“In its recently reported fiscal fourth quarter, Apple’s adjusted net income grew approximately 124.6% from $1.085 billion in Q4 2007 to $2.437 billion in Q4 2008—an extraordinary number when fully accounting for iPhone sales in both periods. Just as impressive is Apple’s 75.1% grow rate in sales. Apple’s adjusted revenue grew from $6.673 billion in Q4 2007 to a whopping $11.682 billion in Q4 of 2008. Earnings per share grew 123.0% from $1.21 in Q4 2007 to $2.69 in Q4 2008. This begs the question? Where the hell are the analysts and why aren’t they quick to point this out? Only on Wall Street can a company grow earnings 124.6%, sustain bouts of analyst downgrades and see its shares decline 55% (while boasting a 14 forward P/E on a GAAP-basis),” Andy M. Zaky reports for Bullish Cross.
“I was both shocked and very disappointed to see no analyst comment on the fact that Apple’s business grew an astounding 124.6% on an adjusted (real) basis,” Zaky reports. “What’s even more troubling is that no one seems to emphasis the significance of the fact that Apple grew its cash hoard from approximately $21 billion in Q3 to $25 billion in Q4. That’s a $5.00 increase in total cash per share from $23.45 in Q3 to $28.22 in Q4. At this pace, and assuming Apple makes no big acquisitions, Apple could very well have nearly $48 per share in cash and cash equivalents by the time we hit November 1, 2009. So I ask again: Where are the analysts and why aren’t they making mention of this?”
Full article — very highly recommended — here.
[Attribution: AppleInsider. Thanks to MacDailyNews Reader “GizmoDan” for the heads up.]
@papasmack
The $25B will prevent the stock price from ever going below $28 per share. Though I believe it should be based on total equity and not cash/cash equivalents.
Also, it can prevent a hostile takeover. Anyone who wants to make a move on AAPL has to contend with the directors buying back shares and driving up the price of the stock.
At some point AAPL will have to conclude it has enough cash on hand. With the remainder, it could (1) pay dividends, (2) buy back shares, (3) buy companies that strengthen its business, or (4) invest in more R&D;.
A few years ago, AAPL invested a few hundred million to secure its supply of Flash memory (this happened just after the Samsung deal fell apart). It turned out to be a great investment and now AAPL, being the major buyer of Flash memory, maintains very good margins on the iPhone, iPod, and all products that contain SS memory. The net effect of their investment was that Flash quickly became a commodity and supplies were plentiful.
In a downturn like this, it’s nice to have cash because everything looks cheap. For example, AAPL could buy Akamai for $3B and secure a global distribution network for its digital content. Personally, I hate AT&T;and would like AAPL to control the wireless network (AT&T;, you suck). I thought they would bid (with Google) on the bandwidth that became available last year. They didn’t but if the auction happened today, they would probably be able to obtain it on the cheap. Who knows, maybe some cash strapped network will sell some undeveloped airwaves.
In short, cash is good. papasmack, I see your point. If AAPL paid a dividend you could buy more AAPL stock.
Why pay a dividend and get double taxation? Once at the corporate level and again at the personal level.
why not buy back shares to show confidence and un-delute earnings? Provide a large buyer while there are many scared or over leveraged sellers.
@papasmack
Um… make payroll?