David Lentz

Awaiting Apple Earnings and Guidance

One last thing when contemplating taking Apple private -- there are not many investments for that amount of money that return in the range of 25%-30% (Reuters reports Apple's return on equity to be 27% for the last 12 months).

Awaiting Apple Earnings and Guidance

The precise wording on forward guidance will be really interesting. I suspect it is being sliced and diced a thousand different ways right now. The other thing that will be interesting is whether or not Steve Jobs attends the earnings webcast -- usually he does not, unless there is something that is viewed as of major strategic importance to the company to be discussed.

If the stock were to fall to the $60 regime, there is the potential of taking the company private via a debt-leveraged stock buyback scheme or (because debt is pretty hard to come by in this economy) via a consortium of well-heeled investors + the (in a quarter or two) $30+B in cash within the company. I can see Steve Jobs, Bill Gates, Larry Ellison, and other Silicon Valley billionaires kicking in enough to do this.

Apple is a tremendous generator of profits, and would be an outstanding thing to have as one's private company in an uncertain world. Seems like billionaires, watching their equity holdings shrivel and wither, might want to take cheap, profitable companies private. Maybe even Warren Buffett might overcome his aversion to tech companies if the price was right.

If the economy ever improves, they can always sell them back to the public at huge profits in a future IPO.

Awaiting Apple Earnings and Guidance

Roger -- I believe the earnings announcement is scheduled for 10/21 -- that's about a week after the expected/rumored new product intro on 10/14.

Awaiting Apple Earnings and Guidance

papita -- if you think that the market will bottom before Apple reports, then you have absolutely no idea about what is happening in the global economy.

How many people will be buying Macbooks and iPhones if the unemployment rate is 25%? How about if the credit card companies fail?

In today's WSJ, the front page story is that one mortgage in six is under water in the USofA. The state of California is requesting a bailout from the federal government. The national debt has jumped up by about 50% in the past couple of months, after doubling over the past 8 years. There is a very real possibility (possibility, not probablility -- I hope) that the United States might suffer economic collapse, and idiot senators and representatives are throwing hundreds of billions of additional debt on the bonfire.

And you think that the markets will bottom in the next couple of weeks?

Get real.

Awaiting Apple Earnings and Guidance

Zach, what do you think the chances are of Apple announcing a stock buyback program, to deploy some of that huge cash cushion they have and support the stock price? It would seem to be a desirable thing to do, not only for the stockholders, but to support the compensation and bonus programs for the employees.

I expect an increasing number of companies with ready cash and good profits to be weathering the storm this way. Several already are.

How would a significant stock buyback program (say, $15B) at Apple change your thinking?