't think Jony Ive would be a great CEO as he doesn't have that killer instinct of jobs.

     

    jobs is irreplaceable, i have no problem with that. I think the problem with Tim Cook is that he isn't keeping his supply chain in check, that's my problem wiht him.
    23 Apr 2013, 06:48 PM Reply Like
  • wmateri
    , contributor
    Comments (518) | Send Message
     
    It's odd that a company with $144B in cash would borrow money to buy back shares. I guess this reflects Apple's continuing commitment to avoid taxes through offshore loopholes and havens. It also reflects how the Fed's continued ZIRP is behind a great deal of the "value" we find in equities today.
    23 Apr 2013, 06:53 PM Reply Like
  • rw1270
    , contributor
    Comments (376) | Send Message
     
    It is about taxation. Majority of cash sits on overseas accounts and is waiting for more friendly domestic tax environment. However, it can serve as a very good collateral here.
    23 Apr 2013, 07:02 PM Reply Like
  • XRTrader
    , contributor
    Comments (609) | Send Message
     
    its not odd at all wmateri. Its all about the average cost of capital for a corporation. its just so cheap to borrow now that they will improve their returns by borrowing money instead of repatriating it.

     

    think about it: if they issue 1 billion in bonds (@ 3%), then buy back 1 billion in their own stock - they save the 3% divy they would have paid on their own stock. AND, the interest on their bonds is tax deductible! So, they are out basically NO extra money, and they decrease the share count and increase EPS on the outstanding shares. It is literally like creating free money.
    23 Apr 2013, 08:48 PM Reply Like
  • wmateri
    , contributor
    Comments (518) | Send Message
     
    xrtrader - You're right it's like free money and the gift is straight from Uncle Ben (Bernanke, that is).

     

    Of course, it's a reasonably responsible thing to do given current interest rates and tax laws. But, isn't it a shame that such shenanigans are considered responsible these days?
    23 Apr 2013, 10:02 PM Reply Like
  • XIV_TRADER
    , contributor
    Comments (4) | Send Message
     
    Borrowing at 2.5-3% as oppossed to repatriating off-shore cash at 35% makes sense to me, no?
    24 Apr 2013, 01:23 AM Reply Like
  • SoldHigh
    , contributor
    Comments (995) | Send Message
     
    A concern here would be that companies too often tend to buyback stock as the stock continues lower. If I were holding AAPL, I'd be worried that a stock buyback is the best the company can come up with.... I miss the innovation.
    23 Apr 2013, 07:17 PM Reply Like
  • davidbdc
    , contributor
    Comments (3141) | Send Message
     
    I get tired of hearing management teams talk about things like this.

     

    Borrowing money to buy back shares? If thats the best they can do then they should all be fired.

     

    Grow market share, innovate and design new products, develop new technologies, run efficient operations. That is what they get paid to do. If you can't do that then step aside and let someone give it a whirl.
    23 Apr 2013, 07:41 PM Reply Like
  • chabig
    , contributor
    Comments (532) | Send Message
     
    "Grow market share, innovate and design new products, develop new technologies, run efficient operations."

     

    I think they are doing all of those things if you substitute "grow new markets" for "grow market share". Market share is a meaningless metric.
    23 Apr 2013, 07:45 PM Reply Like
  • VictorHAustin
    , contributor
    Comments (793) | Send Message
     
    Besides, I would argue Apple is growing its share of its target market. The media doesn't measure or report that market. They lump it in with another low end market that is growing so rapidly right now that it occludes the market of interests to us.
    24 Apr 2013, 12:59 AM Reply Like
  • hx88
    , contributor
    Comments (115) | Send Message
     
    Well said David! The dividend and buyback is impossible under Jobs. They show confidence in company's products in pipeline. Good time to buy.
    23 Apr 2013, 07:45 PM Reply Like
  • baozebub
    , contributor
    Comments (361) | Send Message
     
    Not sure what AAPL could do better. They just announced an action on $50B plus $1.60 a share times 939 million shares. The math adds up to $50B + $1.5Bx2.75years = approx $54B by end of 2015. This works out to $5B a quarter for the next 11 quarters. (I rounded down a bit, since the dividend boost will cost Apple less as the number of shares floated will decrease)

     

    Apple's current quarterly payout is a bit less than $2.5B. So Apple effectively tripled their quarterly payout.

     

    Of course, this is being interpreted by some people to be bad news since such a crazy action by any company means they are desperate.
    23 Apr 2013, 07:48 PM Reply Like
  • pollyserial
    , contributor
    Comments (1055) | Send Message
     
    They could innovate, and make high quality products, like they used to.
    24 Apr 2013, 12:03 AM Reply Like
  • baozebub
    , contributor
    Comments (361) | Send Message
     
    Great thing about Apple is they don't force you to buy their products, or their stock.

     

    Bad thing about Samsung, Google, Blackberry, etc. is that they all force you to badmouth Apple.
    25 Apr 2013, 08:06 PM Reply Like
  • Guppy
    , contributor
    Comments (3) | Send Message
     
    Wonder to myself if aapl let the stock tank first so that they could get a good deal on their buyback.
    23 Apr 2013, 07:50 PM Reply Like
  • VictorHAustin
    , contributor
    Comments (793) | Send Message
     
    If so, they have served the shareholders and I thank them. There is no "Apple" distinct from the shareholders to be the "they" you speak of.
    24 Apr 2013, 01:03 AM Reply Like
  • harrykutcher
    , contributor
    Comments (83) | Send Message
     
    david,you are the MAN....thanks
    23 Apr 2013, 07:59 PM Reply Like
  • scott trader
    , contributor
    Comments (4511) | Send Message
     
    Obviously apple knows the well is not drying up...60 billion stock buyback is very convincing.......great product, growing market share , worldwide growth, ecosystem, new adopters.full pipeline of new product categories.......if you don't agree with my optimism maybe you should buy htc. Or Sony or dell or amzn or msft or Samsung or Bbry....or nok they all have no clue without aapl leading them around by their noses...I do give Bezos more respect though he takes a lot of chances with stockholders money...but not mine..
    23 Apr 2013, 08:06 PM Reply Like
  • Eric Dee
    , contributor
    Comments (807) | Send Message
     
    Ditto on this side ScottT
    23 Apr 2013, 08:51 PM Reply Like
  • Atkins
    , contributor
    Comments (1037) | Send Message
     
    scott, I'm no AMZN fan, and I wouldn't touch it at this point, but Bezos is leagues ahead of Cook as a leader. Not even close. I'm also not convinced Cook is much of a supply-chain manager, which is purportedly his strength. I just don't see the proof in the pudding.
    23 Apr 2013, 09:44 PM Reply Like
  • scott trader
    , contributor
    Comments (4511) | Send Message
     
    @ Atkins...... Bezos is brilliant no doubt about it .....wish I owned the stock but fear I would not sell fast enough and get trampled trying
    23 Apr 2013, 10:47 PM Reply Like
  • scott trader
    , contributor
    Comments (4511) | Send Message
     
    Hey Eric......glad we finally agree......
    23 Apr 2013, 10:54 PM Reply Like
  • Eric Dee
    , contributor
    Comments (807) | Send Message
     
    Yep Scott. That was quite a strategic show put on by AAPL for Wall Street. Can you imagine the largest stock buyback in the history of the Market? Kind of makes my hair stand on end when TC teases the masses with product launches starting just in time for the Christmas season 2013 and into 2014! Wow!
    23 Apr 2013, 11:42 PM Reply Like
  • brentn
    , contributor
    Comments (55) | Send Message
     
    So isn't this a similar type of share buyback + dividend increase plan IBM has implemented over the last 5 years? I'd love to have Tim Cooke hire a special trader to totally screw short sellers by executing share buybacks at random times and amounts.
    23 Apr 2013, 08:12 PM Reply Like
  • VictorHAustin
    , contributor
    Comments (793) | Send Message
     
    Why random? Why not right after the HFT algos hit a few seconds before a one or five min bar closes?
    24 Apr 2013, 01:05 AM Reply Like
  • Hank890
    , contributor
    Comments (676) | Send Message
     
    1-Horn's Preferred shares scheme was absurd. The share buyback (up to $50 B) is much better. Management can use the threat of massive purchases like a spiked club to punish the idiotic "shorts" anytime they decide to get clever. Cook is going to force them to cover,...again, and again, and again. After a while, even they will get the message.
    23 Apr 2013, 08:14 PM Reply Like
  • Joey2shoes
    , contributor
    Comments (37) | Send Message
     
    Borrowing to buy back is actually a cash saving as they will have less Dividends to pay out which will go to interest costs which will be tax deductible. In effect they will end up cash positive and not have to repatriate overseas cash.

     

    As far as being innovative we have to give them more time to come up with the products they're working on. Lifestyle changing products don't just happen when you want. New markets in China and India will help them grow product sales for years to come. A new close to 5" iPhone will probably come but only when they can deliver a quality product. Give them a chance to do it right.
    23 Apr 2013, 08:18 PM Reply Like
  • bgold1955
    , contributor
    Comments (1938) | Send Message
     
    6 months? Wow!
    23 Apr 2013, 08:21 PM Reply Like
  • wmateri
    , contributor
    Comments (518) | Send Message
     
    I guess in the absence of technological innovation, we'll have to settle for financial innovation.
    23 Apr 2013, 10:04 PM Reply Like
  • scott trader
    , contributor
    Comments (4511) | Send Message
     
    @ Joey2 shoes you are very sharp... it is brilliant strategy buy back shares while increasing dividend for the fewer share holders....less to pay out....
    23 Apr 2013, 10:50 PM Reply Like
  • Eric Dee
    , contributor
    Comments (807) | Send Message
     
    FYI bgold1955, the hardest obstacle from a marketing perspective to overcome is the release of a bad product. AAPL has a great marketing team! So be patient, a good product or two well be well worth the wait, plus they are set to release just in time for the largest buying season for consumers. It's called getting all your ducks, in this case Apples in a row!
    23 Apr 2013, 08:56 PM Reply Like
  • scott trader
    , contributor
    Comments (4511) | Send Message
     
    @ Eric Jobs always said he was most proud of not bringing all ideas to market......he was very selective...
    23 Apr 2013, 10:56 PM Reply Like
  • Sharon Dohm
    , contributor
    Comments (20) | Send Message
     
    AAPL should make a hostile bid for GOOG; if the FTC shoots them down, they will still make a lot of money on the takeover. They should have done it a few years ago when GOOG was at 400. Now GOOG is double the price but I don't see where the two businesses overlap. I thought about all the acquisitions they could make and this is the best one. They need more recurring revenue.
    23 Apr 2013, 09:00 PM Reply Like
  • Sharon Dohm
    , contributor
    Comments (20) | Send Message
     
    BTW, Peter Misek and Dan Niles were so wrong when they both said that AAPL would not announce any decisions about what they were going to do with the cash when they announced EPS. It makes you wonder if you can trust anything they say. So much for your 'channel checks' when you were in Asia, Peter. No wonder Dan Niles doesn't work on Wall street any longer.
    23 Apr 2013, 09:04 PM Reply Like
  • Sharon Dohm
    , contributor
    Comments (20) | Send Message
     
    Also, AAPL should license their iOS for the phone immediately.
    23 Apr 2013, 09:06 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3079) | Send Message
     
    How well did that work in the 1990s with Mac OS?
    23 Apr 2013, 09:07 PM Reply Like
  • VictorHAustin
    , contributor
    Comments (793) | Send Message
     
    That part of it went ok. It didn't address the issues of the time which stemmed fom Apple holding a permanent grudge against corp users after MS / IBM coerced business into single sourcing. They never would tie up those last few loose ends that would have permitted IT to actually deploy Macs in lieu of Windows and they always demanded a cold turkey conversion without any migration. That doesn't work and I'll bet even Apple would not convert a large and mission critical group on a key support platform all at once in the midst of production.

     

    On this point, Apple still doesn't get it. But I think it was driven by Jobs and maybe someone else at Apple will have an aha! moment eventually before they lose their pad initiative and the chance to leverage it into a capture of the corporate desktop. Not betting, just hoping.

     

    Sharon, I like your idea to buy Google much better.

     

    But surely Android will Balkanize before too long. Honor among thieves has a limited lifetime.
    24 Apr 2013, 01:36 AM Reply Like
  • steven russo
    , contributor
    Comments (162) | Send Message
     
    The thing that no one seems to realize is that even if Apple has no growth and no innovation they already have enough cash to raise the dividend 15% per year for the next five years. Managements stock options do not vest until 2016ish and thats when they want the stock to be up, not now. It will be slow and steady but a guaranteed winner over the next five years.
    23 Apr 2013, 09:09 PM Reply Like
  • sumitagg
    , contributor
    Comments (2) | Send Message
     
    buybacks don't change the cash flow streams of the company. investing 101. people are less excited with AAPL products that is why the stock is at 400
    23 Apr 2013, 10:48 PM Reply Like
  • VictorHAustin
    , contributor
    Comments (793) | Send Message
     
    But they change the CF of the holders who do not opt to sell. That's the point. It's a shareholder action, not an operations decision.

     

    The concomitant benefit to the remaining shareholders is that they each benefit from a greater proportion of the (unchanged) total FCF.
    24 Apr 2013, 01:09 AM Reply Like
  • baozebub
    , contributor
    Comments (361) | Send Message
     
    I think everybody is still excited, especially the Apple haters. That's why they're commenting on everything Apple.
    25 Apr 2013, 08:08 PM Reply Like
  • Judge mb
    , contributor
    Comments (6) | Send Message
     
    No shortage of opinions.

     

    As they say past performance is no guarantee of future results.
    But outstanding past performance is certainly more comforting than the opposite.

     

    Time will tell. Put your money down. I am leaving mine on Apple and hoping I am right.
    24 Apr 2013, 12:26 AM Reply Like
  • jbcm
    , contributor
    Comments (234) | Send Message
     
    I have done a lot of comment at a lot of article here last week about Apple. And I satisfied with some of the movement now going to happen with Apple and Apple:s share.
    1) Buyback program is good.
    2) Dividend increase could have been better than 15%, now payable 16 may 2013 ($3.05 each kv)
    3) They miss total split 10:1 that I suggest to the Board of Directors in some of my comments here. And the reason why I suggest that! But maybe it could come up at the agenda soon or later.
    I am very long at Apple.
    24 Apr 2013, 04:24 AM Reply Like
  • faramarz
    , contributor
    Comments (240) | Send Message
     
    Apple's problem is not the level of earning now but the level of Q1 & Q2 2012 (& +/- also Q3 2012) Margins & subsequently EPS relative to Revenue which were exceptional & can never be beaten.
    We will see a return to a moderate Growth (+/- 10%) both on Revenue & EPS with Q4 2013 or Q1 2014 & thereafter. +/- 10% for a large cap is a fantastic achievement.
    But if Apple comes with a new disruptive product, then the growth on Revenue & EPS could be much higher (+/- 20%).
    The ratio of Software to Hardware related Revenue is very important.
    24 Apr 2013, 04:56 AM Reply Like
  • Regarded Solutions
    , contributor
    Comments (15446) | Send Message
     
    While the decision is obviously a good one, it took forever to do it. Apple has an issue in managing cash, aside from keeping it offshore of course. My own personal opinion is that Einhorn had a "chat" with Cook privately and was urged to support this move rather than his forceful urging to increase dividends.

     

    As of now, I am less of a fan of Einhorn. He failed to stick to his guns for whatever reason, and THAT is a sign of weakness.
    24 Apr 2013, 08:05 AM Reply Like
  • Vegas Ben
    , contributor
    Comments (216) | Send Message
     
    The iPrefs idea was a very bad idea. I'm sure somebody explained that to Einhorn and he realized that a buyback would be better.
    24 Apr 2013, 12:46 PM Reply Like
  • jbcm
    , contributor
    Comments (234) | Send Message
     
    I see today that just now at FreeStockCharts.com that it is not so many Apple shares that change owner this time only about 8,5 million. I think that most share owner don´t won´t sell at a this cheap course. That is smart of them! (smile!)
    25 Apr 2013, 12:49 PM Reply Like
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