“In this post I will discuss some non-product, non-operational financial decisions for AAPL that may be important catalysts for its stock,” William Haynes writes for Seeking Alpha.
Haynes writes, “Some (or even all) may not happen, and their timing is equally uncertain.”
In order of their potential impact on the stock price:
1. Dividend
2. Stock Split
3. Apple Enters Dow Jones Industrial Average
4. Interest Income
5. Buyback
Read more in the full article here.
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Stay focused on the products and the stock will follow. Start focusing on the stock and that’s the end of the magic as we’ve known it. And the stock.
Translation: The timing of events that may not happen is uncertain.
1. Dividend – nope
2. Stock Split – possibly, really a null event if it does happen
3. Apple Enters Dow Jones Industrial Average – if so, then Apple will make every major index look better
4. Interest Income – at 3% (which is generous right now), Apple would get around $2B
5. Buyback – nope
this guy in the article repeats the myth that apple had to take money from microsoft. so his credibility went away immediately.
The article is not based on any information. It’s all speculation so pretty much bunk.
Where do I begin? The author of the article is so stupid that he should not be permitted to use a knife and fork – he’s a danger to himself and those around him.
One more time – here goes:
In order of their potential impact on the stock price:
1. Dividend: NO. And did I mention NO? The only people who are drooling about a dividend are large Wall $treet institutions and hedge funds. You stand to make a pittance. But institutions would make BILLIONS. Meanwhile, this would dramatically reduce Apple’s available cash, raise the stock’s P/E ratio, and give Apple less money to maintain a protective moat if things ever go bad. Plus, Apple’s cash allows it the option to make acquisitions (God forbid) and buy components at volumes and rates that keep the company’s products price competitive.
2. Stock Split: STUPID. A stock split adds ZERO value to the stock and makes it less valuable. In fact, a stock split would make Apple stock more price-sensitive and volatile. In many cases, the people who want this aren’t the little guy, but hedge funds and institutional brokerage houses, which increasingly make money on the rapid ups-and-downs of a stock’s price.
3. Apple Enters Dow Jones Industrial Average: Apple has not done badly where it is. The beneficiaries of being part of the Dow are institutions and mutual fund managers (AKA analysts) who, despite having infinite resources to select stocks, do a terrible job. This is a lazy way of trying to goose the Dow, which is increasingly irrelevant.
4. Interest Income: Sure. If that helps the company, great. But if the inference is via bonds, last I checked, Apple doesn’t need to issue them – the company has NO DEBT.
5. Buyback: BRAIN-DEAD. Publicly traded companies whose stock is flatlining are the ones who turn to this parlor trick. Buying back stock will decrease the shares outstanding, and often will goose the stock’s price. But the underlying value of the stock does not change one iota. Zilch. Nada. ZIP. Apple is a growth stock, not a stagnant stock. Why should the company need to buy back stock that is already in demand?
It sounds like William Haynes is sleeping with Kay Huberty or Toni Sagnocchi. All of his assertions echo those being trumpeted out of the posteriors of the big Wall $treet firms. These recommendations will do nothing to help Apple nor ordinary investors. They would actually make Apple less competitive and valuable. Instead, if Apple were to follow these directives, the only winner would be the fat cats on Wall $treet. And you would be left holding the bag.
Everywhere there’s lots of piggies, living piggy lives,
You can see them out for dinner, with their piggy wives,
Clutching forks and knives, to eat the bacon…
– George Harrison
+100
=:~)
Right On – Straight talk, no pandering or hedging, no pun intended.
Unexplained is why Apple needs a catalyst.
All Apple needs to do is continue doing what they do now! That is catalyst enough. It will be $1000 per share in a few years. Let’s hope the dollar doesn’t drop to $3.50/€ in the meantime!
The way I see it, Apple has performed so well under the stewardship of Steve Jobs who “thinks different” that it has out-stripped, out-manoeuvred and out-performed every one of its competitors and many others.
Along the way, it has outgrown its traditional roots (technology) to build a larger footprint across sectors (technology, music/media, telephony etc) delivering various siesmic shocks as it did so and now sits one place away from being the largest corporation on Earth.
All done by Apple flouting conventional thinking i.e., Thinking Differently.
It maintained an obssesive focus on the real users of its market offerings, those two-legged species called “humans”. It delibrately ignored enterprise knowing that the humans within will tackle their places of employment. And we are now witnessing the start of a big clash developing between Enterprise IT and Consumerised IT as these ordinary people in organisations embrace Apple products in droves and build them into their “personal-business” lives.
As its own track record shows, the one time it tried to follow convention (kicked off in the Scully years) it failed abysmally.
So nothing that this author has said makes any sense particularly since Apple is very successful DESPITE every one of his points. If any one of them were of any use to Apple, it would have actioned them long ago.
More to the point, the author conveniently ignores one key indicator tied to the tennant “results matter” – the indicator being that since SJ’s return, Apple has exceeded all quarterly targets bar one.
What we have here is a member of the “Wall Street Establishment” attempting to bring down the tall poppy that Apple has become. Doing so by comparing Apple to other corporations is akin to using benchmarking in the hope it improves performance while all it does is reduce performance to the level of the PAST performance (based on past strategies, processes, results etc) on which the benchmark is based.
Apple is a leader and not a follower. It is so in the business it pursues (consumer and not enterprise), the way it pursues it (direct to the consumer hence the Apple Stores), the way it funds it (zero debt as debt is a killer), and the way it shares the rewards of the pursuit (through market valuation).
Confirmed again by this analyst is Wall Streets sole (and soulless) self-interest to have companies, as their principal objective, make short-term money for Wall Street. Somewhere in the Biz school ‘shareholder interests’ preempted product quality and customer focus.
These people would kill the proverbial golden goose. My suggestion is that this analyst cash out his Apple stock and buy Microsoft (or maybe Dell, or Nokia, or HP) for his ‘catalyst’. Afterall, like Balmer they all have a “good plan, that we like a lot.”