“Apple Inc., the world’s most valuable company, is ‘more likely than ever’ to return money to shareholders in the form of a stock buyback or dividend, according to Morgan Stanley,” Adam Satariano reports for Bloomberg.
“Apple is able to finance a $25 billion share repurchase program or a 2.4 percent dividend using its available cash, said Katy Huberty, an analyst for Morgan Stanley in New York,” Satariano reports. “Apple has $76 billion in cash and investment holdings, equivalent to about $81 a share, which could be used to fund the effort.”
Advertisement: Limited Time, ends Sept. 20th: Students, Parents and Faculty save up to $200 on a new Mac.
Satariano reports, “Last October, when Cupertino, California-based Apple had $51 billion in cash and long-term investments, Steve Jobs said it was keeping its “powder dry” in case an opportunity comes along. ‘We’ve demonstrated a really strong track record of being very disciplined with the use of our cash,’ Jobs said on Oct. 18 during a conference call with financial analysts. ‘We don’t let it burn a hole in our pocket.'”
Read more in the full article here.
MacDailyNews Take: Hopes and dreams in notes to clients do not reality make — especially from one of the worst AAPL analysts on the planet.
Related articles:
Analyst dubiously suggests Apple’s revolutionary iPad may now be cannibalizing the Mac – August 17, 2010
Analysts expects Apple to debut lower cost iPhone models in June – February 26, 2010
AAPL: Morgan Stanley analyst Katie Huberty strikes again – December 10, 2008
Morgan Stanley analyst Kathryn Huberty’s record at predicting Apple (AAPL) performance not so strong – September 30, 2008
Worst analyst on Apple lowers price target – September 23, 2008
If Alex Guano says it’ll happen then it must be so.
Guano? Isn’t that huge heaps of bird crap?
Oh that guy, he’s bat sh!t crazy
If Katy Huberty says it’ll happen then it must be “no.” Morgan Stanley is going to close down before they get to play with Apple’s money.
Nonsense. Why would Apple give away a key advantage it has over just about any other company? In a down market, valuable but financially weak companies will decline even further. Then it’s time to go bargain hunting. Plus, Apple can make unmatchable deals with suppliers and “corner the market” on key components.
Also, that $81 per share in “cash” makes AAPL (the stock) more stable. After all, even if Apple’s ongoing business was suddenly worth zero, AAPL is still worth at least $81 per share. And Apple’s current ongoing business is worth A LOT more than $380 minus $81, or less than $300, per share.
Katy Huberty claims that Apple are “more likely than ever” to return money to shareholders.
In reality, Katy Huberty is more likely than ever to be talking complete nonsense and without the slightest shred of evidence to support her claim.
He could be right that it is “more likely than ever”. But maybe it has moved from “Zune will be an iPod-killer” likelihood to “when pigs fly” level of probability.
Lots of AAPL investors here at MDN. What do you think?
Can you do more with that money than Cook, Ives, Cue and tens of thousands of the smartest engineers, designers, retailers and operations people on the planet?
I’d buy AAPL shares with my dividend.
A dividend makes sense (though a $25 billion dividend is retarded), it says that owning Apple shares is a prudent investment not just a speculation (assuming that the dividends are paid regularly). And dividends can be used by long investors to buy more shares.
A stock buyback is always retarded. It’s a short term reward for people who may own a share at a given time that in the long run just damages a company.
I have to disagree with you on your point for “A stock buyback is always retarded.”
For a lot of companies a buy back is a stock manipulation strategy but in Apples case, it would be a short term benefit for the investors but would actually help the company and reflects a true value of the stock by keeping a lot of stock out of the hands of the Hedge Fund managers. These fund managers play this stock because it’s almost guaranteed quick easy money. Apple exec’s know that and don’t like it.
My 2-cents
I call BS. A dividend makes absolutely NO sense whatsover, nor does a buyback. A dividend is usually used by slow-growth companies to make their stock worth owning. A buyback is typically a parlor trick used to artificially pump up the value of the stock by reducing the number of outstanding shares.
Apple doesn’t have to do either one.
The reason why Morgan Stanley (via Katy Huberty) is asserting this – and make no mistake, that’s exactly what Morgan Stanley is attempting to do – is because as an INSTITUTIONAL investor, the company owns millions of shares of Apple Stock. Thus, if Apple pays out $25 billion in dividends, who wins? You guessed right: it’s an early Christmas and free income for another Wall $treet fat cat. And you and me? Chump change.
This is nothing less than a Wall $treet shakedown. They are trying to get ordinary schmucks like us to take the bait. Paying a dividend will do nothing to make Apple stock more valuable. It effectively would raise the P/E ratio of Apple stock, making it less of a bargain, decrease its cash that the company can use for development of new products, purchase of components at the most competitive price, make strategic acquisitions or use the cash to create a protective moat should the company ever encounter tough times.
When a company like Apple is growing at the rate that it has and is, a dividend is completely unnecessary. I’m sorry to the person above, but I could not disagree more. Dividends are fine for a company like General Mills, a large but slow-growing and mature business. But for a company like Apple, it’s completely inappropriate.
Warren Buffett has been painted with the same brush for decades by the ever-greedy Wall $treet, and he has wisely resisted the call to pay out dividends or buy back the stock. There has never been a need. If Morgan Stanley gets its way, the company will make billions for having done nothing. You will get the equivalent of a Happy Meal.
Don’t take the bait.
Very well said.
Can’t blame her, Katy is just trying to get a leg up. 😉
You are correct – Apple is still a growth play despite its size. Growth companies do not typically issue dividends, instead plowing that money back into the company. The interesting and likely unprecedented situation in this case is that Apple is a growth company with no debt and a massive bundle of cash and investments. There are no rules for such a unique situation – Apple writes its own rules and the pundits and analysts (who would be rich if they were consistently right and had the guts to act on their own research and recommendations) just don’t get it. So they make stuff up to fulfill their daily BS quota.
Not gonna happen, anal-ist making crap up hoping to create pressure. Apple is at war and dipping into the war chest weakens their dominant position.
I don’t see them giving dividends until the have at least $100B in cash which should be in 3 quarters time. Even then I’m sure they have a cunning plan for the cash. Global mobile operator perhaps?
Stockbrokers are greedy. They see Apple’s cash as something they can get their hands on.
If the dividend does appear then the only thing I would do is reinvest it back into Apple.
Whilst the 2.4% return would be handy it hardly is going to change my world. I would much rather have Apple go up 2.4% in stock value and continue to go up based on their stellar performance.
Perhaps she hopes with Jobs out of the CEO chair, Apple will redefine their relationship with the stock market. But dividends and buybacks are what microsoft does.
Will not happen.
Aplenty returns in spades to it’s real investors and users, who have voted confidence in Apples discretion on this issue and trust the company to continue with the same discretion that made Apple a power house that has no competition.
In Apple we trust.
Will not happen.
Apple returns in spades to it’s real investors and users, who have voted confidence in Apples discretion on this issue and trust the company to continue with the same discretion that made Apple a power house that has no competition.
In Apple we trust.
There’s no substance or basis for Huberty’s private wet dream.
She’s just trying to phsyce investors and create expectations that will no doubt create a sellof when Tim Cooke in Apple’ quarterly conference call will only reiterate what Steve Jobs has already said many times : We’re keeping our powder dry.
That’s : NO – to dividends otr buybacks.
dividends are a sign of stability for the stock price so it’s more predictable and becomes less volatile. investors will see it as more investment grade with a predictable rate of return. This in turns gives management the option to explore acquisitions with shares and cash.
given that AAPL has so much cash, an increasing stock price, growing revenue/profits and huge upsides, they would be silly to acquire using stocks and just buy what they need with cash. Using stocks is just a form of cheap line of credit….if the share values increase, the purchase price of the acquisition actually becomes more expensive. Using cash to buy something to increase revenue/profit actually increases stock prices (especially with Apple’s margins) a stock buy back really isn’t investing in growth, but converting flexible cash to a paper investment. You only need to stabilize a stock price if you have no prospects for growth or artificially bump your stock price up to be seen as more stable so you can use the shares to acquire something.
More likely? Yes.
It’s just that same as, “No.” is more likely than “Absolutely no way in Hell!”
Some money, not all. Of course it’s more likely as the cash pile gets bigger.
No.
Not going to happen. Dividends are paid when there is nothing better to do with the money. I seriously question their reasoning here. Nope. Apple has nothing better to do with it’s money? Laughable.
Well, if he’s talking up the stock price, I’m fine with that. Will Apple ever give a dividend or buy back stock? Not in my lifetime. If it ain’t broke, why fix it? They like their cash horde and probably still have scars from nearly going bankrupt 14 years ago…
Remember, a lot of Apple’s “cash” pile is sitting overseas. It hasn’t been repatriated because of the taxes that would be incurred.
That money is not available for paying a dividend, or share buybacks.
Don’t take it personally, Macheads. There’s a wheel in the bowels of Wall Street and on this wheel are categories of spew that analysts must periodically seize upon to justify their worth. In addition to the monthly “give APUL investorz divendund plz” story, there’s the “APPL should do this with its cash” and the incremental ever-upward microadjustments to their valuations – because god forbid they ever appear too bullish on AAPL.
Analysts know shit about AAPL. If you doubt this, take a look at any of the earnings predictions the big houses have made for EPS in the last – I don’t know – forfuckingever. Apple 2.0 does this every quarter and it’s hilarious.
“Repurchasing shares or initiating a dividend is the best use of Apple’s excess cash for shareholders,” she wrote in a note to clients issued Monday. “Using over 40 years of stock performance and capital deployment data from our U.S. Equity Strategy team, we conclude buybacks or dividends would be most accretive to shareholders in the long term.”
What Huberty doesn’t mention in the text of her report is that by “shareholders” she means Morgan Stanley and the other institutions that hold 70% of Apple’s shares. You have to get to the fine print in the “disclosure” section to learn that …
“As of August 31, 2011, Morgan Stanley beneficially owned 1% or more of a class of common equity securities of the following companies covered in Morgan Stanley Research: Apple, Inc., DELL, EMC Corp., Seagate Technology, Western Digital.”
With 927 million shares outstanding, 1% of Apple would be worth than $3.5 billion at Tuesday’s opening price of $382.14.
maybe in 3-5 years, the goal is to have so much cash, that they can buy the whole company and turn it private so they never have to disclose anything anymore.
So humm.. That’s the same Morgan Stanley that almost went BANKRUPT from toxic assets, bad lending practices and equities fraud a couple years back, hey?? NOT likely to believe much you say now days lads… Sorry.
Long standing shareholders of Apple believe what Apple is doing to insure they have a technology advantage 5 years into the future with wise and insightful use of that leverage (money) should continue… Goldless Sachs be damned….