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Apple Issues Statement About Returning Cash to Shareholders
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No.
Consider Dell paid a 35% premium on their share price when they went private. Look at Apple's market capitalization, and multiply that by 1.35. That's the conservative figure for how much they would need to go private. They don't have that kind of money.
Please reread my post and the link you posted as I think you have not entirely understood either one. You are referring entirely to the brief time period between the dividend declaration and the dividend payment dates (ex-dividend), the period during which someone who buys the stock is NOT entitled to the next dividend. They own the shares when the dividend is paid but the dividend goes to the previous owner. This is the reason for the discount during the ex-dividend period, not because the dividend has reduced the market capitalization of the company. It has not done this at all as the cash never was a part of this calculation in the first place.
I am referring to that entirely brief time. The poster you were responding to was correct as to the effect (Apple's share price will go down the amount of the dividend) but not the cause (It's not due to a decrease in market cap).
I specified that the effect was true and gave the reason why that happens (The shares trading ex-dividend).
There's a bit of an irony that goes along with this question, as companies (smaller ones at least) that carry a lot of cash on their balance sheets can be ripe takeover targets.
IIRC, that's one of the things that gets tossed around whenever people talk about someone acquiring Nvidia - that they'd also be acquiring their cash reserves.
So the point is?
If you draw a line from before the dividend date to after dividend payment the impact on the stock price is a wash, all other things being equal (which of course they are only rarely). We always get a lot of people arguing on these boards that dividends subtract from the market value of the company. Maybe that wasn't actually your point, and if so I apologize for taking you to task on it. But to be honest I'm really not certain what you are arguing.
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I don't know the specific case, but yes it would be true if they carried cash on the books that a takeover company would get that much as a discount against current market cap.
Not actually arguing anything - just noting that the dividend *does* decrease the value of shares by the amount of the dividend. Because there is enough profound misunderstandings about what dividends do that its useful to note things like that.
It was actually half a bag of real peanuts in their shells.
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No, 3 days. But we get nothing else except a staff discount on 1 system a year, which due to the low pay we get is still out of my price range.
That's a nice little gift form Apple to their customers. Just out the niceness of Apple's heart they can lower the price. But why did you stop there? Shouldn't Apple just be nice to people? And the customers buying these Apple gadgets are obviously already doing okay. Do they really need more money? Apple should really just take this money and give it away to the poor in \third world countries. Or how about funding education here in the US? Apple could announce to its shareholders that they are becoming a non-for profit (that would solve those nasty tax problems) and that all excess cash will be handed over to the New York State Public School System. That would probably result in some pretty nice schools. And think of the children!! How could they not do this?
Fair enough, this subject does seem to generate plenty of misunderstandings. I'm not sure adding the (transitory) ex-dividend effect to the discussion is going to clear anything up though. I try to steer clear of that issue because it tends to mislead many into believing that dividends do not provide a positive investor value. The bottom line is, traders trade and investors invest. An investor views dividends as a guaranteed, additional return on their investment that doesn't depend on market conditions on any given day, month, quarter or year, and that don't have a negative impact on the ability of the company to earn.
I don't understand this. If I buy Apple stock it's not so Apple can give me my money back. If that was what I wanted I would skip the middle man and keep my own money in the first place. The point of buying their stock is to invest in their business. So as an investor, I would much rather that they spend their money on their business rather than "giving it back to stock holders". Spending this kind of money to effect their stock price is also weird because it has no specific benefit to the company at all; and this is not about pocket change. Spending $45 billion on something that doesn't help the company is just weird.
But research and development of what? They spend $2.5 billion per year as it is. $2.5 billion are already paying a bunch of very smart people excellent wages to come up with new ideas.
What should they do next? Find more smart people? Hire some astrophysicists? More scientists? More graphic designers? More poets, what? What is the next frontier of incredible stuff that we do not know that we need yet?
To me, it comes back to this. When we have back-and-forths about "innovation" like this, stuff like screen size is barely a blip on the radar. When I hear stuff about the interface being "boring" or "tiring," I am mystified -- I honestly wonder how one expects a smartphone operating system to entertain them?
You beat me to it, but I was going to add that a company is never going to use its cash reserves to lower its profit margins, profits being the name of the game. Not a well-run company, anyway.
In my opinion, it is little more than a glorified Wall Street shakedown to pump Apple, the corporation, for short-term profit and gain and to hell with the company's long-term health and/or ability to create and innovate.
These vultures see Apple's $137 billion+ of cash, and these are glorified casino swindlescams that do little more than cut these knaves in on the action.
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More on big ideas and innovation
I also want to add...this is where it is important for sovereign governments, particularly world "superpower" governments, to continue to invest large amounts of research into scientific endeavors. Sovereign economies have the sole ability to pool the amounts of resources consistently to fund large endeavors.
What corporations are able to do is take such discoveries (when the heavy lifting has been done by previous research) is refine it in ways in which they Make Stuff That People Can Use. Apple through Steve Jobs have been masters at this. They still can, they still have the engineers and designers and programmers who made prototypes in the first place...and now it's Schiller and Ive's responsibility to refine that into The Next New Thing.
I also want to add...this is where it is important for sovereign governments, particularly world "superpower" governments, to continue to invest large amounts of research into scientific endeavors. Sovereign economies have the sole ability to pool the amounts of resources consistently to fund large endeavors.
What corporations are able to do is take such discoveries (when the heavy lifting has been done by previous research) is refine it in ways in which they Make Stuff That People Can Use. Apple through Steve Jobs have been masters at this. They still can, they still have the engineers and designers and programmers who made prototypes in the first place...and now it's Schiller and Ive's responsibility to refine that into The Next New Thing.
Half right. The purpose of capital it to reinvest it back into the company to grow earnings further. That's why it's called capitalism. The issue with Apple is the immensity of their cash reserves, and the rate at which it continues to grow. They simply could not spend this much money on growth, at least not wisely. Some companies, when faced with excess cash, go on merger and acquisition binges. Mostly, this ends up in disaster. If Apple could come up with a $100b idea that would spark more growth, then they'd do it; but I think we know that such a investment is highly unlikely. They are experiencing the "problem" of having a very high return on investment. They simply do not need the kind of money they've accumulated for anything that it would be good for them to do.
As an investor you should be delighted when a company gets to the point where their business throws off so much cash that they can give some to shareholders. If they can, but don't, is when you should worry.
Probably you make that nonsensical comment as an Einhorn shill and little else...because otherwise you have no idea how Apple's investment decisions and shareholder policies have worked (well) over the last 15 years.
A company's share price is to be deemed as a rational valuation decision by the market based on future expectations. Apple's phenomenal growth is the EXACT reason why dividends have never been needed since SJ came back...you buy at 10, believe in innovation and sell it later at 400. But of course, this is incomprehensible to you and convicted inside trading criminals like Einhorn, who regard Apple as a non-growth commodity crap like MS or Nestlé, which have nowhere to go but down.
Fact is: people like you pretend to be AAPL "investors" when all you wish to make is a quick buck instead of truly going long on the company. Besides, Apple's cash pile is not at all a pure dollar mountain, but a portfolio of short and long-term investments aimed at keeping the company ready for crises AND strategic acquisitions.
But why waste time with someone who waits for my "ridiculous" comments just to comment on them? Go join Einhorn in signing that pathetic vulture letter, Mr Shill.
What Apple should do is a stock split. This alone would increase attractiveness to its shares so that it can continue to grow instead of flatlining like Dell, as Einhorn's suggestion would lead it to.
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Absolutely - as in growth=money. Einhorn is not a long investor, he is an inside trading convict.
And my message above isn't even dealing with the fiscal impact over any repatriation of the "cash" pile...which is a huge deal in itself for Apple.
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Huh? Double huh?
The irony of your first statement is that dividends do just the opposite of what you imply. They reward patient investors, not traders.
Your second statement is even more puzzling. The fiscal impacts of paying dividends is so close to zero as to be zero. Please, let's not be disingenuous. "Cash" does not mean vaults full of unmarked small bills. This is commonly used shorthand for liquid investments; in this case, mostly corporate bonds, commercial paper, treasury notes, and the like. If you are referring to overseas money that will be subject to taxes, then so be it. They cannot hold these funds offshore forever just to avoid U.S. taxes, no matter how they plan on using it.
Is there any point that you can imagine where the cash pile is unnecessarily large for crises and strategic acquisitions? Keeping in mind that a public company can make a strategic acquisition by issuing new shares of their stock. And in fact that is how they typically do any large acquisition. So is there a point where you start saying that Apple is holding too much cash.
Apple's cash is mainly in bonds issued by the US, highly rated companies, and other governmental agencies (foreign and domestic). They made about 1% on those investments last year and nearly nothing the year before that. So they are losing ground to inflation and that is at the current low inflation. They would lose ground even faster if we ever got hit with some serious inflation. So there is a cost to Apple keeping this money to preserve the two options you mention. Is there any point in your mind when this cost gets too high? If in two years the cash pile is $200 billion, will you still say Apple should save it for a rainy day or to make a huge cash acquisition?