Slashdot Mirror
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.'"
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.
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.
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
, 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.
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.
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?
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.