“Apple Inc., the maker of Macintosh computers and the iPhone, rose to the highest in two weeks in New York trading after Sanford C. Bernstein & Co. said a ‘significant’ share repurchase plan may boost earnings,” Elizabeth Campbell reports for Bloomberg.
“A depressed price-to-earnings ratio, low interest rates and a growing cash balance ‘make a strong case for Apple to initiate a substantial share repurchase program,’ wrote Toni Sacconaghi, an analyst at Bernstein, in a note to clients,” Campbell reports.
“The New York-based analyst estimates that a $20 billion stock buyback would boost earnings by nine percent above his estimate of $5.50 a share next year,” Campbell reports. “Apple hasn’t repurchased stock in more than five years, said Sacconaghi.”
Full article here.
MacDailyNews Take: It must be pump time.
[Thanks to MacDailyNews Reader “iWill” for the heads up.]
The only significant reason a company would want to re-purchase their shares would be if there would be few other ways to grow the business (see: Microsoft). According to most analysts, Apple is looking ahead at multi-year sustained growth. Thus, no point wasting hard-earned cash on stocks (their own, or anyone else’s).
Really? We’re linking to something that “Toni the tool” is writing?
What basis is there for a share buyback from Apple? Have they done this in the recent past? Has there been any indications that they might do this?
No.
This is just Toni making stuff up.
You know, if there were fewer shares, the profit per share would be higher.
Brilliant!
See, that’s why he makes the big bucks, and you don’t.
Sacconaghi is nothing but a complete incompetent and liar. One of the worst asshats there is analyzing Apple. He has already shown his ass on more than one occasion.
Hmm. Spending billions on a buyback to boost earnings by 9% would be good for the stock, but boosting earnings by 75% through iPhone sales does nothing.
Friktard analysts.
Apple should buy up some of their shares at the current low price to fill the Option Grants they handed out last month to the Executive team. That would save them a big pile of cash as the shares are currently much lower than the Option Price that was given to them.
same trick as when someone said apple was coming out with an $800 notebook. this then gives people ammunition to crush apple when they don’t deliver. neat way to drive down the price of the stock.
This guy is so off when it comes to Apple. Steve has repeatedly said they are very happy to have $25 billion “safely” in the bank (i.e. short term treasuries) and want to maintain a very strong balance sheet. In two years when they have generated another $20 billion in cash, perhaps at that time the company will choose to return cash to investors through a buyback or dividend. The dividend is a better option as if Apple just did a buyback, you would be transferring alot of that cash from the company to employees who exercise options.
Boost the stock by 9% at today’s price or what? The stock price is half of what it was last year and this guy thinks Apple will spend $20 billion to make it go up 9% so that Tony can later make a comment about Job’s health and make it go down 20%.
Ain’t Gonna Happen…no other words necessary.
Another analyst who thinks he knows what Apple should do. What should Apple do?? Exactly what they are doing now. Opening stores, evolving their fantastic OS and iPhone software, expanding into previously unreachable areas, and staying above their always safe guidance.
Don’t fix something that isn’t broken. They know that growing too fast is painful, and are just keeping things steady. Just continue to kick butt as usual.
The last thing Steve is going to do is do what Toni the Tool tells him.
Besides $20B would drain Apple’s ability to acquire cheap companies.
And, more importantly, Apple doesn’t need to pump up earnings, as it’s on pace to earn $10 a share non-GAAP. Even the GAAP number should start to close in on the non-GAAP one, as the deferred revenues start to normalize now that more and more quarters pass by.
Jobs, said in the conference call that Apple liked it’s cash position and the money was not burning a hole in their pocket and with the economy as it is cash was king and a good bargain might be had.
So, I’m poo pooing the this as well a load of poo!
In todays environment, I’d much rather leave the cash with Apple to make strategic acquisitions with. They can grow much faster if they can buy good technology rather than having to invent everything. The faster Apple can sprint ahead of M$ the better.
If Apple isn’t going to lower the price some on it’s key products (hint macbook, no net book), then they sure as heck need to get way out front from a technology point of view. (Must Have Tech Marketing)
I’m a bit concerned about M$ disclosure of tipping point to lower cost machines, particularly net book where Apple has no offerings other than iPhone, which has some limitations from a netbook point of view.
If Sacconaghi suggested it, you know its a bad idea.
A 4% increase in EPS would cost Apple $10 Billion (or 50%) of its cash horde. Using today’s ISM that would increase the value of AAPL by $4.30.
On the other hand, the interest on that $10 Billion would earn an extra 17¢ per share.
As is typical of someone that can’t add, Sacconaghi’s idea is as bad as his forecasts.
> So, I’m poo pooing the this as well a load of poo!
Mind if I sit down and poo poo it with you?
Just another example of an analyst who gets paid to do only half the math. Poo is an understatement.
The PE on Apple should be over 30 given what’s coming down the pike and the rapid gain in market share. adjusted for GAAP accounting the PE is prob. more like 12 rather than 20. Apple is not going to buy back shares.
It should buy up clean semiconductor manufacturing technology and leverage a lightweight OSX variant into embedded computing systems with a flexible SDK, replacing custom chips and code in everything from home heating, refrigerators, cars, HDTV, etc. They could save companies millions in custom IC/chip development and speed products to market, with standardized, easy to program code libraries. They steal enormous biz from companies like Texas Instruments.
um, duh simple math, less shares = more revenue per share. Doesn’t take an analyst to figure that one out, just someone who understands 4th grade math.
“The New York-based analyst estimates that a $20 billion stock buyback would boost earnings by nine percent above his estimate of $5.50 a share next year,” Campbell reports. “Apple hasn’t repurchased stock in more than five years, said Sacconaghi.”
$5.50 a share for fiscal 2009? That’s only 13¢ higher than Apple reported for fiscal 2008. In other words, Sacconaghi is forecasting zero growth for 2009.
Let’s compare that to his Q4/08 EPS forecast:
Sacconaghi $1.05
Wall Street consensus $1.11
Apple Actual $1.26
Gregg Thurman $1.28
Don’t know much about this kind of stuff, but it seems to me that $20B for 9% is crazy talk. Apple’s stock (has and) can easily increase twice that in a year from them doing what they do best.
If they invest that kind of $$ in something, let it be something useful that could kill some of their deadweight partners. Like starting their own cell phone carrier business or indie music label.
In light of Current Events™
How can any wall street analyst type say ANYthing with a straight face ?
Do they think any of us would believe them ?
Do they really think we’re THAT stupid ?
You Betcha
BC
Back to your tomb Sacconaghi.
Why is the cash Apple has burning a hold in everyone’s pocket except Apple’s??
When Anti-Apple MS shills like Sacconaghi say they ‘push’ for a buyback, it’s time to hold on to cash. This idiot justifies his reasoning by saying that a $10B or $20B buyback would enhance EPS in the future. Fool of a fool. Anyone can see that Apple by its evolving strategies is doing more to improve earnings beyond the expectations of any company in the world and this is only the beginning of a very robust trend in earnings.
The more I see on Investment websites, the more it is apparent that analysts are wholly devoid of ideas. One says ‘Buyback’, and all the dummy analysts jump on the bandwagon. It is funny. It is perverse too coming from the anti-Apple analyst faction on Microsoft’s shill payroll. Tip? Look for the analysts who haven’t followed suit.