Zaky: Why Apple should hold off on paying a dividend

HOT Apple Computers + FREE Shipping“Toni Sacconaghi, an analyst with a questionable track record at Bernstein Research, wrote an open letter to Apple (AAPL) urging the board of directors to return some of its growing cash hoard to its shareholders in the form of a dividend Thursday morning,” Andy Zaky (a far better AAPL analyst than Sacconaghi – MDN Ed.) writes for Seeking Alpha. “Just as I began to believe Wall Street analysts couldn’t get any more idiotic, Sacconaghi sends this highly misguided open letter to the board of directors at Apple.”

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“Apple is currently trading at an elevated market capitalization that rivals the likes of Exxon Mobil (XOM), and all indications point to Apple far surpassing Exxon to become the largest company in the United States in terms of market capitalization sometime in 2011,” Zaky writes. “For the market to have full confidence in Apple’s market cap, Apple will have to show that though its net income isn’t anywhere close to surpassing Exxon’s in the immediate future, its extraordinary cash position justifies a very large portion of its market cap.”

Zaky writes, “Shareholders will derive a larger benefit from headlines that read ‘Apple exceeds $100 billion in cash’ than headlines that read ‘Apple returns a few dollars to its shareholders.’ Once the fact that Apple surpasses $100 billion in cash spreads across the financial industry, no one will question whether Apple should hold the #1 market cap.”

Read more in the full article – recommended – here.

MacDailyNews Take: We’re not sure what’s motivating Sacconaghi, but if it’s to continue looking like a goofball, he’s doing a great job.