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Apple To Launch Largest Stock Repurchasing Plan In History
An anonymous reader writes "In conjunction with its earnings report for the second quarter of 2013, Apple issued a press release announcing some major plans for its ever growing stockpile of cash. It is increasing its quarterly dividend payout to investors by 15%. What's more, the company will spend $60 billion in stock repurchases, making it in Apple's words, 'the largest single share repurchase authorization in history.'"
But I'm glad I invested in Bitcoin.
Oh my. Here we go again. Apple is going out of business now like Microsoft was suppose to be for the last 15 years?
If I've learned anything here I've learned that the average "geek"* doesn't have the first clue about business.
* I use that term loosely anymore. The geek element certainly has waned over the last few years. I blame KDawson.
No, they're not.
Dividends encourage investors to hold their shares for long periods of time by giving some income along the way. A buy back is something which boosts the price of the shares, but does nothing to generate a revenue stream for the investor. And if it doesn't inspire new investors to buy in, it can result in little or no benefit to the investor.
What's more, you can issue a dividend regardless of what the price of the stock is with respect to it's actual worth, whereas you shouldn't be buying back stock unless the shares are worth less than the management thinks they're worth.
Dividends themselves are generally something that only make sense when the firm doesn't have somewhere to invest the money themselves. It basically says to the investor that you're going to make more money investing the money elsewhere than we're going to derive by investing it ourselves. And frequently that means that the business can't expand any further for regulatory reasons.
Agreed. Repurchasing and boosting the dividend when the stock traded above $700 might have been a good idea; doing so when it's hovering around $400 with a PEG ratio of 47% is a good idea. Buying back your own stock at a discount to what it's worth, while simultaneously returning cash to shareholders and appeasing a huge PITA activist investor? That's smart.
Financing the buyback with debt is a tiny bit worrisome, but Apple's probably just taking advantage of the low interest rates their high credit rating and hoard of cash afford them.
The only surefire protection against Microsoft infections is abstinence. - The Onion
Repurchasing stock is meant to increase shareholder value, raising the dividend is meant to do the same.
The latter is completely wrong (other than tax treatment, dividends have a neutral effect on shardholder value). The former is correct only because a company acting rationally will only purchase its own stock if it is confident that the stock is undervalued. It is far from clear to me that Apple's stock is undervalued.
When all you have is a hammer, every problem starts to look like a thumb.
It really isn't so much that they are going to waste it (though that is always a concern). investors/shareholders make money from one of 2 ways (like it or not investors are their to make money), either the shares go up in value or they receive an income as dividend from those shares. Apple doesn't have to provide stellar growth, they can continue on with their excellent profit and earnings with no growth, however to do so they need to change the way they are returning value as without growth shareprice will stagnate which means you have just removed the traditional way that Apple investors were getting value from the shares. buybacks and dividend allow investor returns while also bolstering the shareprice through desirability as an investment. What they are doing makes sound business sense even if like me you despise them.
No. No they do not.
This is the biggest lie ever told to the American public, and anyone telling you this should never be trusted. (Yes. This is a large list.)
Companies exist to promote commerce, create useful goods, and provide a livelihood for their employees. Owners and stock holders are allowed (This is a revokable privilege, not a right) to make money to provide incentive to facilitate the above functions. Anything less is a criminal enterprise.
When we deviated so far in to the "making money" and "shareholder value" ideas is the day this country started to fall apart.
This is not an argument. This is advice. Ignore it at your own peril, America.
This is one of the most insightful comments I've ever seen attached to a /. story with 'Apple' in the title.
(I know, that's faint praise...)
I can see the fnords!
If a stock rises as the dividend date gets closer, purely because of the dividend then those new buyers are just gullible, and the everybody who failed to value the company accurately is just stupid. Proof: if we could rely on a stock price increasing just before the dividend then we would bid up the price right now, well before the dividend. And so the stock would not rise in advance of the dividend because it was already fully valued. See?
If you don't see, then I have a perpetual motion machine to sell you.
When all you have is a hammer, every problem starts to look like a thumb.
That, OR they might want to start coming up with some new ideas.
Well Apple takes on average about two-three years to deliver products that create entire markets.
So they are about due, and Cook said there were some surprises coming in the fall.
But it's absurd for you to mention Jobs in this context, products take many years to complete. It will be at least two more years before we see products that never had input from Jobs, including this one.
It's also kind of funny how Apple "needs" to come up with new ideas, when no other company seems to have the same need... or at least no-one ever says they do.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Apple's stock has always been weird. Their P/E ratio is lower than Dell's. Doesn't make sense to me, but I'm not a finance guy.
If you can't convince them, convict them.
Stick to your roots guys, this isn't a stock forum and 99% of the people here clearly don't know one blessed thing about investing, how companies work, or even what these big numbers actually mean.
Actually its worse then that, but I'm being politic.
-Matt
It strange that now Slashdot Wisdom(tm) is Apple came out with new ideas every year when SJ was alive.
Apple's market changing innovations were.....
1998 - iMac
2001 - iPod
2003 - iTunes
2007 - iPhone
2010 - iPad
So, by that pattern, this would be the year that Apple "needs to innovate". But there is no conceivable market larger than the phone market.
Gotta love how apple zealots can state exactly how wide the "correct" human hand is and what the capabilities the "correct" person who might use a phone are. I guess when you are a member of a cult masquerading as a cell phone company this is exactly the "right" kind of group think to have. No room for natural variation or a difference of opinion. If you don't like it the problem is YOU and certainly not the cult of Apple.
, purely because of the dividend then those new buyers are just gullible,
Nope. The dividend is the reward for holding the stock for a full quarter. Thus the stock price at the beginning of the quarter would be the amount that makes the dividend comparable to the interest rate the stock price would earn if it owned corporate debt.
However as the date of the dividend approaches the former owner wants a larger part of this reward because it held the stock for most of the quarter, while the new holder naturally expects less of it.
In the extreme, if I buy the stock a second before the dividend is issued I would get a hefty return for having done nothing unless the price rose.
Your proof is all wrong because it fails to consider the cost of holding the stock instead of say corporate debt.
I have small hands and my Galaxy S2 is very easy to use one handed. I must be doing something wrong to be able to use the phone that is the wrong width for the human hand so easily.
Gotta love how apple zealots can state exactly how wide the "correct" human hand is and what the capabilities the "correct" person who might use a phone are. I guess when you are a member of a cult masquerading as a cell phone company this is exactly the "right" kind of group think to have. No room for natural variation or a difference of opinion. If you don't like it the problem is YOU and certainly not the cult of Apple.
That's not something new. They used to claim that their display has just the perfect amount of pixels for every person on earth, since apparently everyone has the same viewing distance when looking at their phone, anywhere, at any given time
It depends upon what you mean with the word "created." They certainly changed the face of computing, mobile music players, smart phones, and tablets. All of these categories existed before Apple got into the market, but once Apple decides on an approach, other companies seem to try and do things in a similar way.
Apple: New Product Development for Microsoft since 1985!
Any insufficiently advanced magic is indistinguishable from technology.
2. The iPhone is the right width for the human hand.
Because Steve Jobs told you that? Man he should have gotten into the glove business and we could have gotten rid of the silliness of having different 'sizes' and just make the correct size for the human hand.
Incorrect! Who do you think sold them BASIC for the Apple II?
...I'm kidding; they had their own.
Until 1979.
When Microsoft sold them a better one.
Bio questions? Ask me to start a Q&A journal. Computer analogies available for most topics!
Before iPad, no tablet shipped with full colour, 3d capable GPU, motion sensor, GPS, compass and 10 hour battery life in a single device, that weighed less than anything of comparable size. To say it was merely branding successful is kinda... well.. flat out lying?
I run: Windows, OS X, Linux, FreeBSD. Just because you have a hammer, doesn't mean everything is a nail.
they really did break their respective markets wide open.
Kudos for coming up with a much more accurate way of phrasing this than I did - "Created" really was a wrong term compared with "elevated" or "break wide open" as you said.
Basically they expanded the market greatly for a number of different product categories, and not just hardware - iTunes and online music counts as well, it was really Apple that made that a consumer market (against the will of the music industry).
"There is more worth loving than we have strength to love." - Brian Jay Stanley
2. The iPhone is the right width for the human hand. Any larger and you need two hands to use it. It's a phone, not a tablet.
Japanese gamers complained that the Playstation controller is too big. American gamers complained it's too small. What's this "the human hand" business about?
Financing the buyback with debt is a tiny bit worrisome,
I'm willing to bet they are doing that because a good portion of their cash hoard is outside the United States, and if they brought it back in, they'd have to pay taxes on it.
"First they came for the slanderers and i said nothing."
debt has a positive one
After considering current inflation, the interest rate is essentially zero...
A buyback means that they don't have immediate (or short to mid term) uses for that money.
More like, they don't have immediate more compelling need for that money, and they feel their stock is so undervalued, that it is the most fiscally responsible choice for the use of that money.
But as an investor it tells me that they don't have big ideas and that I'd rather put new money elsewhere.
They may have big ideas that are already more than adequately financed, and/or that they don't require all that cash for; or that are more risky.
When you have a big idea; squandering an infinite amount of cash (however much you happen to have) on it, is not necessarily the right approach -- there comes a point, where returns are diminishing, and excessive investment into the big idea (even if it will be the best thing since sliced bread) just serves to reduce returns.
If they see that for now their excess cash has exceeded what their work in progress demands, then they could still have an excellent number of high impact ideas about to roll out, but still not require the insanely large pool of cash they have at hand.
No, I don't think so, they weren't repackaging anything. They weren't taking the crappy MP3 players of 2000 and rebranding them. They made them usable. Not earth shattering stuff, sure, but why wasn't ANYBODY doing them right. So, whatever, I don't care - the argument's stupid. There's a big difference in how the ship is being steered now that Job's is gone and anyone who doesn't see it can't really be helped. The stock price, however, is a reflection of it.
Umm, wait a sec:
1) Apple has paid dividends before - even when Jobs was quite alive.
2) You're looking at the wrong time scale. OSX and the iPod came out in 2001. MacBook Air The iPhone was launched in 2007, and the MacBook Air in 2008. The iPad showed up in 2010. On that kind of scale, Apple could wait until 2015 and it would still keep to its innovation calendar just fine.
Quo usque tandem abutere, Nimbus, patientia nostra?