My post wasn't a critique of Apple. They're a business and not a charity.
But neat post.
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Apple Announces $100 Billion Share Repurchase Program
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My post wasn't a critique of Apple. They're a business and not a charity.
But neat post.
Ugh when you have money and no idea on what to do with it, just buy your own shares. Shareholders will be happy since increased demand will likely mean rising values but then again there‘s so many other things Apple could throw money at or start being less greedy. Maybe Cook can concentrate on that after he finished his goal of the trillion dollar evaluation.
They could use that money to update their computers every year or discount years old models; they could start charging less insane prices with slightly lower margins (especially the notebooks) or whatever but Scrooge McCook just prefers to hoard the money.
And also - Apple is very profitable right now and iPhone on its own is a huge business, but should AAPL value decline in the long run because their (other) products get out of date and underperform, he‘ll have burned cash.
They could use that money to update their computers every year or discount years old models; they could start charging less insane prices with slightly lower margins (especially the notebooks) or whatever but Scrooge McCook just prefers to hoard the money.
And also - Apple is very profitable right now and iPhone on its own is a huge business, but should AAPL value decline in the long run because their (other) products get out of date and underperform, he‘ll have burned cash.
There are those who say Apple is head and shoulders above the FANG stocks but it's the FANG stocks that get all the praise along with those nice, fat P/Es. Apple is mired with a P/E of 17 to 18, no matter what they do. Even dividends don't matter to the biggest and greediest investors. I think Boeing only gives a 2.08% dividend yield yet investors are absolutely going nuts over buying that stock and at least it gets a nice P/E of 24.
Point me to a better APR than 1.7%. I need to park some cash.
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How much woud you want it to increase?
Stop pretending like this is all a bad thing, and that Republican voters are blind. Neither is true.
First, a stock repurchase makes nobody richer, in theory. It is only a signal to the behaviorist investors that Apple's management is very confident about the future, in hopes to keep the stock price high, but it does nothing to raise the intrinsic asset value of the firm. Also, the dividend increase is literally a dime (.63 to .73) on a $175 stock; not exactly what I would call a huge windfall. Apple is still primarily a tech-sector growth stock, and not a value/dividend stock.
Second, we all know the new tax law was primarily a corporate tax break. The Republicans did what any politicians would do, left or right, and made it sound like a good deal for individuals as well. However, all it takes is a a brief look at the percentage change (huge for corporations, tiny for individuals) to know that this tax bill was always about growing the economy on a large scale and keeping more money and jobs in the country. It was called the Tax Cuts and Jobs Act, not the Wage Increase and Free Handouts Act, and is in fact succeeding immensely so far.
Third, why in the world do so many people believe that the rich getting richer is a bad thing? If there is a lie to expose here, it is that one. Clearly you already know that rich people are investors, because you equated the two. So, guess what... if you give wealthy investors more money, they are going to reinvest it back into the economy. THIS IS A GOOD THING. It's how most companies even exist in the first place.
Glad you took the time out of your day for this conservative circlejerk nonsense to be totally lost on me.
"Republicans are not liars, they are deluded wishful thinking dreamers."
What is the definition of insanity? Doing same thing expecting different results?
Without any requirements, of course all that huge $$$$$ windfall will go into SBB, Div ++, and other things that will benefit those who invested most in major corporations ($1000 employee bonus for the corps is equivalent to finding a penny on the ground). That is just how the world works (Hello? "Greed is good"?)
Its is like the only thing Republicans believe in is fiscal polices that do not statistically work (trickle down) and a 2000+ year old book that is largely fiction.
Had the tax bill limited or prevented the funds to go to SBB, Div++ and management bonuses, all directly to employee wage boost or infrastructure improvements, and a minimum wage increase at least $ 0.50 that would be really help the economy.
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Tax Cuts and Jobs Act IS A HORRIBLE BILL.
It is effectively the GOVERNMENT GIVING corporations BILLIONS of $$$ to do with what they please, no strings attached.
There is also no attempt to address the ever faster growing wage imbalance (how many 100's of billions of $$$$ is a good enough reward for the success of a person??)
And yes, I am saying the rich are getting richer, because it is statistically proven.
So, yes, "Wage Increase and Free Handouts Act" is exactly what it is.
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$0.10.
Get some more stocks, does not have to be Apple. It will be a great year for companies.
Glad you confirmed my suspicion that you wouldn't know sound financial theory if it hit you in the face, and that you care more about divisive political spats than actually finding the truth.
The money belonged to the corporations in the first place. It's better for those billions to be reinvested in the US economy than to sit in offshore accounts, period. No rational person on either side of the political spectrum debates that.
Barely, but no one should be using a savings account as an investment anyway.
Yes, what they bumped it to is better than nothing. I've owned for ~22 years and most of them didn't get any dividend. But still was hoping for a bigger quarterly bump or a nice one-time dividend. The stock buyback doesn't do much for me as it "may" increase the price of the stock, but if I don't plan on selling I don't get any benefit now anyway.
Actually, it's a publicly traded company that will do what suits the shareholders.
Isn't Trickle Down where rich people buy stuff from not quite as rich people and they both win?
Apple, the richest company in the world (at around $800B), buys stock from people with net values of $10B, so they get money from Apple, and give up their rights as shareholders...
Those decabillionaires buy stuff, like a Gulfstream G500 or two, or they put the money in the bank, and the bank loans out that money to people. However, I know a few rich people that are real, and they don't let their money rest. They demand more from their money than 0.3% interest.
Those Gulfstream employees have to build those things, and that helps out their bottom line.
Of the many wrong things you've said I have time to respond to only one, so I will pick this whopper.
Stock repurchases are a reverse dilution. This means they raise the EPS for stockholders, and since stock prices are a direct function of earnings, they do in fact make stockholders "richer." Companies would have absolutely no incentive to buy back equity if they didn't have this affect. They are not supposed to "raise the intrinsic value" of the company; they are meant only to concentrate earnings on the fewer remaining traded shares of stock and so increase the price of those shares. So buybacks are much less an expression of confidence than are dividends. The latter have to be paid out every quarter, on time, in perpetuity, at the set rate. Buybacks on the other hand are commitments with a limited life and the money is spent on whatever schedule the company chooses. Also, in calculating the value of the dividend, you have to consider not the $0.10 quarterly per share increase just announced, but the annual commitment, which is now on the order of $20B a year.
So it seems you are looking at buybacks and dividends rather backwards.
Instead the money is mainly used to buy back stocks and other prefered shareholder perks, both of which will have large numbers of forging investors.
If #45 and the Republicans really wanted that money get into the US economy, it should have been barred from stock buy backs and other shareholder perks, instead spent on wages and capital improvements.
And before you say Apple could have done that, it is highly unlikely they would. When other are doing SBB, there would be shareholder revolt if Apple did it.
It would have been easy to add language that would insure those trillions would be spread more evenly across a corporate expenses.
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Can I ask,
By reducing the number of shares in circulation, does that effect supply/demand, thus increase value of share?
(less supply, more demand, higher prices.)
I am not certain is S/D works entirely the same way with stocks.
And by same regard, with fewer stocks, the 10 cent increase is net less to total quarterly dividend payment, as there are fewer stocks to pay the dividend too (or that it goes back to Apple).
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I disagree, but I appreciate the civil and informed response.
I fear we have waded into a hotly-contested debate on the merits and effects of share repurchases with no clear winner (this is why I originally said "in theory"). Historically, some have failed, and some have succeeded. In my opinion, in 2018, we are past the point where anyone is fooled by EPS boosts resulting from buybacks. Only time will tell if stockholders actually get "richer" as a result. Sure, some shareholders get fractionally-premium prices for stock in the buyback (constituting a similar effect as a dividend - while others see a tiny, and likely temporary, boost in value), but maybe they would have been better off in the long run holding onto more shares. I think Apple knows this, and is playing the long game, certainly with incentives beyond merely boosting EPS. Many of those incentives are already well documented, and I'm not sure why you would be so quick to invalidate them.
A relevant read which I mostly agree with:
https://www.wsj.com/articles/stock-buybacks-are-proof-of-tax-reforms-success-1520292384
You make a good point about momentary vs. permanent expressions of confidence. This would be very situationally-dependent. Also, yes, the annualized dividend is nothing to sneeze at, but it's still a somewhat of a baby relative to other stocks' yields.
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Ah, yes, more complex corporate laws with loopholes ripe for the picking. What could go wrong with that?
It would be cheaper for Apple to pay higher dividend after the reduce the number of shares.Barely, but no one should be using a savings account as an investment anyway.
Stock price is not a supply and demand issue per se, since share value is based on earnings per share, not the number of shares available on the market. The affect is much the same but not for a supply and demand reason.
On the second question, if I understand what you are asking, Apple does not pay dividends on shares they've repurchased.
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A lot of confusion out there about what you own when you but a share of stock in a publicly traded company. You do not own any part of their assets. You are buying only a share of their equity, roughly translated, earnings. So nobody has to be "fooled" by boosting of EPS from stock repurchases, because they are intended to do nothing more (or less) than concentrate earnings on fewer shares. All other things being equal, they never fail to do so. If the stock was going to go up, it will go up that much more; if it was going down, it should go down that much less. The impact is real.
You will also never know who buys shares that you elect to sell. AAPL's float and trade volume is so enormous they can put their bucket into that river to scoop up some sell orders any time they wish. So it is definitely not about creating more buyers, but about the reduction of shares that will occur over time.
Yup, I've been adding more to my retirement this year, and diversifying. I just generally try to buy one individual share of companies I support, mostly to get the investor newsletters/announcements/invites-to-shareholder-calls.
You do not own assets directly, but you do own a literal piece of the company, including its assets. Both shareholders and debtholders indirectly share an effective "ownership" of the assets. Debtholders of course have seniority when it comes to cash flows, while shareholders instead get to be party to the growth and leadership of the firm.
EPS is important, but it is far from the only factor in valuing shares. An efficient market would see the EPS boost, but they would also see a company that has $100 billion less cash (read: assets) over time. As I said before, I think the price increase and stability you speak of has more to do (aside from the earnings beat which was simultaneously announced) with the behaviorism in the market upon seeing Apple's confidence than with the change in EPS.
The bottom line is that Apple has a boatload if cash that they can now dock at the US shore, but Tim Cook has no clue what to do with this cash. There is no vision for the future, so he may as well do something for the shareholders. I am a shareholder, and I don’t mind doing something for shareholders. I would, of course, welcome sizeable stratigic acquisitions and investment in new product categories, but we can’t expect this from the Bean Counter.
I know it’s very controversial, but I would absolutely welcome a Tesla acquisition, since Apple can relatively quickly ramp up the production, using the cash that Apple has and Tesla lacks. There is a line of people waiting for their cars and willing to stay in line for years. The demand is there and the clients are ready to open their wallets. The product cannot be delivered by Tesla on schedule due to capital restraints. It’s a perfect match for Apple to enter into a new product category that is extremely fashionable and enjoys a huge demand. Apple could raise the price of Model 3 and still have people que up at the Tesla stores for days.
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So, AAPL buys back $100 billion in share, about 571428571 of them assuming purchase @$175 each.
Quarterly dividend of 0.63 results in paying $360,000,000 less for dividend disbursement.
And of course $36,000,000 less once the $0.10 goes into effect.
Stock is sweeter ($0.73/ea) for those who have it, but at least partly balanced by the buy-back.
That correct?
Not really. If ever you need proof of what I am saying, try owning stock in a bankrupt company. It's rare when equity holders get anything in a bankruptcy proceeding. They nearly always get nothing because they are not creditors. What they own is a piece of something (earnings) that no longer exists. They are hosed.
In valuing a public company, EPS is factors number one, two, and three. Cash matters virtually not at all, because stockholders have no access to cash (or any other asset of the company) that the board does not elect to pass along to stockholders, entirely at their option. The only situation where cash and other assets matter to stock value is when someone is buying the entire company. At that point the buyer owns everything the target company owned (and inherits their debts as well). So bottom line, for a company that is a legitimate takeover target, their asset position matters, but otherwise, not.
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Not sure. The way I'd look at it (in round numbers), if Apple buys 60M shares, they save roughly $180M annually in dividend payouts for buying back $100B in stock. So in theory, in five or six years, they've covered the entire cost of the buyback with dividend savings.
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PE is all about the anticipation of earnings growth. With Apple's current growth rate, PE is hardly "mired," it's right around what we should expect it to be. If that growth rate increases or is expected to increase, then you'll get your higher PE. But not because of anything else, least of all, a comparison with other stocks. As for dividends, they matter most to the big institutional investors. They are the ones who usually push the hardest and with the most authority for equity return.
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With the increase I calculate about $1,584,000,000 annual (4x year), going by if BB on current stock value (571,428,571 shares).
Of course a 60M share BB would be magnitudes more.
Regardless of the true sum, we agree such a BB in long run will save AAPL $
Bankruptcy doesn't prove your point any more than it does mine. When you buy a share of a company, you're inheriting the consequences of both its assets and its debt. Shareholders should know full well that debtholders get first claim in a bankruptcy situation, and that will carry a certain risk factor (depending on capital structure, the specific industry, etc.). Assets don't just suddenly matter only at 100%, or any other specific threshold of ownership.
If EPS is all you need in valuing a company, explain Tesla, or any of the numerous other stocks with negative EPS. Valuation is largely based on expectation of future performance, and cash can potentially play a huge role. Cash can be used for new projects, acquisitions, buybacks, etc. EPS is obviously the single most important factor for well-established companies, but there are plenty other concrete examples which prove it's not everything.