Analyst: Apple must pay dividend to win stock investors

Apple Online Store“Apple Inc.’s failure to pay a dividend is preventing some investors from buying shares of the Mac, iPhone and iPad maker, according to Toni Sacconaghi, an analyst at Sanford C. Bernstein & Co.,” Tara Lachapelle and Tom Keene report for Bloomberg.

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“Sacconaghi said about 10 percent to 15 percent of the investors he speaks with avoid the Cupertino, California-based company because they only buy firms with payouts or they’re concerned Apple will use cash for an acquisition. Apple had $25.6 billion in cash and short-term investments as of Sept. 30, the fourth-biggest amount in the Standard & Poor’s 500 Index when companies with financial divisions are excluded,” Lachapelle and Keene report. “‘As an Apple board member, I would not want to create any reason for people to not want to own my stock,” he said. “There is a reason right now, which is there’s a large cash balance that investors are not giving them full credit for, that investors are worried about in terms of the surprise of a large and potentially value-destroying acquisition, and there are investors who have dividend mandates who also can’t own Apple.'”

MacDailyNews Take: Don’t worry, Toni: Steve Ballmer will be crowned Miss America before you’re named to Apple’s BoD.

Lachapelle and Keene report, “Apple generated $16.6 billion in free cash flow, or money generated from its business minus capital expenditures, in the fiscal year that ended in September, according to the company. Given the company’s $281.1 billion market value, a 5 percent dividend yield would cost it $14.1 billion annually.”

Full article here.

MacDailyNews Take: Toni, go back to searching for your “missing” iPhones, you broken record. Steve already answered your incessantly repetitive crapola this week:

“Of course that’s been suggested to us. We strongly believe that one or more very strategic opportunities may come along that we can take advantage – that we’re in a unique position to take advantage of because of our strong cash position. I think, we’ve demonstrated a really strong track record of being very disciplined with the use of cash. We don’t let it burn a hole in our pocket and we don’t allow it to motivate us to do stupid acquisitions. So, I think that we’d like to continue to keep our powder dry because we do feel that there are one or more strategic opportunities in the future. That’s the biggest reason. There [are] other reasons as well that we could go into but that’s the biggest one.” – Apple CEO Steve Jobs, October 18, 2010

89 Comments

  1. This is the world’s dumbest idiot. “preventing some investors from buying” Apple shares? Who is prevented?

    Click this link. ANY DAY! You will see Apple is always the TOP total dollar traded stock on the Nasdaq. It is also 21% of the PowerShares QQQ that is almost always the 2nd. EVERYONE WITH MONEY IS BUYING APPLE! Idiot.

    “Nasdaq Most Active by Dollars Traded”
    http://www.marketwatch.com/tools/marketsummary/screener.asp?exchange=15&view=7&lookup=Look+Up

  2. This is the world’s dumbest idiot. “preventing some investors from buying” Apple shares? Who is prevented?

    Click this link. ANY DAY! You will see Apple is always the TOP total dollar traded stock on the Nasdaq. It is also 21% of the PowerShares QQQ that is almost always the 2nd. EVERYONE WITH MONEY IS BUYING APPLE! Idiot.

    “Nasdaq Most Active by Dollars Traded”
    http://www.marketwatch.com/tools/marketsummary/screener.asp?exchange=15&view=7&lookup=Look+Up

  3. No don’t. Let the stock keep on going up, or quad split or something. Costs Apple close to nothing to split, and that’s better.
    Keep the money Steve. Spend it on blu-ray burn’n. Haven’t enough people asked for that.
    How ’bout a better codec than avchd. An Apple 4K camera? An Apple 4k 3d camera, and 3d 4k tv? Sed, or Fed tv.
    Theres plenty for Apple to do. Spend money on that stuff.

  4. No don’t. Let the stock keep on going up, or quad split or something. Costs Apple close to nothing to split, and that’s better.
    Keep the money Steve. Spend it on blu-ray burn’n. Haven’t enough people asked for that.
    How ’bout a better codec than avchd. An Apple 4K camera? An Apple 4k 3d camera, and 3d 4k tv? Sed, or Fed tv.
    Theres plenty for Apple to do. Spend money on that stuff.

  5. As soon as a company pays dividends, the shareholders or more precisely the fund managers begin to apply pressure for higher and ever higher dividends until the CEO & board are crippled into making reckless acquisitions as a monetary generator neglecting the companies core competency, leading to the company loosing ground to rivals. You don’t have far to look to see these events occurring again & again.

  6. As soon as a company pays dividends, the shareholders or more precisely the fund managers begin to apply pressure for higher and ever higher dividends until the CEO & board are crippled into making reckless acquisitions as a monetary generator neglecting the companies core competency, leading to the company loosing ground to rivals. You don’t have far to look to see these events occurring again & again.

  7. This is the typical attitude of greedy, retarded American investors. “I deserve a dividend for buying your stock which is too expensive for me to afford because everyone else wants it and is inflating the price, although I’ve had no part in helping your company increase revenues.”

  8. This is the typical attitude of greedy, retarded American investors. “I deserve a dividend for buying your stock which is too expensive for me to afford because everyone else wants it and is inflating the price, although I’ve had no part in helping your company increase revenues.”

  9. Any purchase that would materially diminish that pile would be offset by future value. Also, Apple hasn’t ever done deals bigger than throwing a billion at NAND suppliers and see what that bought them – a sh!tpile of flash memory. And it would take apple less than a month of profit to earn that back. Relax everyone… Nothing to see here.

  10. Any purchase that would materially diminish that pile would be offset by future value. Also, Apple hasn’t ever done deals bigger than throwing a billion at NAND suppliers and see what that bought them – a sh!tpile of flash memory. And it would take apple less than a month of profit to earn that back. Relax everyone… Nothing to see here.

  11. Dividends are attractive to people looking for an income component from their investment. Utility companies used to fill this niche in many retirement accounts. So a dividend might increase AAPL’s attractiveness to a subset of investors. The smart ones, however, seek their investment income from other sources and ride the AAPL growth train with the rest.

    Apple has shown great restraint and savvy in its acquisitions over the past decade. Since Apple’s cash hoard is not truly factored into its stock price, they should be able to blow ten or twenty billion without much effect. After all, other companies owe billions and that doesn’t seem to be counted against them.

    For a company that is growing as fast as Apple, the P/E on AAPL is amazingly low. Why does the absolute stock price seem to bother people so much? If APPL is worth $450, then it ought to be there.

  12. Dividends are attractive to people looking for an income component from their investment. Utility companies used to fill this niche in many retirement accounts. So a dividend might increase AAPL’s attractiveness to a subset of investors. The smart ones, however, seek their investment income from other sources and ride the AAPL growth train with the rest.

    Apple has shown great restraint and savvy in its acquisitions over the past decade. Since Apple’s cash hoard is not truly factored into its stock price, they should be able to blow ten or twenty billion without much effect. After all, other companies owe billions and that doesn’t seem to be counted against them.

    For a company that is growing as fast as Apple, the P/E on AAPL is amazingly low. Why does the absolute stock price seem to bother people so much? If APPL is worth $450, then it ought to be there.

  13. As a shareholder I do not wish to see a dividend although a split would be nice. I’ve owned Apple since 2001 & just bought my latest shares Tuesday morning. I will continue to accumulate Apple shares and they will continue to grow in value.
    Wall Street just wants a quick payday. Eff ’em.

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