Granted, Gateway's only got about $400 million on hand, but Dell has over $5 billion in the bank - hardly a number that would have them going to the banks if they wanted to initiate a large purchase...
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Apple Stock Split Coming?
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Granted, Gateway's only got about $400 million on hand, but Dell has over $5 billion in the bank - hardly a number that would have them going to the banks if they wanted to initiate a large purchase...
Buybacks reduce the number of shares outstanding, which increases the equity shared by stockholders. I would not expect Apple to start any buyback programs now, though -- they are more often instituted to support low and falling share prices. Apple was buying back quite a lot of their equity a few years ago. It helped stabilize the share price.
Dividends would be a good thing from an investor point of view. They allow a stockholder to derive some income from holding a stock, without having to sell it. This tends to smooth out some of the bumps and reduces volatility. Apple should be doing something with their huge cash hoard. If they aren't using it to invest in other companies and/or technologies, some of it should be given back to the stockholders. Just bagging it and sitting on it is not very responsible. The way they manage their cash is one of the things I like the least about Apple's management.
It's clear that you don't know what the word "value" means. Price is what you pay for something, and value is what you get. What you mean to say is that the price of Apple goes down during a buyback, but this isn't true either. Unless the shareprice is trading at a premium to intrinsic value, in which case a buyback should reduce shareholder equity, and would lower the stock price in some fantasy world where the market acts intelligently.
Do you think that Apple opens up their giant wallet and takes out a big wad when they make a $1B flash memory purchase? Purchases like that are not made with cash reserves. They are financed for YEARS regardless of how much money the purchaser has in the bank.
How bid a pile of cash do you think would be appropriate? 10B? 20B? The GDP of a small Western European nation? People act like stockholders are greedy by wanting a piece of that pile, but we are the ones who put our money where our mouths are. You can all rah rah Apple all you like from the sidelines, but until you have a real financial stake in the company, your opinion on what Apple should do with that cash are meaningless.
What the heck are you talking about almost every single one of your posts has been incorrect and misinformed. Thank goodness Wildcowboy was there responding earlier. You have posted to many things for me to respond to, but the recent ones kind of take the prize.
Your above 1000 to 500 analogy is way off. As wildcowboy noted, it does not matter in pure economic terms because the return is predicated upon your cost, the number of shares you own and then anything above your purchase price. You are simply not making more money because of a stock split.
Now, you leverage comment has to be the funniest I have seen in a while. what leverage are you suggesting? It sounds like you are saying that your suddenly owning 1000 shares v. 500 is going to allow you into the board room and throw some muscle around. Let me know how that goes, I will post your bail I promise.
I think what you mean to be saying is that the lower price point allows investors to diversify more readily. lets take this example: lets say apple is at $100 and you have $1000 to invest. But, you also really like google, which is for example purposes at $450.50. You buy 2 shares of google, which is $901 and you now want to buy 1 Apple share, you can't because you don't have enough money so you are limited to just your google purchase. But, if there is a stock split and Apple is at $50, you could buy at least 1 share and when you scrounge up that extra $1, your second share of Apple. Because of split the price point is lower and more non-accreddited investors and purchase the stock and diversify their portfolio. Hope that clears things up a little.
Apple's Cash
Actually, Apple has about $12 billion in cash sitting in the bank.
Regarding the recent flash memory purchase, it was not financed: it was paid for with cash using their "giant wallet" as one person called it. Apple Inc. has zero debt. BTW, I am an Apple shareholder and not some neophyte wannabe stock holder.
Actually, Apple has about $12 billion in cash sitting in the bank.
Regarding the recent flash memory purchase, it was not financed: it was paid for with cash using their "giant wallet" as one person called it. Apple Inc. has zero debt. BTW, I am an Apple shareholder and not some neophyte wannabe stock holder.
So why not split 100000000000 to 1?
However, if the same amount of money will now buy you twice as many shares, you will earn twice as much profit as the stock rises. This makes a GREAT incentive for a company to split a stock, making it a much more attractive investment by giving more leverage to stockholders.
True, but not all of us can afford to purchase a large enough quantity of Google stocks to make a decent profit. At $46 per share, more small investors can afford to buy a larger portion of shares, which does equate to more leverage.
Most importantly, the percentage of Apple you own is the
same, whether Apple does 2 for 1, 1 for 1000, or 9 for 2 split.
same, whether Apple does 2 for 1, 1 for 1000, or 9 for 2 split.
Split
It's true you will earn twice as much if the stock rises after a split, BUT remember, there are now twice as many shares out there: the same dollar invesment will only move a stock half the amount after a split as it would have before the split. People will not spend twice as much money on a stock post-split as they would have pre-split simply for the joy of watching the stock rise that much faster. Splits truly are dollar neutral.
What this illustrates is the importance of a stock's percentage rise (or decline) rather than simply the number of points a stock moves. A higher-priced stock will move more on a point basis than a lower priced stock, but a similar percentage. If Apple rises three points, it's gone up about 3%, which is not that uncommon. For a stock like SIRI, which is at roughly 3, to go up three points would mean a 100% increase -- almost impossible unless it is being bought out at a phenomenal price. Yes, you can buy fewer shares of a higher-priced stock, but that stock will move in greater increments than if you spend your money buying tons of shares of a much lower-priced stock.
Further, each stock has it's own personality. Apple generally moves well because, in my opinion, it is both a financially-solid, well-established company, as well as an exciting technical innovator and marketer. Few companies combine these attributes as brilliantly and seamlessly as Apple. Microsoft is financially solid but is certainly no innovator (many would say they stifle innovation). On the other hand, there are many exciting tech companies with exciting products and stories whose finances are abysmal.
Anyway, that's my view of the potential split. Despite being a shareholder, wether they split or not, it makes no difference to me.
It's true you will earn twice as much if the stock rises after a split, BUT remember, there are now twice as many shares out there: the same dollar invesment will only move a stock half the amount after a split as it would have before the split. People will not spend twice as much money on a stock post-split as they would have pre-split simply for the joy of watching the stock rise that much faster. Splits truly are dollar neutral.
What this illustrates is the importance of a stock's percentage rise (or decline) rather than simply the number of points a stock moves. A higher-priced stock will move more on a point basis than a lower priced stock, but a similar percentage. If Apple rises three points, it's gone up about 3%, which is not that uncommon. For a stock like SIRI, which is at roughly 3, to go up three points would mean a 100% increase -- almost impossible unless it is being bought out at a phenomenal price. Yes, you can buy fewer shares of a higher-priced stock, but that stock will move in greater increments than if you spend your money buying tons of shares of a much lower-priced stock.
Further, each stock has it's own personality. Apple generally moves well because, in my opinion, it is both a financially-solid, well-established company, as well as an exciting technical innovator and marketer. Few companies combine these attributes as brilliantly and seamlessly as Apple. Microsoft is financially solid but is certainly no innovator (many would say they stifle innovation). On the other hand, there are many exciting tech companies with exciting products and stories whose finances are abysmal.
Anyway, that's my view of the potential split. Despite being a shareholder, wether they split or not, it makes no difference to me.
I just have to put my 2 cents in.
People on both sides of the split argument are correct.
Yes, an investor's share of a company is the same before and after the split. The price goes down, but you have more shares. The overall net gain is zero.
Yes, the price of a stock after a split can increase at a faster rate than prior to the split, but not because of any financial reasons. It's all about psychology. When a stock is priced lower, the perceived value is greater. Therefore, you have more investors willing to buy, thus driving the price up.
So DMann is correct and the others are correct.
One last point. One poster asked "So why not split 100000000000 to 1?" The reason is that if the stock is priced too low, investor pyschology will deem that company to be "value less". Also, if a stock falls under $2/share, it will get de-listed from the NYSE (not sure what the low limit is for the NASDAQ).
People on both sides of the split argument are correct.
Yes, an investor's share of a company is the same before and after the split. The price goes down, but you have more shares. The overall net gain is zero.
Yes, the price of a stock after a split can increase at a faster rate than prior to the split, but not because of any financial reasons. It's all about psychology. When a stock is priced lower, the perceived value is greater. Therefore, you have more investors willing to buy, thus driving the price up.
So DMann is correct and the others are correct.
One last point. One poster asked "So why not split 100000000000 to 1?" The reason is that if the stock is priced too low, investor pyschology will deem that company to be "value less". Also, if a stock falls under $2/share, it will get de-listed from the NYSE (not sure what the low limit is for the NASDAQ).
The psychology of stock splits can work both ways. Some smaller investors, finding more shares in their portfolios, take the opportunity to round off their holdings downwards. Having been through many stock splits (including two with AAPL), I've seen several of them followed by sell-offs. Predicting the psychology of the markets is an impossibility. The best advice for non-professional investors is to ignore essentially meaningless activities like stock splits and focus on the long-term, meaningful events, like products and profits.
Sorry if this was posted before, but for those who don't understand stock splits, he total price of all shares stays the same, but the price & # of shares change proportionally to each other. Simple equation:
So if it's a 2:1 stock split, # gets multiplied by 2 and $ gets multiplied by 1/2. The # of stocks get multiplied by the kind of stock split (in this case, 2/1) and the price gets multiplied by the reciprocal (this case 1/2). In this example, if you have 1 stock worth $40 before the split, after, you'll have 2 stocks worth $20 each. So you'll still have a total of $40 worth of stocks.
I forget what it's called, but stocks can go the other way; sometimes companies merge stocks to boost their value. In a similar example above, if you have 2 stocks at $20 before, you'll have 1 stock worth $40 after.
A 2:1 split isn't the only kind of split. It can be pretty much any number of stocks after : any # before the split. So you can have (but not limited to):
3:2
5:2
5:3
1:3
3:4
54564376587 : 75746574574
Whatever. The only kind of split you can't have are a 1:1 split, since that doesn't do anything at all.
So if it's a 2:1 stock split, # gets multiplied by 2 and $ gets multiplied by 1/2. The # of stocks get multiplied by the kind of stock split (in this case, 2/1) and the price gets multiplied by the reciprocal (this case 1/2). In this example, if you have 1 stock worth $40 before the split, after, you'll have 2 stocks worth $20 each. So you'll still have a total of $40 worth of stocks.
I forget what it's called, but stocks can go the other way; sometimes companies merge stocks to boost their value. In a similar example above, if you have 2 stocks at $20 before, you'll have 1 stock worth $40 after.
A 2:1 split isn't the only kind of split. It can be pretty much any number of stocks after : any # before the split. So you can have (but not limited to):
3:2
5:2
5:3
1:3
3:4
54564376587 : 75746574574
Whatever. The only kind of split you can't have are a 1:1 split, since that doesn't do anything at all.
Because Apple's stock value would be divided by 100000000000, to less that $0.01 a stock.
Why not get a roll of 20 $1 coins. That way you're really a rebel and there's the self defense bonus.
I was in on that last split in '05. I was stupid though and sold before the price ratcheted back up again, so I didn't really benefit from it. If it splits I would consider buying back in.
( of course I bought it when the stock was $12 so I didn't really do too bad...)
( of course I bought it when the stock was $12 so I didn't really do too bad...)
There is also the earnings per share to consider as well as the share price
Earnings per share are also proportionally adjusted for splits.
The interesting thing is that Apple, Inc stock is widely traded already. Typically only very high value shares will benefit from stock splits ($1000's rather than $100's). Google seems to be quite comfortable with the very expensive stock and I guess Apple would be happy to be simply increasing the stock price.
That would be....
You do get stock buybacks that have the same effect, reducing the number of outstanding shares (and so reducing the amount the company "owes" to the investors) which will increase the share price.
There is an argument however that instead of buy-backs companies should invest the money in other opportunities while maintaining the same risk profile.
You do get stock buybacks that have the same effect, reducing the number of outstanding shares (and so reducing the amount the company "owes" to the investors) which will increase the share price.
There is an argument however that instead of buy-backs companies should invest the money in other opportunities while maintaining the same risk profile.
Reverse Split
This is known as a reverse split, done to boost the per-share price of a stock and usually done to avoid being de-listed from the exchange.
Hopefully you've sold the stock before this happens..
This is known as a reverse split, done to boost the per-share price of a stock and usually done to avoid being de-listed from the exchange.
Hopefully you've sold the stock before this happens..
What does all of this discussion on stock splits lead to? I can purchase 1 share at $90 or two (post 2:1 split) for $45 each - so what?
Anybody - and I mean anybody - holding out so they can afford a single share @ $45 as opposed to not affording one @ $90 is hardy a significant investor. In that case someone is "choking" on the $45 difference and neither Apple nor any other public company is going to split based on those levels.
I am not getting the "so what" to all of this.
Anybody - and I mean anybody - holding out so they can afford a single share @ $45 as opposed to not affording one @ $90 is hardy a significant investor. In that case someone is "choking" on the $45 difference and neither Apple nor any other public company is going to split based on those levels.
I am not getting the "so what" to all of this.
Why would anyone think Apple would be interested in a buy back? That seems really out of line.
Right now Apple stock is in a warm place and hasn't touched $99 in a long time like it did back in Q1 '05. Until this iPhone thing gets off the ground, I would not expect a split. Maybe Q3 '07 if the stock starts to get comfy at $97 or higher.
As an Apple stock holder, I've noticed that analysts love to play with Apple's stock price. Its a high risk stock because of wonderful people like Shaw Wu and the gang. I don't see Apple ever moving to a dividend stock It would lessen the likely hood of big percentage increases and the fun for analysts would be over.
I'd love to see a split, but I don't see it soon. Looking at the tax forms from yesterday, I'd say Apple was the best investment (bought in Q3 '04).
Right now Apple stock is in a warm place and hasn't touched $99 in a long time like it did back in Q1 '05. Until this iPhone thing gets off the ground, I would not expect a split. Maybe Q3 '07 if the stock starts to get comfy at $97 or higher.
As an Apple stock holder, I've noticed that analysts love to play with Apple's stock price. Its a high risk stock because of wonderful people like Shaw Wu and the gang. I don't see Apple ever moving to a dividend stock It would lessen the likely hood of big percentage increases and the fun for analysts would be over.
I'd love to see a split, but I don't see it soon. Looking at the tax forms from yesterday, I'd say Apple was the best investment (bought in Q3 '04).
Back in 2005 when the stock split from $90 to $45, it hit some bad times within the following weeks, but it didn't take many months to double up again.
Doubling profits.... You would never see Apple stock go to $180, so splitting it is a way to get the stock to go up again, or that's how one could see it from the outside.