“As we all have seen, Apple (AAPL) stock has been crushed recently. From an all-time high of $705 on 9/21/12, the stock has fallen precipitously and is now below $500 a share (a 30% decline as of today),” Jason Kaplan writes for Seeking Alpha. “Analysts have done their ‘channel checks’ and concluded that demand for the iPhone (Apple’s most profitable product) is not as strong as need be to meet or beat earnings expectations.”
“I do not believe that any of these analysts have a real idea what is going on in Apple’s supply chain. It is so vast and so complex that no one except Apple can be sure what component orders look like,” Kaplan writes. “The sell-side analysts are paid to speculate, and that is what they are doing.”
Kaplan writes, “I, of course, have no idea what earnings or guidance will be when Apple reports its financial results for the December quarter next week, but there are a number of things the Board of Directors can do to help stabilize the share price and even put a floor on it going forward.”
1. Apple should double the dividend payout
2. Apple needs to split the stock 10-for-1
3. Apple needs to buy back larger amounts of stock
“What would keep Apple from making these shareholder friendly moves? Well, first a large chunk of that cash is held off-shore for tax purposes and is not likely to be repatriated for payment to shareholders, barring a federal tax holiday… Another reason why Apple might not want to make these shareholder friendly moves is because the perception might be that the Company is no longer an innovator and that Apple has played its last hand,” Kaplan writes. “That may be true. What is the next great money maker for Apple? An iTV? Maybe the Company does not have one at this point, but so what? Its existing products continue to be best sellers and should be for many years to come.”
Read more in the full article here.
MacDailyNews Take: If we had a nickel for every time we heard “Apple’s best days are behind it,” we’d use the dump truck full of them to load up on some more AAPL stock. Do not underestimate Tim Cook and Co.
“I believe Apple’s brightest and most innovative days are ahead of it.” – Steve Jobs, August 24, 2011
[Thanks to MacDailyNews Readers “Arline M.” and “Brawndo Drinker” for the heads up.]
10 for 1 Split seems to be the best solution.
Avoid wasting money on Buybacks
I don’t care about buy backs. I want Apple to at some point to state, “We have $125,000,000,000.00 that says that Apple will not go lower than $500 a share!”
When you have billions in the bank, you can force the shorts to move on to some other stock to attack. We are coming up on 4 months of this crap. Time to man up Apple and defend yourself and your investors.
Just the opposite. 1 is nonsensical waste of money, 2 is a useless exercise and has no impact on total capital. As for 3: remember what Buffett told Jobs (and Jobs did not listen): “If you feel your shares are undervalued, buy them back”. This would stabilize the price of APPL and limit the amount of shares for stock manipulators.
I certainly agree with you on one and two. Three is questionable. Apple simply needs to keep their nose to the grind stone and try to fight off the competition. It’s not what Apple is not doing, it’s that Apple doesn’t have the whole world to themselves anymore. Most of the people that were in Apple without understanding valuation have been flushed out. Almost all of them. They drove the stock price too high in September. The pendulum has swung the opposite direction a little too far so I believe we are about to right the ship very soon. It probably doesn’t deserve to be at $705. And it probably doesn’t deserve to be at $485 either. We shall see.
No, it’s not a wise move. It would just create more papers for Wall Street to create more havoc in order to spite Apple. What Apple should do is to consolidate its shares. Now it has 940 million shares on the market. Half it to 1 for 2 to make the price double. If Wall Street still wants to play down Apple shares, let’s see how far it would drive down the price. If it keep on with its madness of vindictiveness against Apple, then it’s an opportunity for Apple to buy back its shares at a cheaper rate without breaking the bank than if it tries to take the company private. This will benefit long-term investors because the shares would be scarce and Wall Street would not be able to freely manipulate the shares as it does now.
Apple can do this because it does not need any more funds from Wall Street for expansion. Companies that are short of funds to expand have to rely on Wall Street for finance and consequently they are at the mercy of Wall Street. Wall Street would love for companies to issue more papers into the market because it can easily manipulate and dictate what these companies could do or not to do.
After Apple has mopped all shares from Wall Street’s deathly embrace, it can slowly increase back the number of shares in the market by issuing bonus shares to existing shareholders in the form of 1 for every 10 or 100 shares. Never again let Wall Street to control its destiny. I do not know if there is any other companies that have the cash hoard of Apple to pull off this audacious move.
I can’t follow your argument.
how will more expensive shares stop manipulation? the total market value is the same.
if a hedge fund has 100 million to spread around, why does it matter if the shares are 1000 a pop or 100? (Some years ago Jim Cramer who was running a hedge fund at the time demonstrated by using a small amount of money – I think it was a few million – he could drive the price of a small company up or down by starting a cascade of sell or buy orders. He also described exactly how to spread rumors to manipulate aapl: he called it ‘fomenting’ ). If a hedge fund wants to manipulate aapl whether the shares are $100 or 1000 makes no difference as they are moving millions of dollars around.
when you SPLIT it means that many more SMALL investors will buy shares and thus wrest more control away from the funds who hold the majority of aapl now. Psychologically many small investors simply won’t spend 500 or 1000 bucks on a share but they might buy a one or two $100 shares a month.
getting more long term small investors will create greater stability than having big hedge funds who don’t give a rats azz about apple’s long term prospects. They make money trading (if aapl goes up OR down).
right now also no one is buying tech mutual funds where aapl is lumped together with dead wood like Nokia, Rim, Motorola etc. Most tech funds have lost money .
so the only thing left is small investors like apple fans who want to invest and many don’t want to buy 500 or $1000 shares.
Attacks of nonsense hearsay come and go every few weeks. There is no way that Apple is able to “defend” itself with any measures that discussed in the linked article.
So instead of thinking that Apple’s Board is stupid, this Seeking Alpha guy has to think about this simple fact and just let it go.
However, if there is criminal intent among’s Murdoch’s WSJ or other parties, then SEC, police and prosecution have to act.
But not Apple’s Board anyway.
Agree. Low price brings spread to a penny and significantly impairs the big options plays. Also would bring retail investors, which might add stability.
Does anyone know – why does it seem that AAPL shares seem to tank harder in the last 15 minutes of every trading day ?
Look up ETF.
There are also other issues that happen with large trading groups that happen at the end of the day. It is not the volume it is the direction that is the problem. I like short squeezes in stead.
My guess is that when shares are dropping and investors are skittish, some of them rush to close out their positions at the end of the trading day rather than risking some bad news and an after hours correction. I used to watch the stock market a lot, and it appeared to make sharp moves (up or down) at the beginning and end of many trading days. However, unless you can figure out the pattern amidst the chaos, that won’t make you any money.
yeah, for almost 3 and half months now, gotta be from Wall Street
so called Big Boys Flash Trading. If ever the SEC would prohibit
computer generated flash trading, this would not happen.
I wouldn’t have any problem with a stock split and an increase in the dividend, although not doubling it, a 25% increase would be plenty. I also agree that buybacks are a waste.
If I had the amount of money sitting around that Apple has, you can bet I’d be doing some pretty massive buy-backs because as far as I can see, it’s the best investment opportunity in a very long time. Forget about what’s good for the shareholders. Think about Apple. Imagine buying in at $485/share right now? In my dreams.
This is just people playing games to get the stock as low as they can before the announcement so that they can double their money. Isn’t that illegal? Shouldn’t these people stfu and gtfo.
This guy is 100% spot on! Been recommending all three of these moves for the past year.
“Avoid wasting money on Buybacks.” (MacHeadB)
As a long-time and fairly large shareholder of this equity, the 150 Billion dollars (+/-) the company will be sitting on as of Feb 23 is doing absolutely nothing–NOTHING–to bolster its share price or growth potential. If they’re not going to buy Amazon, Microsoft, Google, or some similar entity [:)], I want my money back. Period. It’s not THEIRS, it’s OURS, the shareholders’. Use it or lose it, Apple.
It is theirs .. U don’t like it go buy AMZN or MSFT and see what they give u back
The stock split will be the best option … 4 to 1 would get individual buyers back in the game …. All of this volatility would cease…
Do the split and double the dividend, but instead of a buy back, buy Disney!!! Please, please, please! Then offer ESPN live streaming and replays in iTunes exclusively and take it away from the cable/satellite companies. Then watch their little empires begin to collapse.
I agree with this but would add Apple ahod also consider secondary listing on Hing Kong market. With lower price this would open whole new raft of investors. The Board have not supported the operational guys and appear out of their depth.
That the stock split as a way to boost share price continues to be suggested by people who call themselves analysts baffles me completely.
There is absolutely NOTHING about the stock split that changes ANYTHING about the stock. If you have ten shares of AAPL today worth $500 each (total $5,000), and it split 1:5, tomorrow you’d have 50 shares of AAPL worth $100 each ($5,000). People who wanted to buy AAPL today would want to do it tomorrow. Those who didn’t (for whatever reason), won’t do it tomorrow. No investor in the world would think of a value of a stock based on the price of a single share. Looking at top market cap companies of the world makes this patently clear:
1. AAPL – share price $480
2. XOM (Exxon-Mobile) – $90
3. Petro China – $141
4. Google – $724
5. Berkshire-Hathaway – $145,000 (!!)
Price alone is absolutely meaningless. About the only one tiny little bump that AAPL might get from a stock split that brings the share price below $100 would be its inclusion in some of the stock indices, the ones which require the share price to be below $100. Since some stock portfolios out there are based on specific indices, when a new stock becomes a part of an index, the fund managers adjust their portfolios and buy the proportionate amount of the new stock. This buying would probably show as an uptick for AAPL around the time of the split. Usually, such upticks tend to be less significant than other events that move the stock much more. Not to mention it would be a one-time event.
Stock split is a meaningless exercise.
“Stock split is a meaningless exercise.”
No, it’s not. I know of several people who have told me, after suggesting that AAPL would be a good buy, that it’s “too expensive”. No, these people are not fund managers or savy investors. They’re just plain old people. If I know of 3 who think this way then there must be more. To them the math of 10 @ $500 = 100 @ $50 doesn’t matter. It just “feels” too expensive.
A person for whom a $500 stock is expensive is totally irrelevant. A hundred thousand such persons would still be irrelevant; it is difficult to imagine that a person who judges stock on the share price alone has any serious investment money (those who have know AAPL is an excellent investment at $600, let alone $480). No matter how many such ignorant people are there, their combined investment capital would be totally negligible (in proportion to the $457B (as in billion) of current market capitalisation of AAPL.
1 Predrag
IMHO, anyone who judges whether a stock is expensive or not on share price alone should not put their money in the stock market.
Return on investment is measured as a % of your cost.
Agree totally
++++++
Apple *needs* to focus on making great products that end up selling and making lots of profit.
I think they’ve been doing that pretty consistently for a while now, and they’ve even been improving on this.
Apple’s PE ratio is no longer being represented numerically, but rather as “INSANE”. At some point this will break, and the stock will ride back up.
Apple itself cannot manipulate the market alone because once voice is drowned out in an ocean of opinion from analysts, commentators, journalists and fund managers etc etc. Ideally shares should not be negotiable instruments, third party loans and options and other strategies all outlawed.
Apple does not need to care. The company does not get 1 cent on a trade of their stock, other than the executives that get stock bonuses, there is no incentive (other than stopping an investor revolt) for them to play the price manipulation game.
Technically, Apple does need to care. Investors own the company. Everything Apple does is ultimately done to satisfy the shareholders. Board of directors is essentially the body that represents those shareholders. If you own even a single share of AAPL, you are allowed to vote at shareholders’ meetings. We own Apple and they work for US.
As far as the current stock value is concerned, it is still noticeably higher than it was exactly a year ago (and any time before that). No company in the world is expected to be called on their stock performance by the shareholders if the share value is above the level a year ago (and even before that). Neither Apple, nor their board, is concerned with short-time traders, who are worried by a four-month 30% drop. Strategic performance of a company does not change based on such gyrations. Let us review AAPL a year from now. If it is below today’s close, we should begin to worry.
Apple doesn’t need to care – and what’s more it doesn’t and won’t care. The shareholders may own the company but anyone who thinks they will take action are deluded.
The reason the stock price is where it is is because stock analysts judge Apple by standards that apply to other companies – but so NOT apply to Apple. Apple has a mission quite separate from other businesses. Stock value and dividends are not part of that mission and won’t be for a very long time.
Now and one year go. You’re welcome.
Jan 13, 2012 -419.81
Jan 15, 2013 – 485.92
When the tide turns and the price runs quickly up to $800-900 then people will see how big money investors shook out the small money investors and stole Apple shares at firesale prices. Welcome to Wall St. 101 ……. Greed is good…
Hell even Apple gets to buy back shares at a great price. The way you lose now is by selling.. Buy Buy Buy ..
Any move Apple makes right now will be interpreted as negative b/c the institutions and mutual funds, who hold the lion’s share of Apple stock, still want to accumulate more shares, cheaply, before they change the bad news into good news.
What is the consensus about automatic trading? I feel that the high-speed buying and selling of large lots for a small profit is one of the factors in volatility. If this be true, wouldn’t a small tax of, say, $0.01 a share throttle those sales?
LOL,
AAPL is doing great, focusing on fun stuff for themselves. I’ve been long for many years and trust that they will focus on making cool stuff and ignore the nattering masses distracted by money and stock price and short term gain.
Shhhh! You’ll break the spell Bro. Nevermind that I don’t own a single share of APPL. I do have a pot to piss in though, so… Yea me! Good luck guys, I’m T- totally lost and out of my league now, I dont have a clue as to what is going on with APPL. Thanks to you all as always for putting your money where our mouth is….
Go Apple!
Dear Jason Kaplan:
We really don’t care about Apple’s share price. On a list of 1,000 things important to us, it’s about #1,000. We care about making the best products and we make a lot of money doing it. Your fickle love for us and your blatant attempts to manipulate our value in the eyes of investors are laughable and will have no effect on the billions of dollars we make on the tens of millions of product we sell. It will not stop our retail outlets from being the most profitable on the planet by several orders of magnitude. We live and die by the value of our products in the eyes of our customers.
In short, gimmicks to “stabilize” our share price are about as interesting to us as the idea of licensing our desktop OS. Thanks for contributing to the echo chamber of unsolicited advice.
-Apple
Apple does not care about it’s share price. It never has and won’t start now.
The share price is what the fool pays for it. Apple has never manipulated the share price like other corporations are doing. Buy Apple and stick with it, then in the long run you will make a profit.
Apple should care about it’s share price! Not caring makes it possible for a bunch of hedge funds to periodically move the share price down. Thats no tragedy but they do this by spreading FUD big time. Look at what has been happening in the past few weeks. The bad publicity is not just in the United States. It is beeing picked up by asian and european media as well. That is bad for business!
Apple should hedge the stock. They have the necessary funds to do it. If they say they will hedge the fund then the people who are behind this game will become very cautious and probably move on to another company.