Does aapl stock split soon?

  • Posted: 01 January 2010 12:49 AM #16

    Alan A. - 31 December 2009 10:38 PM

    Dividends? Likely not, as Apple loves to spend on R&D. I am assuming that Apple stockholders use the value as equity for other investments.

    Apple does not spend the profits on R&D either.  Witness $30B in the bank.  Apple’s largest use of profits so far is acquisition of other companies like the chip designer they recently bought.  I have to believe that SJ has a use in mind for all that capital.  It’s his ace in the hole and he’ll play it one of these days.  What would it take to buy a company like Clearwire or Sprint?  Or maybe just their WiMax frequency licenses?  An Apple tablet with a WiMax chipset would be hard to compete with.

    As for uses for my own profits, I periodically sell shares and use the money for things like a private university education for my wife.  Investing in Apple has changed my life.  I knew it was a good buy at $7.49 per share, but I never expected it to get to where it is now.

         
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    Posted: 01 January 2010 03:06 AM #17

    Thanks for the insight Zeke…always helpful to get some education from someone on the inside track.

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  • Posted: 01 January 2010 04:09 PM #18

    Alan A. - 31 December 2009 10:38 PM

    Dividends? Likely not, as Apple loves to spend on R&D. I am assuming that Apple stockholders use the value as equity for other investments.

    There’s no reason for Apple to pay a dividend at this time. The company is growing at a torrid pace and shareholders have been richly rewarded through share price appreciation. There’s no justification for a dividend as a means to increase the yield on the investment (total return) and a dividend would do nothing to increase the share price at this time.

    Apple’s net income as a percentage of revenue is in the stratosphere and the return on assets is already quite attractive.
    One could argue (and management has made this case before), the double taxation of dividends (taxes are paid on income by the corporation and taxes paid again by the shareholder on dividends received) is one of the most unattractive ways to provide a value to shareholders on their investment especially at a time of strong revenue and earnings growth for the company.

         
  • Posted: 01 January 2010 04:15 PM #19

    DawnTreader - 01 January 2010 08:09 PM
    Alan A. - 31 December 2009 10:38 PM

    Dividends? Likely not, as Apple loves to spend on R&D. I am assuming that Apple stockholders use the value as equity for other investments.

    There’s no reason for Apple to pay a dividend at this time. The company is growing at a torrid pace and shareholders have been richly rewarded through share price appreciation. There’s no justification for a dividend as a means to increase the yield on the investment (total return) and a dividend would do nothing to increase the share price at this time.

    Apple’s net income as a percentage of revenue is in the stratosphere and the return on assets is already quite attractive.
    One could argue (and management has made this case before), the double taxation of dividends (taxes are paid on income by the corporation and taxes paid again by the shareholder on dividends received) is one of the most unattractive ways to provide a value to shareholders on their investment especially at a time of strong revenue and earnings growth for the company.

    I’ll take a bonus check in lieu of any dividend, and it will be deductible too.  Seriously, there is some talk of lowering the corporate rate to 28% (from current 35%), as the US has among the highest corporate rates in the world.

         
  • Posted: 01 January 2010 04:47 PM #20

    Zeke - 01 January 2010 04:49 AM
    Alan A. - 31 December 2009 10:38 PM

    Dividends? Likely not, as Apple loves to spend on R&D. I am assuming that Apple stockholders use the value as equity for other investments.

    Apple does not spend the profits on R&D either.  Witness $30B in the bank.  Apple’s largest use of profits so far is acquisition of other companies like the chip designer they recently bought.  I have to believe that SJ has a use in mind for all that capital.  It’s his ace in the hole and he’ll play it one of these days.  What would it take to buy a company like Clearwire or Sprint?  Or maybe just their WiMax frequency licenses?  An Apple tablet with a WiMax chipset would be hard to compete with.

    I look at Apple’s “use” of its cash a bit differently. On the Mac side, the large cash position has been helpful in securing business with large, risk-averse institutions (governments at all levels, colleges and universities, school districts, etc.). The cash mitigated any concerns about investing in a minority platform. In other words the company and the platform is not at risk of failing and creating an orphan platform.

    The cash position has also buttressed the share price. With over $30 in cash for each share outstanding, the cash adds underlying value to the shares.

    Cash as a competitive advantage. Apple has used its ample cash resources to pre-pay for needed components, sometimes entering agreements in which Apple provides the upfront cash for suppliers to invest in building capacity to meet Apple’s component supply needs. This has guaranteed the supply of needed components in order to grow revenue.

    I am a little surprised Apple’s cash management subsidiary (Braeburn) hasn’t either acquired or chartered a bank to facilitate the processing of merchant activity, reducing the costs of credit card transactions. Beyond the complications, hassles and complexities of such a step, it would assist Apple in reducing transaction costs considering the volume of merchant transactions that occur daily through the iTunes Store.

    Retail store leases - Neither the long-term retail store leases nor the necessary leasehold improvements come cheap. The large cash position supports the growing retail store presence and the associated high costs of retail store expansion.

    The return on cash, though greatly reduced in today’s ultra-low interest rate environment, will rise as interest rates inevitably rise. As rates inevitably rise so will the dollar’s value. Apple’s overseas presence continues to grow and an uptick in the dollar’s value may ding margins on overseas sales. A rising return on the cash on hand may offset the impact of a rising dollar, helping to support revenue as the dollar inevitably strengthens. Consider what a 100 or 200 basis point increase in return on cash would capture in revenue.

         
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    Posted: 01 January 2010 07:06 PM #21

    Mercel - 01 January 2010 08:15 PM

    ... Seriously, there is some talk of lowering the corporate rate to 28% (from current 35%), as the US has among the highest corporate rates in the world.

    Tax rates in US is ludicrously high.  For example, tax rates in Singapore:
    Corporate=17%.
    Max individual income tax=20%.
    No capital gain tax.
    Max estate duty=$12%.

    For super rich guys like Jet Li, renouncing the US citizenship and obtaining a Singapore citizenship save tons of tax dollars. With talks of increasing taxes on the super rich to fund bailouts and healthcare programs, I’m beginning to wonder whether Uncle Sam knows what he is doing or is succumbing to the wish of those 50% of American voters who don’t pay taxes. I suspect these are the same 50% who can’t afford a house but are given a house mortgage anyway.  Why does Uncle Sam need so much tax dollars?

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    Posted: 01 January 2010 07:13 PM #22

    DawnTreader - 01 January 2010 08:47 PM

    ... I am a little surprised Apple’s cash management subsidiary (Braeburn) hasn’t either acquired or chartered a bank to facilitate the processing of merchant activity, reducing the costs of credit card transactions. Beyond the complications, hassles and complexities of such a step, it would assist Apple in reducing transaction costs considering the volume of merchant transactions that occur daily through the iTunes Store ...

    How to ensure that Apple would not inadvertently inherit the toxic assets business?

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  • Posted: 01 January 2010 07:43 PM #23

    Mace - 01 January 2010 11:13 PM
    DawnTreader - 01 January 2010 08:47 PM

    ... I am a little surprised Apple’s cash management subsidiary (Braeburn) hasn’t either acquired or chartered a bank to facilitate the processing of merchant activity, reducing the costs of credit card transactions. Beyond the complications, hassles and complexities of such a step, it would assist Apple in reducing transaction costs considering the volume of merchant transactions that occur daily through the iTunes Store ...

    How to ensure that Apple would not inadvertently inherit the toxic assets business?

    The goal of the bank would be to reduce transaction processing costs primarily and perhaps issue its own cards. There’s absolutely no reason to engage in speculative or high-risk lending to increase yield since the bank itself would not be the primary source of revenue and earnings. There are plenty of specialty banks that smartly choose their markets and areas of exposure.

    Imagine Apple offering its own credit cards to consumers and enterprises while using the bank to process its own merchant transactions. It may be an effective use of a portion of Apple’s cash assets.

         
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    Posted: 01 January 2010 08:20 PM #24

    DawnTreader,

    Do you know how GMAC evolve?  I would think it is started to help customers buy cars.  How come it ended up in house mortgages business too?

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  • Posted: 01 January 2010 09:14 PM #25

    Mace - 02 January 2010 12:20 AM

    DawnTreader,

    Do you know how GMAC evolve?  I would think it is started to help customers buy cars.  How come it ended up in house mortgages business too?

    With that kind of thinking Apple would not have opened retail stores because Gateway failed at the effort. Pitney Bowes runs its own bank for financing postage purchases for customers. You don’t hear about Pitney Bowes having risk undue loan risk exposure or expanding operations outside its defined field of expertise.

    The goal is to assist in reducing costs (merchant transaction costs) and perhaps expanding into providing financing arrangements for customers and customers only via of revolving credit. Apple apparently partners with Barclays now. If Barclays considers Apple customers a good banking business why shouldn’t Apple consider its own customers good banking business.

    I’m not suggesting an aggressive lending effort. I’m suggesting a means to reduce merchant fees on iTunes Store sales and perhaps a limited foray into loans for its own customers. Apple already extends payment lease terms to schools. Why not a chartered bank to handle credit card processing on iTunes Store sales while providing a financing avenue for customers now provided by Barclays?

         
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    Posted: 02 January 2010 04:41 PM #26

    Given past history with the last aapl split, I think the stock will appreciate rather quickly if one was announced in the next two months.

    In 2005 aapl went from 35 to 85 in about 6 months.  It did take a slight dowfall but recovered nicely.  I think aapl decided to split because they were about to announce the transition from IBM to INTEL.  That was huge news.

    I think if this tablet is as big as some have speculated (10 million in the first year) , and the cont. success of the iPhone, this may be a good time to split without impacting long term appreciation.  Remember Macer forecasted aapl at 2441 by 2020.
    http://www.macobserver.com/tmo/forums/viewthread/56555/

    The only way to reach those numbers so quickly would be for a jump start via a split or two.  I think we are in the beginning of a 10 year bull market, no better time then now.

    an aapl split would be so huge for the market that I think SJ could single handily propel the market by 5% and start a nasdaq bull run that would jump start the whole economy better then any gov stimulus.

         
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    Posted: 02 January 2010 09:06 PM #27

    omacvi - 02 January 2010 08:41 PM

    Given past history with the last aapl split, I think the stock will appreciate rather quickly if one was announced in the next two months.

    In 2005 aapl went from 35 to 85 in about 6 months.  It did take a slight dowfall but recovered nicely.  I think aapl decided to split because they were about to announce the transition from IBM to INTEL.  That was huge news.

    I think if this tablet is as big as some have speculated (10 million in the first year) , and the cont. success of the iPhone, this may be a good time to split without impacting long term appreciation.  Remember Macer forecasted aapl at 2441 by 2020.
    http://www.macobserver.com/tmo/forums/viewthread/56555/

    The only way to reach those numbers so quickly would be for a jump start via a split or two.  I think we are in the beginning of a 10 year bull market, no better time then now.

    an aapl split would be so huge for the market that I think SJ could single handily propel the market by 5% and start a nasdaq bull run that would jump start the whole economy better then any gov stimulus.


    lara, you have beat this horse to death. If I am right Apple has it on record that they will grow the number of shares to 1.8 billion. If you think SJ and the board give one rats ass about regular shares holders, I will sell you ocean front property in Colorado. Apple has given away over 200 million shares over the last couple of years. If they wanted to protect shareholders the number of outstanding shares would not have grown at the rate that it has. If you want to make the share price go up fast just stop the dilution.

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    Posted: 02 January 2010 09:39 PM #28

    mbeauch - 03 January 2010 01:06 AM
    omacvi - 02 January 2010 08:41 PM

    Given past history with the last aapl split, I think the stock will appreciate rather quickly if one was announced in the next two months.

    In 2005 aapl went from 35 to 85 in about 6 months.  It did take a slight dowfall but recovered nicely.  I think aapl decided to split because they were about to announce the transition from IBM to INTEL.  That was huge news.

    I think if this tablet is as big as some have speculated (10 million in the first year) , and the cont. success of the iPhone, this may be a good time to split without impacting long term appreciation.  Remember Macer forecasted aapl at 2441 by 2020.
    http://www.macobserver.com/tmo/forums/viewthread/56555/

    The only way to reach those numbers so quickly would be for a jump start via a split or two.  I think we are in the beginning of a 10 year bull market, no better time then now.

    an aapl split would be so huge for the market that I think SJ could single handily propel the market by 5% and start a nasdaq bull run that would jump start the whole economy better then any gov stimulus.


    lara, you have beat this horse to death. If I am right Apple has it on record that they will grow the number of shares to 1.8 billion. If you think SJ and the board give one rats ass about regular shares holders, I will sell you ocean front property in Colorado. Apple has given away over 200 million shares over the last couple of years. If they wanted to protect shareholders the number of outstanding shares would not have grown at the rate that it has. If you want to make the share price go up fast just stop the dilution.

    Hey all I want is to make it to Vegas earlier;)  How did they give away the 200 million shares?  I do agree with the opinion that SJ does not care about the shareholders at this point.  He figures anyone who has held for 10 years should be happy with the 2500% appreciation. 

    I think SJ is upset that aapl is not treated like RIMM, AMZN, or GOOG.  He knows that high multiple PE is there but won’t attempt to improve the stock price in anyway.  Keep in mind in light of amazing growth aapl is only up 10 bucks in the last two years.  I ask for a split but know it won’t happen.  I guess we have to wait until SJ leaves to expect a split.  I have all the time in the world.  2020 is only 10 years away.