Apple Board Has Been "Considering" Dividends and Buybacks Since 2005

[GfPQqmcRKUvP]

With this obscene amount of money stockpiled, why dont Apple do the decent thing and lower the prices of some of its kit? Or donate a good chunk to charity, say a cancer charity for instance (if they had when they had $50 billion perhaps steve jobs would still be here?)

Oh, you know, because businesses are supposed to make money, and as soon as investors see that Apple's primary goal isn't to maximize returns everyone sells their stock and people's retirement accounts/pensions/mutual funds lose all their value and you've just ruined a lot of people's nest eggs.

re original article

i like seeing aapl cash pile grow - keep going aapl

Ummm, why? You can "like it" all you want, but what's the correct decision financially?

just split the stock 4 to 1

cash is king

What if you're not going to use the cash? Splitting the stock would do nothing.

Splits can drive the value of a stock through the roof.

No, they can't.

Many people who don't have much money want to own a few hundred shares of Apple today. Because of it's price, they can't buy in. By splitting the shares, they let a larger population buy the stock.

Yeah, because the population of people who can afford $100 per share of AAPL and can't afford $400 per share of AAPL will create so much demand on the exchanges that the stock will skyrocket? I didn't think so. Stock splits, at best, unlock some marginal liquidity. That's it.

 

[mrr]

I would like to see a stock buyback and then a split.

 

[Aussieiphone]

Pay rise

I would like to see a pay rise to $25/hr for retail employees here in the US.

If the avg store currently spends annually 2.5-3m on wages and does 7m annually in sales, doubling their pay of $12/hr (or tripling the min wage) would still be less than sales in store, but I propose they use the billions they earned off the backs of the people to fund this instead.

243 US stores x 3m extra spending in wages annually per store is less than a billion dollars...not much difference to Apple, big difference to the employees lives.

source: http://www.ifoapplestore.com/stores/shifts_staffing.html

 

[swordfish5736]

A whopping 0.1% of it's cash reserves? Who cares?

Not to mention what is spent on lawsuits is considered an expense so the now almost 100 billion they have in cash is after the legal fees. People will claim they are suing too many companies, take a look at how many companies are constantly suing apple.

 

[GfPQqmcRKUvP]

I would like to see a pay rise to $25/hr for retail employees here in the US.

If the avg store currently spends annually 2.5-3m on wages and does 7m annually in sales, doubling their pay of $12/hr (or tripling the min wage) would still be less than sales in store, but I propose they use the billions they earned off the backs of the people to fund this instead.

243 US stores x 3m extra spending in wages annually per store is less than a billion dollars...not much difference to Apple, big difference to the employees lives.

source: http://www.ifoapplestore.com/stores/shifts_staffing.html

But why would they do that? People willingly work for Apple for that wage. If the wage is unfairly low they'd have to raise it to attract people. If I were a stockholder I'd be justifiably mad if they were needlessly spending a billion dollars of stockholders money on people who would work there for less.

Look, there are lots of great causes to contribute to in the world, and I'm by no means discouraging that. But when I invest in a company and entrusting them with my hard-earned money, they have a fiduciary duty to me to invest that money in something that will provide my investment upside. It's a nice sound-byte to say that they should give a ton of money to charity and to paying everyone double or triple their market value, but I'm more than capable of doing that myself with money I've allocated for expressly that purpose. I'd rather my investment money not be squandered with the social machinations of a company that exists as a public, profit-generating entity.

This post does not apply to private companies.

 

[Nielsenius]

With this much cash on hand, Apple needs to bring jobs back to the United States. At this point, they're just being greedy (I guess that's capitalism, though). We could really use the 600,000 jobs that are currently in China over here. Maybe this would even lead the way for other corporations to bring jobs back from overseas. This is doubtful, of course, because most U.S. companies would rather cut expenses and hire less than cut executives' pay checks.

 

[Aussieiphone]

But why would they do that? People willingly work for Apple for that wage. If the wage is unfairly low they'd have to raise it to attract people. If I were a stockholder I'd be justifiably mad if they were needlessly spending a billion dollars of stockholders money on people who would work there for less.

But when I invest in a company and entrusting them with my hard-earned money, they have a fiduciary duty to me to invest that money in something that will provide my investment upside.

Seriously? - "people willing work for Apple for that wage" are you aware of the current global financial crisis? Jobs are not so prevalent that people can pick and chose...

You seriously believe your money for investing is more "hard-earned" than a retail employee earning squat per hour? I'm sure Mr Joe $12/hr has plenty of money for investing... Generally the majority of the time, the more money you make the easier your job is, ask your office janitor.

But hey, if your principals allow for investing in companies that treat their workers immorally, I'm sure I could find some hot tips in China, India, Cambodia, Vietnam, Ethiopia, Nigeria or even Mexico for that matter. Plenty of people in the world to take advantage of - Happy Investing!

 

[RalfTheDog]

...

No, they can't.
...


Yeah, because the population of people who can afford $100 per share of AAPL and can't afford $400 per share of AAPL will create so much demand on the exchanges that the stock will skyrocket? I didn't think so. Stock splits, at best, unlock some marginal liquidity. That's it.

At 400 per share that is $40,000 for a minimum 100 share investment. That is steep for many investors. At 100, You only pay $10,000 that is the minimum investment for a CD at most banks. Trust me there are many people who wish they could scrape together enough for 100 shares. Many of them are on this board.

 

[3onpar5]

I thought it would be kind of cool to give every employee a $5000 bonus as a thank you. I think I read they have 60,000 employees. That's 300 million. I think that would be a great use of a very small amount of the built up cash

 

[the8thark]

With Apple closing in on $100B, they could have a significant impact on the national debt

100 Billion is just a drop in the ocean when compared to the US 14 Trillion debt.

 

[Macs4u]

Oh, you know, because businesses are supposed to make money, and as soon as investors see that Apple's primary goal isn't to maximize returns everyone sells their stock and people's retirement accounts/pensions/mutual funds lose all their value and you've just ruined a lot of people's nest eggs.



Ummm, why? You can "like it" all you want, but what's the correct decision financially?



What if you're not going to use the cash? Splitting the stock would do nothing.



No, they can't.



Yeah, because the population of people who can afford $100 per share of AAPL and can't afford $400 per share of AAPL will create so much demand on the exchanges that the stock will skyrocket? I didn't think so. Stock splits, at best, unlock some marginal liquidity. That's it.

Making money is fine but if they can store 100 billion in cash tells me that their margins are wrong. If apple lowered their base imac for instance from £1000 to say £850 , they arent going to suddenly be broke!

If over the time from going from $0 stashed cash to $100 billion, they had reduced the macs by £150 each , they would still be close to the $100 billion stash now as more people could afford them.

I personally know of a couple who adore their iphone, adore their apple tv yet cant afford to purchase a mac so have to stick with windows. Its these people that apple need to attract!

 

[henrystar]

My father was telling me that his investment advisor has been getting on him for a few years because Apple makes up more than 5% of his portfolio and he should diversify.

His response? "Well, it started lower than 5%, and now that it's successful you want me to sell it? NO!"

I bet he's not the only person to have that discussion.

You should hear my wife! Her investment philosophy is that if an investment goes down, you should keep it until it goes up. If it goes up, you should sell it. She's been trying to get me to sell my AAPL for years. Fortunately, I am made of iron.

 

[Smigit]

If over the time from going from $0 stashed cash to $100 billion, they had reduced the macs by £150 each , they would still be close to the $100 billion stash now as more people could afford them.

Can you actually prove this? People like to say that lowering the cost won't have an impact on revenue and profits because demand increases, but that implies you know more about Apple's own financial forecasting than they do themselves.

As people (and articles) have already mentioned, Apple is struggling to meet demand for many of its products. There is no need to reduce costs to create demand and in many cases, there is no current capacity to sell more than they are already without pushing sales into back orders. I realise you mentioned the iMac and not the iPhone or whatever, but you still have to assume Apple has a fairly good idea about what their prices mean in terms of demand.

 

[frukoa]

they should invest the cash in building the deathstar

 

[Thunderhawks]

Seriously? - "people willing work for Apple for that wage" are you aware of the current global financial crisis? Jobs are not so prevalent that people can pick and chose...

You seriously believe your money for investing is more "hard-earned" than a retail employee earning squat per hour? I'm sure Mr Joe $12/hr has plenty of money for investing... Generally the majority of the time, the more money you make the easier your job is, ask your office janitor.

But hey, if your principals allow for investing in companies that treat their workers immorally, I'm sure I could find some hot tips in China, India, Cambodia, Vietnam, Ethiopia, Nigeria or even Mexico for that matter. Plenty of people in the world to take advantage of - Happy Investing!

While I have compassion for people who work for lower wages or have to take a job due to no other opportunities (wondering what people consider opportunities), your comment is missing the core of all problems.

Education!

People who are well educated just have better opportunities to get better (as in better paid) jobs.

One great example is Ireland, which many years ago did not have much to offer to export etc. They realized a major change had to be made and started to put as many resources as possible into education.
After generating a lot of highly educated skillful people they attracted a lot of foreign corporations = jobs.

You must also admit that some people are just not smart for whatever reason and in addition there are just not enough jobs for everybody in this overpopulated world.

Why is all of this Apple's problem? Just because they have money?

There was a time when nobody cared about what they were doing or whether they would go broke or not.

It is astonishing how many people line up to distribute other people's money, citing morals, having to give back, should be more charitable etc.etc.

All of that without the slightest idea how to run a business like Apple's.

$ 12 per hour is also misleading if other benefits are not mentioned, like health insurance etc., which much of the country doesn't even have.

It is a free country and to always claim that one MUST work for $ 12 (or whatever amount) because there is nothing else is just an excuse.

There are people who do not want to work, are too lazy to get better education, not willing to move where the jobs are or plain refuse to keep starting at the bottom time and time again and work their way up (i.e. more $$$) via excellent performance and hustle.

Yes, it is hard, but then again where is that any corporations problem?

The discussion about all the problems is endless!

Why begrudge Apple's profits? They earned them with brilliant products and nobody will stand in line to pay them anything when they release a dud!

But, it is just easier to complain and blame others for ones own fate.

 

[PinkyMacGodess]

Buy a Country?
iSland

If Apple bought a country, they could move their production there, put chain link all around it, and employ Oompa Loompa's to build the stuff. Two problems solved: 1) Security - It's their island. They can patrol it as they see fit. 2) A destitute workforce forced to work for peanuts or risk swimming the oceans to get away.

I wonder if anyone at Apple has suggested this... Given how OC they are about security, I'd wager that it has come up, if only in jest...

 

[pimentoLoaf]

A split means nothing. It doesn't change the company's market cap, the percentage of the company that you own, your cost basis, etc. It's only the perceived cost of the stock. Just ask GOOG or BRK-A.

A 10:1 split today followed by a gain to $200 is the exact same as the stock going to $1578 without a split. Which... Isn't. Going. To. Happen. At least not for a loooong while.

Which is why dropping it to $50 will allow it to go up to $200 fairly quickly, say... within two to three years. Apple to $1578 might take forever if not ever due to the seeming impossible buy-in of the currently increasing cost.

 

[thekev]

They've earned it in foreign territories and the U.S. won't allow them to spend and invest it here without taking a piece of it. Yeah, Apple's the evil one in this situation...

You are actually just posting garbage here. I'm not getting into the fairness issue or comparisons on corporate tax rates. Corporations (not just Apple) do push domestic income offshore to avoid taxation for one thing. The other thing being that many investments can offset current tax liability. Allowing a tax holiday does absolutely nothing to encourage domestic investment (look up the last one). This idiotic concept of yours has been debunked plenty of times already.

 

[Avatar74]

My father was telling me that his investment advisor has been getting on him for a few years because Apple makes up more than 5% of his portfolio and he should diversify.

His response? "Well, it started lower than 5%, and now that it's successful you want me to sell it? NO!"

I bet he's not the only person to have that discussion.

Your father's investment advisor is right. I purchased Apple when the market underpriced them and sold recently. There are a number of currently underpriced securities if you know where to look. Winning in the investment game isn't about taking big risks and finding a slam dunk. It's about knowing how to insulate yourself from potentially catastrophic loss... the returns will compound over time if you protect your principal.

"Be greedy when others are fearful and fearful when others are greedy."
- Warren Buffett

"An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative."
- Benjamin Graham

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Which is why dropping it to $50 will allow it to go up to $200 fairly quickly, say... within two to three years. Apple to $1578 might take forever if not ever due to the seeming impossible buy-in of the currently increasing cost.

Splits are designed to attract more speculators (read: idiots) to an otherwise mediocre company in order to artificially inflate its market price. A company that consistently outperforms should never need a split, because investors and scarcity will fuel increases in the stock price. There's no perceived benefit for Apple's long term operations since splits are strictly a market activity and do not change the amount of equity or paid-in-capital the company's operations have access to.

Stocks that experience splits often achieve unrealistic premiums relative to their tangible book value. Apple is already overpriced (watch, here we go with the layman daytraders lining up to lecture me on business valuation)... A split is the exact opposite of what they should be doing.

A shrewd investor wants to stay as far away from psychotic speculators as possible. They turn everything into an irrational rollercoaster ride.

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You should hear my wife! Her investment philosophy is that if an investment goes down, you should keep it until it goes up. If it goes up, you should sell it. She's been trying to get me to sell my AAPL for years. Fortunately, I am made of iron.

Your wife is right, partly. First, purchase a stock that's underpriced relative to its intrinsic value. If it does happen to dip but operations are still solid, buy more. Once the market overprices it, dump it. Rinse, repeat with a different company... of which there is no shortage.

If I kept the Apple stock I recently sold, I wouldn't have moved it to a company that has so far netted me double Apple's one year returns. So there you are.

 

[TallManNY]

Splits can drive the value of a stock through the roof. Many people who don't have much money want to own a few hundred shares of Apple today. Because of it's price, they can't buy in. By splitting the shares, they let a larger population buy the stock. The more people who can buy, the more demand. The more demand, the better the total valuation. This can also help with product sales as, people are more likely to purchase a product, if they own stock in the company.

This theory is outdated. It is based on the assumption that the poor or middle class who may not have much money are numerous enough to make a difference with their demand for a stock. That just is not the case anymore. The people for which a $470 investment is difficult in a material way in which a $50 investment would not be are too poor in comparison to the rich and the hedge funds to create meaningful demand even if these investing poor are numerous. Stocks move based on people and companies who make million dollar investments. When 40% of the nations wealth is in the hands of the 1%, it doesn't matter what the bottom 40% wants to or can invest in, they are meaningless as far as the market is concerned.

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[/COLOR]

As a shareholder: Apple is NOT sitting on it. They've been investing a large portion of it in to the supply chain, giving loans to manufacturers for preferential treatment, etc. They leverage it well.

No, that is not true. This cash is largely invested in U.S. Treasuries and other highly rated investments. Apple is earning about 2% on this money. Now Apple does make significant investments in its supply chain like you point out. However, even the largest investments that we hear about (like the $3 billion to buy up a lot of panels last year for the iPad), these investments are made out of just a few weeks of cash flow, maybe a month or two for the biggest expenses. At the end of EVERY quarter, every dollar that was sitting in non-productive liquid investments is either still sitting there or has been replaced with a new dollar sitting there. Also those dollars have been joined by new dollars and the pile grows. You can only argue that Apple has used the cash reserve dollars when they actually decrease their cash reserves at the end of a quarter. That has not happened in years.
Every investment in Apple stock, basically buys you $300 of Apple and $150 of U.S. Treasuries and other lame investments that probably don't return more than the rate of inflation.

 

[IJ Reilly]

At 400 per share that is $40,000 for a minimum 100 share investment. That is steep for many investors. At 100, You only pay $10,000 that is the minimum investment for a CD at most banks. Trust me there are many people who wish they could scrape together enough for 100 shares. Many of them are on this board.

There's no such thing as a "minimum" investment in a stock. Not even one share is a minimum since it's even possible to buy fractional shares. In the old days (very old days now), buys and sells in non-100 multiples were considered "odd lots" and cost more in commissions to trade. No longer. So consider how much money you are investing, not how many shares you are buying. The former is the only thing that matters. But the real message is, anyone who finds these concepts to be confusing or brand new to them should really not be buying individual stocks. Go for an index fund instead.

 

[GfPQqmcRKUvP]

Seriously? - "people willing work for Apple for that wage" are you aware of the current global financial crisis? Jobs are not so prevalent that people can pick and chose...

You seriously believe your money for investing is more "hard-earned" than a retail employee earning squat per hour?

Well, considering my professional qualifications are far higher than a retail store employee, yes. Still though, that's not the point and not even close to what I was implying in my post. The point is that people invest in companies that are trying to maximize returns. If the company isn't trying to do that (you know, by paying their people triple the market rate), they are wasting the money that is invested. This is a public company and their ultimate value lies in their free cash flow. You're proposing limiting that cash flow, the only aspect of a company that is worth anything for an investor, to pay retail employees triple the market rate. I think that's ridiculous.

You are actually just posting garbage here.

Then by all means, explain how I'm wrong. This sentence is unnecessary. Do you disagree with all my posts or just the one I quoted? Why can't you just make your point on how I'm wrong and leave it at that? Easy to act like a jerk behind a computer...

Allowing a tax holiday does absolutely nothing to encourage domestic investment (look up the last one). This idiotic concept of yours has been debunked plenty of times already.

Back up your claims, then. If you want to sit there and argue that allowing money to flow back into the United States is somehow not a positive for the economy, go ahead. It's true that Apple has sufficient cash for their operations in the U.S., I just don't think it can hurt to bring the balance to the U.S, especially since most repatriated earnings result in distributions to equity holders. Just make your point and move on. We can all do without the hostility. Be civil.

 

[ThunderSkunk]

They should do things no one else can.

Everyone can close their eyes for a second and imagine how fledgeling technologies today will revolutionize our world in the future. The reason innovation is so slow is because there's precious little capital with technological vision behind it, to take all the people scattered across the world doing odd little fragments (& a lot of redundant work) of the big picture, and put them on the same team, give them the equipment they need, and produce marketable products. There are industries that will thrive once they cross the threshold. Apple has the resources and vision to elevate future technologies from government & university funding, & by carrying them over the threshold, take all.

Robotics
Biological Interfaces
Intelligent prosthetics
Etc etc etc.

All hardware & software.

Hire a new team to develop the next generation OS. Not the usual clunky separated components of file system, OS, and applications, with the user navigating around manually between them, but a content-aware OS with invisible program modules, like extensions, & the OS operates them on your behalf based upon what you're trying to achieve. Install it in the home, but have it extend out through your mobile devices...

Buy a facility and set up an automated assembly line & eliminate the bad PR that comes with Foxconn.

I can think of plenty of things to do with 100 billion dollars.

 

[TallManNY]

At 400 per share that is $40,000 for a minimum 100 share investment. That is steep for many investors. At 100, You only pay $10,000 that is the minimum investment for a CD at most banks. Trust me there are many people who wish they could scrape together enough for 100 shares. Many of them are on this board.

There is no reason why investments need to be done in 100 share blocks. Why in the world would someone think that is how they have to do investments? You can go online with your broker and buy 1 share of Apple. That is about $470 and it will cost you about $15 in transaction costs. Some people would probably like to trickle in a little lower than that, like buy a $50 or $100 share every month because that is what they have to invest. But those people control such little capital that they are meaningless in creating demand for a stock where billions of dollars worth of shares trade every day.

 

[snberk103]

Your father's investment advisor is right. I purchased Apple when the market underpriced them ....

"Be greedy when others are fearful and fearful when others are greedy."
- Warren Buffett

"An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative."
- Benjamin Graham
...

I've heard this version.... " Buy on bad news, sell on good news. " Too much good news coming from Apple for my tastes.

Of course I'm also the one who bought Nortel at the $5 share recently.... I mean... how much more bad news could there be? Between that episode and others I've concluded that I should let the professionals manage my portfolio... that has actually worked out for me.