He looks a lot like Count Dooku.The Dark Side is with him.
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Any buyback will just cause a spike in the stock price and will harm Apple in the long run.
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Highlights from Apple's Preliminary Proxy Statement, 2014 Shareholders Meeting Proposals
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Ichan's not THAT greedy
If you guys have been following this story, you would know that part of his deal for the buy back would be to exclude all of his shares from the increase in stock price. He would have nothing to gain by selling after the buyback.
I think APPL is undervalued - in Sept 2012 it reached $700 but recently it's been hovering in the 500s for a long time. Jim Cramer had a point in his recent article that APPL stock is hated because it's not moving - the rest of the market could go up or down and APPL is still doing about the same thing. (http://money.msn.com/top-stocks/post--apple-is-hated) This has been the case even after APPL released new products like the iphone5s/c, mac pro, etc - which makes APPL look stale.
By doing a buyback it will show that APPL is indeed growing and attract new investors. Currently APPL is a flat stock and few investors are going to invest in that. Unless of course they see (or predict) some real growth!
If you guys have been following this story, you would know that part of his deal for the buy back would be to exclude all of his shares from the increase in stock price. He would have nothing to gain by selling after the buyback.
I think APPL is undervalued - in Sept 2012 it reached $700 but recently it's been hovering in the 500s for a long time. Jim Cramer had a point in his recent article that APPL stock is hated because it's not moving - the rest of the market could go up or down and APPL is still doing about the same thing. (http://money.msn.com/top-stocks/post--apple-is-hated) This has been the case even after APPL released new products like the iphone5s/c, mac pro, etc - which makes APPL look stale.
By doing a buyback it will show that APPL is indeed growing and attract new investors. Currently APPL is a flat stock and few investors are going to invest in that. Unless of course they see (or predict) some real growth!
Buy backs historically just cause a spike in the stock price and leaves a company weaker in the long run. It's great for those investors who want to pump and dump. The only long term solution to raise the stock price is innovation and beating the market's expectations.
The reason why APPL has so much money to do a buy back is because they have huge profits but are not letting it reflect in their stock price (giving money back to the investors). They're saving the money for other types of investments...but no matter how much they innovate if they don't let their stock price increase, then they wont be able to attract new investors. We've seen this happen with the iphone 5s, Mac pro etc - barely any change in stock price. Investors expect to make money through growth of stock price - right now APPL is applying the growth elsewhere and share holders as well as customers are getting impatient.
Ah, not.
The $50b just happens to be the amount of free cash Apple can be expected to generate in one year, and buybacks don't happen all at once. Typically they occur over a period of years. So Apple could implement Icahn's proposal without breaking a sweat. I bet they announce something similar in January. Just you wait.
How Apple holding a mere $150b in cash puts them in a "vulnerable position" is something you will have to explain. I promise to listen attentively just as soon as I stop laughing.
As for wanting to keep "Wall Street out of the Silicon Valley," you might as well try to keep Catholics out of churches.
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Why would Phillips be a good acquisition for Apple? Assuming you can justify this, then explain how a $50b buyback would prevent it.
How does a buyback positively affect the customers (answer - It doesn't) ?
As far as shareholders, they were aware of how Apple operates. If you don't like how the company stock is managed, sell and buy something more to your liking.
If you can't sell because you would take a big lose, a buyback would be good for you since the price of the stock would spike and you could dump your Apple stock. As soon as everyone dumps their Apple stock, the price goes back down (i.e. spike).
Not weaker, just more conventional. Steve could never explain why Apple was continually stockpiling more and more cash. This was never a sign of strength, but in fact can be read as just the opposite, and was increasingly being read that way.
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Fundamentally wrong. Fewer shares increases a stock's EPS. This does not produce a "spike" but a higher share price going forward on a permanent basis, other variables being equal.
Funny (in a sad sort of way), but just this morning I read an article about how the vast majority of Americans are financially illiterate, and how this is leading most to being totally unprepared for retirement. Each and every thread on financial matters reminds me how true this is.
I believe the buy back would happen over the course of a year and could continue for years. That would not cause a spike but higher share prices that reflect the income of the company.
I think the title of your post says it all... I Just Don't Understand
You are 100% correct.
In this thread: People who have no basic grasp of finance making absurd assertions about Apple's optimal capital structure.
Then there should also be a law that takes away the majority of your wealth and leaves you with only $100 for you to live on for the rest of your life... I mean as long as we are making up totally random "laws" based only on schadenfreude.
Most of the posts here are incredible juvenile - focusing on his picture. Beavis & Butthead is that you?
While I agree with Apple management & will vote against ALL activist shareholder proposals AAPL has underperformed the current bull market - still below its all time high when many others have surpassed (see Google or Amgen). I don't think Icahn is being too unreasonable putting Apple mgmts feet to the fire. But Cook is the CEO. He knows better than Icahn what $ will be needed for the next few years for buyouts & R&D.
Ultimately good product will push AAPL through the current ceiling. Cook is on a short leash here I think. This must be his and Apple's year or Icahn won't be the only mega investor nipping at Apple's heels. The last thing Apple needs right now is a proxy fight.
Icahn is not an idiot; quite the opposite. He is very clever. But what he suggests is aimed at benefitting Icahn, and not Apple. His plan is to invest $2bn in Apple and walk away with $3bn, with Apple paying the difference. That's of course not in the interest of all the other shareholders.
Where did you get that information from? Sorry, but that sounds false to me. All shares usually increase in value after a buyback, and all shares have the same value. You can't just "exclude" your shares from that.
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Right now AAPL trades at $560 per share. That's what shares are bought and sold at. We don't know what the value of the company is.
If Apple used $56bn to buy back 100 million shares, the company would have $56 less money and therefore would be worth $56 bn less (worse if having $56 less would stop it from executing plans that make money or if laying their hands on $56 bn has tax disadvantages). On the other hand, every share is now a bigger portion of the company. If the value of the company was exactly $560 per share, both effects would even themselves out, and a share would again be worth $560. If the value of the company was more / less, then Apple would have paid less / more than the shares were worth, so the remaining shares would now be worth more / less. But since the market _assumes_ AAPL is worth $560, it should logically assume AAPL is worth $560 after the buyback.
That's the theory. In practice, a 100 million share buyback would in the short term reduce the number of shares that people are willing to sell, and therefore increase the price. Long term, the price should drop again.
I know you're probably not serious, but if that happens, I'm leaving the country. Even Cyprus is better than that.
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Depends what you mean by "value". Typically it goes by the number of shares times the share price for a public company (since that's what you'd have to pay to buy the whole company), not the total assets.
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Why is that good for AAPL long-term? Buybacks are for when the company is undervalued. It was undervalued when it was at $390, but now, I don't really think so.
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If by "Wall Street" you mean the investors, Tim Cook and all the other executives are from Wall Street.
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I would want Apple to invest more in iCloud. It's too wimpy. If the retail staff wants to benefit from Apple's success, they can buy shares like the rest of us.
This photo reminds me of one of those reconstructions of a 10,000 year old man based on a skull they found. He doesn't look real at all.
now I am not a finance savy guy. But it was explained to me that Apple holding on to so much capital makes it somehow unattractive to take over attempts. If this is the case I am glad Apple maintains this capital even if it means they pay taxes (oh horrors...taxes).
I've seen many great companies laid low by takeovers or even just by defending against takeover attempts.
Personally I think this is one of the ways in which modern neo-liberal (doesn't mean what you think, look it up) capitalism has wandered off course. We look at companies now just as balance sheets, and the only actions we want those companies to undertake are those that improve the parts of the balance sheets that impact us favorably short term. Used to be, people bought stock in companies for the dividends, or for the long term stability and growth of the company.
Now it's just about speculative trading.
I remember at my old job where everyone was a Mac fan, the engineers would gush about Apples market cap reaching new heights.
Yeah, so? I just want new models and faster speeds.
Market cap does *%$& all for that.
I'd love to see a chart plotting Apple patents, device market share and market cap.
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I've seen many great companies laid low by takeovers or even just by defending against takeover attempts.
Personally I think this is one of the ways in which modern neo-liberal (doesn't mean what you think, look it up) capitalism has wandered off course. We look at companies now just as balance sheets, and the only actions we want those companies to undertake are those that improve the parts of the balance sheets that impact us favorably short term. Used to be, people bought stock in companies for the dividends, or for the long term stability and growth of the company.
Now it's just about speculative trading.
I remember at my old job where everyone was a Mac fan, the engineers would gush about Apples market cap reaching new heights.
Yeah, so? I just want new models and faster speeds.
Market cap does *%$& all for that.
I'd love to see a chart plotting Apple patents, device market share and market cap.
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at current share prices and current retail wages it would take most people a couple months to afford one share. And then they might or might not get a dividend. When I worked retail, investing in stocks was not on my mind, paying the rent was.
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True but it's hard to take over the biggest company in the world, the cash is particularly nice as a backup for touch times, cheaper components, buying company's and installing specialized machinery when needed. Everything between 50 and 100 billion is worth having, the rest is balast.
Look a lot like this guy
http://i317.photobucket.com/albums/mm374/mauther/paper toy 2/alfmad89.jpg
Looks a lot like this guy
http://i317.photobucket.com/albums/mm374/mauther/paper toy 2/alfmad89.jpg
Looks a lot like this guy
No, no, no, and no. Apple's "value" at any given moment is precisely known, assuming you are speaking of market cap. Cash and other corporate assets are not, repeat not, part of a company's market cap. The effects of buybacks do not "even themselves out." They benefit all shareholders, large and small in equal proportion to their holdings. The reason is not "supply and demand," it is the due to the concentration of earnings on fewer shares. The effect is not temporary, at least insofar as the company does not issue new shares and create the opposite effect (dilution).
What you are espousing here is not a theory, it is complete and total misinformation.
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Yeah, but Carl Icahn is ugly and his mother dresses him funny. Enough said, right?