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If I intend to stay invested in the company, and am willing to DRIP the dividends, then, absolutely.

If I wanted out, I could just sell. If I wanted income, I could sell pieces. The upside of a dividend versus selling for income would be if a lot of people were taking dividends instead of selling, it would tend to keep the share price higher.

At this point, I'm not looking for income, I'm looking for an investment.

http://www.wisestockbuyer.com/2012/11/dividends-vs-stock-repurchases/

There's a time and a place for each of them. As I feel that AAPL is undervalued, I think a buyback would be a good idea.

No matter what your personal objectives might be, it is still peculiar to say that you prefer theoretical gains later instead of guaranteed gains now, especially considering that they are not mutually exclusive propositions.

I've been in AAPL since 1997. I've sold pieces already but since the stock is now deader than the proverbial doornail and looks to stay that way for some time, I want income now.
 
Apple can never, ever, in a million years buy back the company. It doesn't work. Here's the extreme scenario: Imagine Apple has bought back every share, except one. The guy who owns that share _owns Apple_. Now imagine Apple is really, really successful and collects a trillion dollars in the bank. And they offer the guy a trillion dollar for his share. He'll say "no, thank you". And on the next share holder meeting he'll be there, all on his own, and decide that Apple pays him the trillion dollars anyway _without_ getting that one share.

LOL. What are you talking about? That's not how it works.
 
Still reckon the obvious big money purchase for Apple is Nintendo. Currently at a 5 year low with a market cap of $14bn, they'd probably get it for no more than $20bn possibly even all in shares. Would be a good fit for both companies.

Plenty of money in the DS, Wii and Wii U still which they could milk over their remaining lifespan as they transition over to Apple platforms. License all the franchises to Disney for theme parks, movies, tv, merchandise and so on. Then make all the game franchises exclusive on Apple once the Nintendo hardware goes end of life.

This would be an incredible move. Imagine Nintendo IP as an iOS exclusive.

But would it be worth $20 billion? That's a lot of Mario apps to sell at five bucks a pop. :confused:

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It`s just that... Actually Apple`s stock is not cheap at all. It has the correct value.

Oh please. It's trading at what, 8 times earnings? And that's with $130 billion in the bank?

People are insane if they think AAPL is currently at the "correct value." It's oversold and it will rebound. Mark it. Smart money chases the deals.
 
Here's what Wall Street Wizard and Towering Intellect Mr. Warren Buffet had to say:

Aha. Let me write that down so I won't forget.
Because he does, in fact, clearly know what he's talking about.

This literally has zero to do with your first post. So, given a complete non-sequiter response, I'm going to stick with my original assessment.
 
Amazon's growth I can understand... they actually SELL things on a daily basis. TONS and TONS of things on a daily basis, like they are literally the single biggest and most diverse "online store" on the planet, and then some.

But Google? I dunno. I see more hype than delivery/revenue/sales/profits when it comes to a Wall Street analysis. I see Google stocks shooting up based on speculation of un-released products (e.g. Google Glass). To be fair, this is similar to Apple's stocks shooting up in anticipation of new product announcements. But in the end, once everyone sees the final product, the bubble bursts and the stocks deflate back down. I expect this to happen to Google sooner or later. In fact, the Google projects are being so over-hyped that in the end people are going to be disappointed with the final product because product did not meet their unrealistic "Star Trek tech level" expectations. It's at that point when GOOG stocks will plummet towards the abyss.

Amazon's growth isn' nearly what it used to be. It's no longer growing at 40%, it's almost half that. And it makes no money and the environment looks worse for them. More and more states are requiring taxes and brick and mortar stores are finally waking up and will price match.
 
Buffet says the time to buy stock is now.

I say it's always better to buy a stock when it's "tanking" and the company earnings are sound.

You'd rather wait till the stock was up before you buy. And buying while it's down isn't something you'd do.

I'd review that thinking.

Except right now the margin of safety on AAPL is very narrow... AAPL is trading at 93% of its intrinsic value. It'd be much wiser to pick it up at 80 or 70 percent of intrinsic value... But I would rather look at other equally discounted large caps in more stable sectors than technology.

You wouldn't think it but I've outperformed tech hand over fist with.... *drumroll* farming-related industries.

Even if Apple were to initiate a buyback, that's an "if" but the "definitely" is that they're overpriced at this particular moment.
 
Except right now the margin of safety on AAPL is very narrow... AAPL is trading at 93% of its intrinsic value. It'd be much wiser to pick it up at 80 or 70 percent of intrinsic value... But I would rather look at other equally discounted large caps in more stable sectors than technology.

You wouldn't think it but I've outperformed tech hand over fist with.... *drumroll* farming-related industries.

Even if Apple were to initiate a buyback, that's an "if" but the "definitely" is that they're overpriced at this particular moment.

When you say "intrinsic value" are you referring to book value? As in; their office building, patents, etc.? Also, how on earth is the stock overpriced?
 
Einhorn wants a quick buck.

He should eat it, IMO. All prospectives should be based on long term growth. APPL is still quite undervalued from a long term prospective given their revenue. While they should buy back shares at this time, they needn't go crazy, especially since a lot of that cash is locked up overseas.

As for using the cash...
Personally I'd like more/better QA on the software and hardware side.... all of these "fiascoes" or "xxgates" damage the halo effect and product image.
 
When you say "intrinsic value" are you referring to book value? As in; their office building, patents, etc.? Also, how on earth is the stock overpriced?

No, I read one of his comments before, he looks at the discounted value of future cash flows. Technically that is true, but if he uses some form of DCF, he's likely way off, so I wouldn't worry about what he says. (1) you have to predict future cash flows, something no one can predict with certainty for Apple, (2) the discount rate he uses could be the WACC, which relies on beta, making the rate unreliable. The range of margin of error is +-100%. DCF is more like a guess, just look at analysts' predictions.

I prefer looking at the franchise value, similar to DCF, but with no predictions. Buffett says intrinsic value is the sum of cash flows the owner could expect to receive in the company's lifetime, discounted at an appropriate rate. I'm 100% certain I know how he values a business after reading his essays and watching him talk about valuation. The problem is the uncertainty with Apple's earnings. Their balance sheet is solid though. Here are two scenarios: if Apple earns their last 3 year's earnings average for the next decade, then the stock is undervalued. If they earn their last 4 year's average for the next decade, the stock is not a good price to buy because, like that other said, it has a small margin of safety that doesn't make the stock worth buying.
 
When you say "intrinsic value" are you referring to book value? As in; their office building, patents, etc.? Also, how on earth is the stock overpriced?

I'm talking about operating value... current assets minus current liabilities plus projected operating cash flows several quarters forward, discounted to net present value using the weighted average cost of capital (WACC) as the discount rate.

Book value is total assets minus total liabilities and intangibles. But some calculations of intrinsic value define it as book value plus total projected cash flows. I think we had this discussion in another thread... How many golden toilets Apple puts in the executive washroom doesn't improve their ability to generate operating cash flow...

The stock price is still in excess of per share operating value.... doesn't matter how one tries to emotionally justify a purchase: Paying 60 cents for a dollar is always better than paying $4 for a dollar.

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No, I read one of his comments before, he looks at the discounted value of future cash flows. Technically that is true, but if he uses some form of DCF, he's likely way off, so I wouldn't worry about what he says. (1) you have to predict future cash flows, something no one can predict with certainty for Apple, (2) the discount rate he uses could be the WACC, which relies on beta, making the rate unreliable. The range of margin of error is +-100%. DCF is more like a guess, just look at analysts' predictions.

I prefer looking at the franchise value, similar to DCF, but with no predictions. Buffett says intrinsic value is the sum of cash flows the owner could expect to receive in the company's lifetime, discounted at an appropriate rate. I'm 100% certain I know how he values a business after reading his essays and watching him talk about valuation. The problem is the uncertainty with Apple's earnings. Their balance sheet is solid though. Here are two scenarios: if Apple earns their last 3 year's earnings average for the next decade, then the stock is undervalued. If they earn their last 4 year's average for the next decade, the stock is not a good price to buy because, like that other said, it has a small margin of safety that doesn't make the stock worth buying.

I wouldn't say the margin of error is that high, because I'm not using completely imaginary numbers and I take WACC with a bit of a grain of salt because of its use of beta (actually more so because cost of capital is not a constant as a company scales, but that's less unstable for a mature company like Apple whose cost of capital will not change very much).

Forecasts are not dart throwing... My current role involves numbers that roll up to finance and accounting and pretty rigorously tested formulas on customer retention to get the "where might we land" scenario... It's not magic. It's arithmetic. We know what our funnel looks like. The other driver is the pressure that sales organizations have to meet those projected numbers, so unless something goes horribly wrong with operations, supply chain management, etc. on so many levels, every company of this scale has a pretty good idea of where they will land for the next four or five quarters.... they just don't always tell you until it's legally required of them.

That said, on the off chance that there's a little bit of variation in the result, that's what picking a wider margin of safety is for. Where I don't feel as confident about the variables involved, I err on the side of caution and enter at an even bigger discount. I'm not chasing maximum returns but optimal returns with minimal risk... Any number times zero is still zero.

I'm not trying to tell you a "target price" when I discuss these things... It's not a projection of "what will the stock do in x months" but rather a triangulation conservative scenarios that give me a comfort level about a purchase. The wider the margin of safety, the less likely I'm exposing myself to catastrophic risk.

Again... Why pay $5 for a dollar if you can get it for sixty cents? The value proposition is one where, as Buffett famously said, the less the risk the larger the reward.
 
re original article

buffett rocks -
dear mr cook - give mr buffett a call
imho - buy back shares - then split 4 to 1

"what do you do for money honey" - ac/dc
 
Apple has Siri.

Siri isn't a search business.

There's no money in the search engine business for anyone else but Google. You would have to break up their monopoly first. An attempt would cost billions of $$ with entirely uncertain outcome.

Why on earth would Apple want to do that?
We all know that Apple isn't really good at services. MobileMe, Apple Maps etc come into mind.

Yahoo is failing and has an entirely different corporate culture, why would Apple want to buy them?

To be in the search business. I didn't say I think it would be a good idea, but I was replying to other poster about if Apple wanted to try and start up their own search business, which would be a monumental feat. I was suggesting that buying an already established search company, such as Yahoo, would save them a great amount of work.

Again, not saying it would neccessarily be a good idea. I'm quite aware that Apple has always had a shaky record with running services of their own.
 
Siri isn't a search business.

Why isn't it? It will search stuff for you. Apple isn't monetizing that search process with ads. But it could in the future. And while Siri's search feature is somewhat primitive now, it will get better and better. Also, I assume it will be available on OSX in a year or so. No particular reason that it isn't available there yet that I can think of.
 
Except right now the margin of safety on AAPL is very narrow... AAPL is trading at 93% of its intrinsic value. It'd be much wiser to pick it up at 80 or 70 percent of intrinsic value... But I would rather look at other equally discounted large caps in more stable sectors than technology.

You wouldn't think it but I've outperformed tech hand over fist with.... *drumroll* farming-related industries.

Even if Apple were to initiate a buyback, that's an "if" but the "definitely" is that they're overpriced at this particular moment.

Do tech stocks generally perform at traditional rates? My understanding is they're more volatile and generally run at lower ratios. So you'd typically see them run at higher intrinsic values.

Sounds like you're into shares, do well with them and now what they're about. I don't. I'll defer to you on this one.

I've enjoyed your posts on the matter. Thanks.
 
It was March. I was kicking myself for not selling AAPL at its all time high that it had reached a few months before. Now, the stock had lost more than half its value. I decided to buy more shares, since the PE was so good and it had rock solid financials. Then it lost another 10%. I knew I should buy more, but it's hard to do that when you've already made a big bet and it's lost 10% more. So I just sat tight.

It took about another year to stay above that previous all-time high, but it got there. Then it more than tripled.

This was, of course, March, 2009. 3 years ago. Stock price was $92 (before going down to around $82). People have awfully short memories. I'm not pretending I know when it's going back up. I thought the stock was actually a good buy at $600; I bought some there, some again at $500, some more at $450, and more at $430. Guess how much money I've lost on those? Nothing, because I haven't sold it. It will turn around, as the cash pile will have a buoyant effect on price. But one must be patient.
 
Apple needs to introduce something very quick in order to stop this continual slide of their stock. Everyday it seems they hit a new low including today.

Tim Cook said he was concerned about the stock price but did nothing more than say they had great stuff in the works.

Buffet is an amazing investor and Apple had all time sales increase but the market is looking for future growth and without a new product I just don't see it happening.

Google is at another all time high today for their stock and Apple is at another 52 week low today. Seems to be the norm for the last 6 months.

Not looking to invest in a tanking stock with nothing but rumors to look at for the future quarter.

Apple has over $120 billion in cash. They can do without your short term investment. :rolleyes:
 
The burden is spending $10 billion to buy a company that made $20 million last year. The drag on earnings going forward is the problem. Netflix is squeezed between content owners who they have to buy content from, competitors who are largely giving away similar product (Hulu, Amazon Prime, over the air TV), and customers that are used only paying a modest monthly fee for the service.

There's no such thing as Hulu or Amazon Prime outside of the USA. In Canada, even with its even smaller selection of movies and TV shows, Netflix is by far the cheapest option.

And before you ask, there's no over-the-air signals where I live.
 
Do tech stocks generally perform at traditional rates? My understanding is they're more volatile and generally run at lower ratios. So you'd typically see them run at higher intrinsic values.

Sounds like you're into shares, do well with them and now what they're about. I don't. I'll defer to you on this one.

I've enjoyed your posts on the matter. Thanks.

Thanks.... let me address a couple of thoughts:

1. Per share intrinsic value isn't perfectly correlated to market price or market price-related ratios.

2. "at higher intrinsic values" relative to what? When I say that a tech company is overpriced, I'm saying that its intrinsic value is below its market price or that it's market price isn't far enough below intrinsic value to make it an attractive, risk-mitigated purchase.

The market does not always price a company in perfect correlation to its real operating value, and since the majority of equity stakes tend to be institutionally held (and will continue to be so for the foreseeable future due to the concentration of access to capital), mergers & acquisitions analysts who are driven by different objectives than personal financial advisors, market analysts, etc. do have a very good method for triangulating that value, and this has been true every single decade that the Wall Street hype parade tries to insist that the market price is always the correct price.

They often use the $20 bill analogy to illustrate efficient markets hypothesis... saying that there's never going to be a $20 bill on the sidewalk because someone will have picked it up. But we find those "spare bills" scattered about the market every day.

The problem with the efficient markets hypothesis is that it relies on the assumption that all players in the market are equally informed and equally perceptive about all of the inputs affecting the value of an asset. That is absolutely not the case.
 
Except right now the margin of safety on AAPL is very narrow... AAPL is trading at 93% of its intrinsic value. It'd be much wiser to pick it up at 80 or 70 percent of intrinsic value... But I would rather look at other equally discounted large caps in more stable sectors than technology.

You wouldn't think it but I've outperformed tech hand over fist with.... *drumroll* farming-related industries.

Even if Apple were to initiate a buyback, that's an "if" but the "definitely" is that they're overpriced at this particular moment.

At eight times future earnings? You have to be joking.
 
At eight times future earnings? You have to be joking.

At 93 percent of their intrinsic value (which takes future cash into account vis-a-vis discounted cash flow analysis), yes.

The problem with using P/E is that you're not telling me what a shrewd person should pay for future cash flows... you're telling me what the masses of imbeciles are paying, right now. We've had this discussion before and we're not going to agree.

Purchases predicated on the idea that "it's not really that expensive because everyone else is doing it" are essentially a sort of faith-based investing... hoping that everyone else is smart and not stupid (i.e. that they aren't just being irrationally exuberant), or hoping that they're all stupidly going to drive the stock price up and thirdly gambling that you're only marginally less dumb than they are.

a) that's a feeble hope.

b) It's not a real honest-to-god calculation of operating value at all.

People like P/E ratios because they're fans of self-deception, because it's a ratio that sounds important (but is largely meaningless to a business analyst; do people think we count the ratio of pirates to global warming when we generate operating forecasts?), and because it requires less work.... It's a neat sounding number, but it's chock full of BS because it doesn't pare out the cash flows unrelated to operations and because the numerator is a lagging metric, not a lead indicator (by PMP definitions).

Listening to the market tell you what the market thinks you should pay is as stupid as letting the last three bids on every ebay auction fool you into thinking that's the right price to pay. "It's the right price until it isn't" is not an investing strategy. Bidding gets out of hand when people let their emotional attachment to an item drive their decisions. That is the fastest path to being taken advantage of in any acquisition, whether a car, a house, a company....
 
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At 93 percent of their intrinsic value (which takes future cash into account vis-a-vis discounted cash flow analysis), yes.

So AAPL are at 93% and you don't think that's worth investing in. Just our o curiosity where do the following sit;

Google
Microsoft
Samsung

As a lay person I'd bail on MS because they seem oblivious to their mistakes and ignorant of what's going on around them. I'd support Samsung because they're the opposite. Google. I don't know what google is. And that bothers me so I'm only interested in them if they produce strong income. My gut feeling is hey probably don't as a percentage yield.They do seem to have contra of a market though.
 
At 93 percent of their intrinsic value (which takes future cash into account vis-a-vis discounted cash flow analysis), yes.

The problem with using P/E is that you're not telling me what a shrewd person should pay for future cash flows... you're telling me what the masses of imbeciles are paying, right now. We've had this discussion before and we're not going to agree.

Purchases predicated on the idea that "it's not really that expensive because everyone else is doing it" are essentially a sort of faith-based investing... hoping that everyone else is smart and not stupid (i.e. that they aren't just being irrationally exuberant), or hoping that they're all stupidly going to drive the stock price up and thirdly gambling that you're only marginally less dumb than they are.

a) that's a feeble hope.

b) It's not a real honest-to-god calculation of operating value at all.

People like P/E ratios because they're fans of self-deception, because it's a ratio that sounds important (but is largely meaningless to a business analyst; do people think we count the ratio of pirates to global warming when we generate operating forecasts?), and because it requires less work.... It's a neat sounding number, but it's chock full of BS because it doesn't pare out the cash flows unrelated to operations.

The problem with most of the Intrinsic Value calculations is their reliance on Book Value. Unless you are considering the liquidation value of the company then I think Intrinsic Value has very limited meaning. In fact and in reality, equity holders rarely get anything in a real liquidation, so that's another one of those feeble hopes you speak about. Ah, but then you will say that not all Intrinsic Value calculations include Book Value. Yes indeed, other models make completely different assumptions. So perhaps people like Intrinsic Value because they are fans of another kind of self-deception?

PE is just another number, but it is based on something more intrinsic than Intrinsic Value. It at least gives you some scope of comparison, a way of viewing how investors are valuing earnings, whether collectively the markets are predicting earnings to accelerate or decelerate. Which, I hope you'd agree, is of some importance. Its value is limited and useful if you understand the limitations, just as is the case with any predictive model.

Of course you can rely on any valuation model you like for making your investment decisions, but if the market collectively never agrees with your model, then you stand to lose money. The markets are fundamentally not rational places and don't function to satisfy predictive models.
 
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