speak of the devil

Discussion in 'Apple, Inc. Rumors' started by evanmarx, Jun 19, 2002.

  1. evanmarx macrumors member

    evanmarx

    Joined:
    Oct 23, 2001
    Location:
    Switzerland
    #1
    so ... aplple stocks plummeted today and before about 20%!! Do you remember that thread (http://www.macrumors.com/forums/showthread.php3?threadid=5562 ), where three top apple board members dumped a big part of their shares? Looks like they knew exactly, what was ahead ... even if some macrumors members pointed out that everything was for the best, taht this was agood sign ... yeah right .... :mad:
     
  2. AlphaTech macrumors 601

    AlphaTech

    Joined:
    Oct 4, 2001
    Location:
    Natick, MA
    #2
    Stock, by it's very nature, goes up and down. Some go up and down more then others, but they all do it. What really matters, more, is how long it takes to recover.

    One stock that continues to do very well is Harley-Davidson. I looked at it a few months back, and since it hit the market, it has been on a fairly steady increase. It has also split about five times since it started (last one in 2000).

    Apple on the other hand, has only split twice. The stock is down (as of the latest read) 14% today.

    Apple stock has been on the market since 1981, where Harley has only been on since 1986/87. You know where I will be putting my money (as soon as I can afford to purchase some shares). :D
     
  3. Quark macrumors regular

    Joined:
    Jan 9, 2002
    #3
    EvanMarx... huh?

    So you think that Executives are never allowed to sell stocks?

    The reason that Execs get stock incentives is so that they can sell them at some point in the future, otherwise they are not worth anything.

    Do you not understand how that works?

    They weren't "dumping" stocks, they were selling stocks and well ahead of any information about anything.

    Unless you have proof that Apple Execs are evil and out for themselves... that's a pretty big accusation you are making. You better have more proof than the well gapped timeline you are pointing to - which is extremely, extremely weak.

    Do you hate Apple? Do you hate Corporations? Do you not like having people employed? What is your angle?

    You can say the same thing about almost any exec that sells stock.

    Sorry about the length of this, but I can't stand it when people have such negative comments about business where they clearly don't understand or know what they are talking about.

    :rolleyes:
     
  4. macktheknife macrumors 6502a

    macktheknife

    Joined:
    Jan 24, 2002
    #4
    Can't blame the execs for cashing out

    There are quite a bit of restrictions on executive selling and buying of company shares. I don't know whether the senior team knew about the change in estimate, but I can't really blame them for cashing out, given that AAPL reached a 52-week high of $26.17 as recently as mid-April when the turnaround in the PC industry then (as now) was uncertain at best.

    Here's my view (and you can take it or not): I think it is a good time to buy AAPL. AAPL as of 11:34 AM PST is at $17.32. Apple has about $4.1 billion in cash and short-term marketable securities with 355 million shares outstanding, giving each shareholder a claim of about $12 cash. Apple has only $300 million in long-term debt, and that is definitely a manageable amount. If you buy AAPL at $17 now, you are essentially paying $5 just for AAPL's computer business alone, given that $12 of the share is simply cash.

    So is Apple's computer business worth $5? Well, we can look at it two ways. First is to compare AAPL to CSCO and MSFT. You will find that you are paying a substantial premium for their businesses over the cash they hold. Second, you can estimate how much of a return on business you are getting with this rough rule of thumb. We can be conservative and say AAPL will earn only $0.08 this coming quarter and for the next three quarters, giving AAPL earnings per share (EPS) for the year at $0.32. Take $0.32 and divide it by $5.00, and you are essentially getting a 6.4% return. Not bad considering that the overall market is doing so badly and that interest rates are at all-time lows.

    But that's just a real conservative estimate: I haven't even factored in future growth prospects or what would happen if EPS actually comes in higher. Thus, I think the market is overreacting to Apple's announcement. All the major brokerages are cutting their recommendations from "buy" to "hold", but I think they should have labeled AAPL a "sell" a month or two ago when it was at $26 and rate it a "buy" now that it's much lower.

    You can do the math and analysis yourself, but I've made my case. I'd like to know if there are any different views. I've convinced my co-worker to sink about $6,000 into AAPL, so I want to make sure he feels better about the whole deal.
     
  5. topicolo macrumors 68000

    topicolo

    Joined:
    Jun 4, 2002
    Location:
    Ottawa, ON
    #5
    Re: Can't blame the execs for cashing out

    I heartily agree, I've been putting some of those points out for a while now and I think that apple's current price is quite a value. Unfortunately, apple's stock historically seems to hover around the $20 level (at least from '87). If your co-worker bought at over $20 he may have to wait a while :(. It's just sad that apple stock hasn't appreciated very much at all since the company's IPO. If I had more money, I'd probably invested in Bristol-Meyers Squibb. They're selling at a huge discount and their dividend yield is at a healthy 4%. It's pretty nice to get paid as you wait for the stock price to bounce back up again :)

    As for Quark's comments: you are right about the restrictions that insiders have to abide by, but in general, executives do seem to know a little more about their company than the rest of us. In a recent FORTUNE article, they showed that on average, if there is a lot of insider selling in a company, a stock tends to drop in price by about 14% (if i remember correctly). Also, for evidence of executives taking advantage of insider knowledge, just take a look at Ken Lay (Enron), Sam Waksal (Imclone), and Martha Stewart (evil child-eating woman ;)). Of course, Waksal and Stewart haven't been convicted, but it's pretty obvious that they acted on insider knowledge.
     
  6. Tommy! macrumors regular

    Joined:
    Jul 26, 2001
    Location:
    NH
    #6
    im not saying that apple execs were selling their shares because they knew the prices were doing to decrease, but i am sure anyone would sell their stocks if they knew they were going to decrease in price by several dollars. you would, i would, and thats the way the market works.
     
  7. macktheknife macrumors 6502a

    macktheknife

    Joined:
    Jan 24, 2002
    #7
    Slight re-adjustment

    I'd like to make a slight readjustment to my calculations. Let's assume that AAPL will earn 2% interest on its cash. This means that on a per share basis, this will represent $0.24 (2% x $12). If we assume that AAPL will earn $0.32 per share over the next year (4 quarters x $0.08), then it means that only $0.08 will come from the operations side (i.e. computers). If you buy AAPL at $17, this means that you are essentially earning a 1.5% return on the computer business ($0.08/($17-$12)). This, of course, is not good, but I am again being conservative here.

    All in all, I still think that AAPL is a good buy but not as good as I thought. BTW, I convinced my co-worker to buy AAPL at $17.40 today, so I think he'll still earn a pretty penny or two.
     
  8. Rajj macrumors 6502a

    Rajj

    Joined:
    May 29, 2002
    Location:
    32° 44' N 117° 10' W
    #8
    The stock market is nothing more than a "white collar" version of Vegas; you invest your money, but get nothing in return!! :D
     
  9. eyelikeart Moderator emeritus

    eyelikeart

    Joined:
    Jan 2, 2001
    Location:
    Metairie, LA
    #10
    the execs cashing their stock options holds no ground to the public stock...

    how many times do I have to say this? :rolleyes:
     
  10. MikeMac macrumors newbie

    Joined:
    Jun 6, 2002
    #11
    About as many times as you have to say "No Apple PDA!" :p
     
  11. eyelikeart Moderator emeritus

    eyelikeart

    Joined:
    Jan 2, 2001
    Location:
    Metairie, LA
    #12
    please...don't remind me...;)

    I guess I sound like a broken record...

    there is no Apple PDA...the public shares aren't affected by inside shares...:rolleyes:
     
  12. spuncan macrumors 6502

    Joined:
    Jul 18, 2001
    Location:
    Detroit
    #13
    Gah this always happens

    I bought into Apple right after MWSF because of there relative low after the big rumor buz and such. At that point it was @ 20.11. I probably should of sold a 26 then re-bought right now. Whatever Il'l probably sell at the MWNY rumor buzz.
     
  13. macktheknife macrumors 6502a

    macktheknife

    Joined:
    Jan 24, 2002
    #14
    Why sell at a loss now? Like a said, each share of AAPL is worth at least $12 in cash since the company has no debt (i.e. senior claimholders). AAPL closed at around $16.85 at the end of Friday. If you bought a share of AAPL at this price, you are essentially paying about $4.85 per share for Apple's computer business. This is a bargain by almost any measure.
     
  14. topicolo macrumors 68000

    topicolo

    Joined:
    Jun 4, 2002
    Location:
    Ottawa, ON
    #15
    Still, you have to wonder how much money apple spent on its recent aquisitions. They may well have less money than was listed on their last quarterly report
     
  15. mymemory macrumors 68020

    mymemory

    Joined:
    May 9, 2001
    Location:
    Miami
    #16
    The truth is that if you tell the they did something evil they are gonna say "bussiness are bussiness" and Apple is another way to make money, you just get a job to get money, now, you get the job you like the best. They are at Apple because they like and know the product, that way they can make money.
     
  16. Ibjr macrumors 6502a

    Joined:
    Jun 29, 2002
    Location:
    Eastern seaboard
    #17
    As i have posted elsewhere, DrudgeReport has it on front page w/ link to SF gate report.
     

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