Either Apple uses its horde to massively increase its offerings (software and service mainly),
or buy back its stocks.
OR reduce the price of its products.
or buy back its stocks.
OR reduce the price of its products.
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Carl Icahn Presses for Apple Shareholder Vote on Increased Stock Buyback
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May we assume you're referring to your own?
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Do you know anything about business?
The corporations are pushing for tax amnesty but the fact that they haven't gotten it yet tells me that they probably aren't going to get it. All of this got wrapped up with the deficit and budget debates in Congress that aren't any closer to resolution now than they were years ago. And we also have to ask ourselves (assume we means stockholders) if Apple's treatment of the cash would be any different if it was domiciled in the U.S. instead of overseas.
Stock pricing is all about earnings, and the growth of earnings, and the factors that feed into earnings growth (some of which you mentioned). This is what stockholders buy when they invest. Shareholders own equity, they don't own assets (of which cash is one), and they don't see any part of those assets unless the company decides to share them, either as a dividend or a buyback. Otherwise they might as well be on the moon, as far as investors are concerned.
Buybacks are of tangible and moderately-lasting value to shareholders because they concentrate earnings on the shares remaining and increase EPS, other factors being equal. They also reverse dilution, which naturally occurs as companies grant shares and options to executives. That benefit would not be erased just because/if/when Icahn decides to liquidate his shares.
No Ph.D required. This stuff is Investor 101.
One can hope for some tax law changes, at the very least. And Apple does spend a lot of cash overseas, too, so it's not like it makes sense for them to bring it all into the US. I think I'd be happiest if Apple was spending more of it where it is and expanding their operations worldwide.
It's like public insider trading.
I kind of wish shares could only be bought in bulk by people with a proven track record or if apple could actively refuse ownership to those who are seen as gaming the system. You can guarantee that he probably borrowed money to invest in apple stock and needs to pay the piper. Same thing happens with football clubs that get bought out when the guy getting majority share ownership is actually technically putting the company into millions worth of debt on what was borrowed to buy.
Apple doesn't need to do anything with its cash apart from make great products and carry on with r&d
I kind of wish shares could only be bought in bulk by people with a proven track record or if apple could actively refuse ownership to those who are seen as gaming the system. You can guarantee that he probably borrowed money to invest in apple stock and needs to pay the piper. Same thing happens with football clubs that get bought out when the guy getting majority share ownership is actually technically putting the company into millions worth of debt on what was borrowed to buy.
Apple doesn't need to do anything with its cash apart from make great products and carry on with r&d
Actually, it does, but his investment is small for a company as valuable as Apple.
Apple needs to tell him to pound sand, until the tax situation for business changes in the US Apple will not change its operating status (per the over seas profits). The US has the highest tax rates on business in the world.
Tom
Tom
Apple management would not have to spend as much time reassuring investors.
Apple would feel more confident that they can take greater risks without an investor revolt.
Apple is owned by these shareholders. The shareholders are Apple's boss. Would you rather have a boss always on your case or one that left you alone and thinks you can do no wrong?
AKA throw it away? Nope. I just don't see the point of a buyback at this point, but that's because I no longer consider AAPL so undervalued (which is why I just sold).
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Meh, I'd rather just trade SPY at this point.
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Sigh... Look up "shareholder", and read aloud what it says. Then tell me what the board is.
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you aren't investing in Apple
When you buy a stock today, unless it is during an IPO, you aren't really investing in the company. You aren't 'enabling that company' or anything like that. You are simply giving your money to ANOTHER INVESTOR. You are investing in a piece of paper, sold to you by a third-party, that you hope increases in value.
Sure, you technically have a 'vote' with your share, but it's a minuscule one that counts for pretty much nothing. None of that money goes to Apple to allow them to do more or do better. It goes into the pocket of an Investor, after the brokers take their cut.
Only people who bought shares during the initial public offering were risking their money directly on the companies success and contributing to the companies goals. Without them, there would be no Apple. They were the people who provided the cash to get the company off the ground.
Today, you are pretty much just trading baseball cards. It doesn't make the Yankees any better to sell a vintage card for a profit to an e-bay collector.
Or, for another analogy, investors in Apple are like people betting on horses. You can buy a ticket, and you hope for your horse to finish first, but it brings you no closer to owning the horse, nor should you be expected to have a say in how the horse is managed.
Sure, a buy-back might raise the value of what you hold, but it will only matter to people who hold massive amounts of stock, like Icahn, while compromising the ability of the company to be successful longer term, which is the only way you can expect long term growth of your pieces of paper.
In the list of things apple could spend that money on, buying paper from investors seems like the worst possible thing to spend it on. They might as well just throw the money out the window. Those shares are with worth exactly ZERO to Apple.
Demanding Apple pay you for your speculation on some piece of paper you bought from some other dude is pretty ballsy, although rather common.
When you buy a stock today, unless it is during an IPO, you aren't really investing in the company. You aren't 'enabling that company' or anything like that. You are simply giving your money to ANOTHER INVESTOR. You are investing in a piece of paper, sold to you by a third-party, that you hope increases in value.
Sure, you technically have a 'vote' with your share, but it's a minuscule one that counts for pretty much nothing. None of that money goes to Apple to allow them to do more or do better. It goes into the pocket of an Investor, after the brokers take their cut.
Only people who bought shares during the initial public offering were risking their money directly on the companies success and contributing to the companies goals. Without them, there would be no Apple. They were the people who provided the cash to get the company off the ground.
Today, you are pretty much just trading baseball cards. It doesn't make the Yankees any better to sell a vintage card for a profit to an e-bay collector.
Or, for another analogy, investors in Apple are like people betting on horses. You can buy a ticket, and you hope for your horse to finish first, but it brings you no closer to owning the horse, nor should you be expected to have a say in how the horse is managed.
Sure, a buy-back might raise the value of what you hold, but it will only matter to people who hold massive amounts of stock, like Icahn, while compromising the ability of the company to be successful longer term, which is the only way you can expect long term growth of your pieces of paper.
In the list of things apple could spend that money on, buying paper from investors seems like the worst possible thing to spend it on. They might as well just throw the money out the window. Those shares are with worth exactly ZERO to Apple.
Demanding Apple pay you for your speculation on some piece of paper you bought from some other dude is pretty ballsy, although rather common.
If I remember correctly from an older MacRumors article, taking the loan out somehow enables Apple to do this without paying US taxes.
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No, that's not true. If so, why would Apple even go public? Also, the vote for ONE share is minuscule, but if you have a lot... which Icahn doesn't really have. He owns less than 1% of the corporation.
Apple does have too much money, and what they should do with some of it is give rent subsidies to the middle class who are losing their homes to tech employees.
Their success (with Google/Facebook/Twitter/etc.) is being felt here in the Bay Area and it isn't pretty. What about the poor? We lost them along time ago.
Their success (with Google/Facebook/Twitter/etc.) is being felt here in the Bay Area and it isn't pretty. What about the poor? We lost them along time ago.
I've been hearing the exact same thing for years and years, since the cash hoard was only 15% of what it is today. It doubles, then doubles again, then doubles again, and still the tune is the same, as if suddenly, Apple is going to have an a-hah moment and find the perfect place to spend $150b.
Remember, we are talking $1b a week, every week, and growing. Apple has never come even within hailing distance of being able to invest that much in R&D. Maybe you think they should be spending it just because it's there. Maybe you think they should be chasing goofy, unrelated projects, like Google does, and letting corporate focus go to hell in a handcart. Colonies the moon, anyone?
Your second point is far scarier than you seem to know. For Apple to need any part of their cash accumulation to fund operations, this would mean that they had gone from being massively profitable to unprofitable. Do you want to be a shareholder if that scenario is even remotely possible? If Tim Cook even hinted that Apple's business might be so fragile that they need to bank against corporate armageddon, would that increase your confidence in the company? If not that, then what's the money for? This is what nags at the backs of investors' minds, and has for years -- whether you know it or not.
And the "grovel before Bill Gates" story is basically a myth. Don't get me started on that one.
Well, when they went public, they likely did need the money, like most companies when they initially go public. But decades later, this is no longer the situation. Every share they offered was bought, and now all of those shares have been bought and sold amongst third parties many many many times over.
When you buy a share of Apple, Apple doesn't see a dime. You are buying it from another investor, who either lost a little or gained a little in the process.
The share price could go to zero tomorrow and not affect apple. It might make employees rewarded with stock upset though ;-)
You're naive.
If you own the company, you can absolutely go into your company's safe and take money. It's a little more complicated when there are multiple owners, as in the case of a corporation. There are procedures that must be followed, and the multiple owners are entitled to different amounts of cash depending on their share of the company. Now, just because the money is there doesn't mean it's in the owners' best interests to take it out of the safe. But if the money is not being spent to grow the business, as is the case with Apple, then it's time for Apple's safe to be opened.
As for why Apple would consider going into debt to pay out dividends or buy back stock, that's simply a tax thing. Interest rates are way, way lower than tax rates to bring money in from overseas. It's a smart business move, and since Apple is still making money in the US, they can pay off that debt pretty quickly.
If you don't know why AAPL would rise after a stock buyback, you clearly don't understand the basics of supply and demand, or P/E ratios, or any other really basic economic realities. There will be a correction, sure, as many shareholders cash out, but with less shares out in the world, each share is a bigger slice of the pie, and the stock price will stabilize higher than it was before the buyback.
Well, while I agree that Carl Icahn is annoying, an investor IS a part owner of the company and he DOES have a right (due to buying a portion of the company) to try to get the company to do with the money what he wants them to.
Someone said he owned 1% ? I don't know if that's true but 1% of a $500 billion company is a significant investment.
And if they buy more and more quickly, then Carl will keep asking for more. He's never going to be happy.
You're right that they don't get money when you buy stock (except initially), but good stock performance allows a company to take loans more easily. Also, a company worth more is harder for other companies to buy out. Probably not issues for Apple specifically, though many executives are shareholders.
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Sorry to disappoint you, but they won't do that.
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Thank you for saying this. Best response possible.
No, you're completely wrong. A repurchase simultaneously reduces the value of a company's holdings while making each share of the company's holdings and earnings larger.
Stock prices are generally based on the earnings of a company, and prospective earnings, not its assets in the event of liquidation. As long as Apple keeps earning, its stock has significant value. Reducing the number of shares means a straight-up increase in the earnings per share. The company overall may be worth slightly less, if liquidated, but the stock is worth much more and the price will come up. A buyback is a fantastic way of increasing shareholder value, and a very smart move if a company has excess cash and the share price is lower than it should be. Everyone knows this, it's just a question of how big a buyback to make. Some investors like Icahn think it should be a very large buyback. Others think it should be a smaller buyback. Apple has their own opinion. But we all know a buyback is gonna happen, it's just a matter of size and timing.
Bleh, Bitcoins. First thing I'm taking a dump on if I ever become a super-hacker.
Maybe he does own 1%, but 1% shouldn't be able to tell the other 99% what to do. No matter how much that 1% is worth it's still only 1%.