Legg Mason’s Miller: Apple about to make ‘dramatic’ cash move

“Apple may finally do something big with some of its $137 billion cash pile, said Bill Miller, portfolio manager of Legg Mason Capital Management,” CNBC reports. “‘I do think they are going to do something fairly dramatic on capital allocation,’ Miller said on CNBC’s ‘Squawk Box’ on Friday. ‘I talked to them about this a few weeks ago. They are actively, as they said, ‘soliciting input.'”

“Miller said he cut his position in Apple ‘close to the highs”‘ last fall, but is now overweight on Apple,” CNBC reports. “In late February, at Apple’s annual shareholder meeting, CEO Tim Cook said the company is ‘seriously considering’ returning cash to shareholders, but the company has not confirmed any specific plans.”

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46 Comments

  1. The ANALyst: I have a small cock. Ooooh Apple’s so, so, so BIG. I talked to Apple so I must be important, they wanted me to put it in, cause they were soliciting input, so I did, but I’m so tiny that I never made it. Oh it was good for me.

    1. Unlike this cro magnon, Miller is a brilliant guy. He knows what he is talking about. He has always been very pro-Apple. I suspect that he is right on, and it will be a nice catalyst for the stock. This will be a dividend increase that will move it up to the free cash flow, with the rest of it being kept for whatever they want to do with it.

        1. Very nice. Analyst analyze. They’re not supposed to be pro anything. Some are good and some are bad but their job is to analyze companies. It’s funny how so many on this site think the analysts are doing a poor job with Apple now but last summer they never spoke up to complain about the same analysts that were behind Apple’s meteoric rise. You just can’t have it both ways. That’s why so many on this site have lost money in AAPL. They didn’t take into consideration that Apple was overbought last summer. So they didn’t take their profit. Then Apple goes down for 5 1/2 months and they freeze like a deer in the headlights. Oops, opportunity lost. Squandered. Now suddenly those same analysts are idiots. It’s not the analysts.

      1. I have no qualms about Miller’s brilliance but frankly what exactly is he talking about? It’s speculation. A dividend increase, soliciting input, unknown sources, it’s still speculation with very little hard core facts.

        1. I would hope they acquire an LED maker… So they can indeed move forward with their vertical market…

          hopefully robotic tech is being developed to start to be involved in building iPhones/iPads that meet market demand…

  2. I hear Cook is taking all the apple emplyees to vegas and giving them piles of money to put in the slot machines! What happens in Vegas, stays in Vegas!

  3. I would love for them to use it for satellites or some other major infrastructure project, but handing money back to shareholders is not where it’s at. That’s just throwing it away. Investors should only make money from the value of the stock. Handing out money will only encourage increased volatility and increasing attempts at manipulation. If they just hold on to them money and ignore the talking heads it will stabilize the stock, And that’s what they need. Stability and the investor in it for the long haul.

    1. I agree that infrastructure is something that Apple could do in a big way that no one else could. Private roads with automated vehicles is one idea, but there are regulatory/legal issues to be dealt with first. Also, roads are expensive. I imagine for just one major road in California, setting up a transportation system could cost 10 billion dollars and take forever to build.

      Satellites is probably a much more plausible investment. But Satellites are best for broacasting, not millions of individual connections.

      Ultimately, Apple will have to branch out. Energy, Medicine, Material Science, etc. You know, some of the things that Mansfield’s group is working on. Those are probably not in the near term. More obvious things coming soon would be improved Macs, iOS/OS X integration, new office-oriented services, apps/games/controller for Apple TV, heck even a search engine. Want to go to war with Google? Attack them where it hurts.

      1. I did not mean transportation infrastructure, that’s for government to get it’s act together on, I meant servers, services, satellites, super-wifi, anythng that helps them deliver a better customer experience, and that is expensive. These are things you take care of only in times like this where you actually have that kind of dough. I mean who has ever had this type of dough? DO SOMETHING MAJOR WITH IT! This is a once in a lifetime opportunity for any company.

        1. I completely agree that transportation infrastructure SHOULD be the job of the government, but governments all over the world are under austerity policies, for one. But also look at all the ineptitude. Not just in the US, but all over. If climate change turns out to be unstoppable, for instance, won’t we need a technology company to step up? Up now we’ve had corporations, but we’ve never had super corporations (to my knowledge). Imagine the company that invents AI.

    2. Low-orbit satellites didn’t work too well for Motorola years ago. They threw away a huge amount of money on that project and got almost nothing back, selling it for pennies on a dollar. But then again Motorola was always screwing good stuff up. Okay, they got lucky with the StarTac and a year or two of RAZRs.

      As long as there are hedge funds and no rules to restrain them, I think Apple and the rest of the stock market will be very volatile. There’s too much herd mentality at work with hedge funds moving millions of shares instantly one after another. They just go crazy stupid.

      I’d like Apple to purchase a fleet of vehicles and start doing their own Street View in Maps. They should make an effort to improve their maps as much as what Google has done.

      Definitely have a Netflix-style streaming service. Apple appears to be letting easy money get past them. However, it’s just possible they don’t have enough server infrastructure to do it on their own right now.

      I still want to keep my current dividends without needing an increase if Apple can increase the share price back to where it was in September.

      No to the Woz. I’m sorry, but he’s too partial to Android to suit my purposes. He’s too much of a tech-nerd. I want someone who focuses on average non-tech consumers.

      1. Apple has what Motorola did not have at the time, an incredible market share and a ready built in market. It it is technologically feasible to go over the carriers heads or in conjunction, it should scare the living pants off of them. If not satellites, then a super wi-fi type of solution. But having full control of their ecosystem would do Apple good. I mean it is feasible technologically and financially.

      1. I don’t think so. I think the biggest mistake that Cook has made so far was to hand out a dividend. This was when the trouble started: Wall Street now realised that Apple was a stock was ripe for manipulation.
        If he gives them more then they will just keep demanding more.
        I hate to pull out the tired old ‘if Jobs were alive’ mantra, but if he were then these shysters would’nt even think about queuing at his door to demand a share in Apple’ money.
        All these reports of Cook meeting with these people and listening to their advice make him look weak and directionless.

        1. Totally agree!!! Cook is no visionary, he is a pawn mover, he is, and will easily be swayed by the greedy bean counters and lawyers. I still believe Apple should bring Woz back as in the very least a figure head, at best a source of inspiration as a guard against Apples products cutting itself off completely from the techies and programmers that have believed in apple all these years, buy iRobot and start getting heavily into Home automation and personal robotics along with consolidating its present lines of activity. I want to see an Apple iRobot before I die.

        2. Exactly, the major players wouldn’t play these games when Steve was alive. Now they sense weakness and are seeing how much they can play Cook. If Cook is weak, he will cave and this will be standard practice for the tenure of his leadership. They will not let up on him regardless of how successful Apple is. He has to hold tight and take back control. You should never, and really can never appease the unappeasable. Let them go elsewhere and more of those interested in the long term success and viability of Apple will be left and stability will take over. This is the only way.

  4. No to Wozniak. Absolutely NO. Not at any price. He is a tepid, weak-willed, wishy-washy Apple supporter . . . if at all. He dated Kathy Griffin for Gawd’s sakes! How sane can he be?

  5. Yes Wall Street – bleed them dry, then when hard times come and Apple doesn’t have its cash cushion any more, you can make more money picking over their bones as they crash.

    Investors that have held Apple have made a LOT of money over the years. Hail to long-term investors. I see nothing wrong with some dividends, but I hope Apple doesn’t let itself get bullied – those cash reserves can help them make some strategic purchases in the future, as well as ride out any new crisis Wall Street may bring our way. Steve wouldn’t let himself be bullied. Granted, they have a lot more cash now – and they should continue to bring more into the coffers. I just hope they don’t lean down the cash reserves too much.

  6. I would rather see Apple use the cash for fixing long established issues and problems and greatly improving their software offerings. This will provide far more shareholder value over the next three years.

    Here are my proposals:

    It seems like Apple works like this:

    Everyone to the left side of the boat, everyone to the right side of the boat.

    What Apple really needs to do is spend some of that extra cash establishing development groups for each of its major products. By doing this Apple can be developing new versions of multiple products at the same time.

    iWork – (Pages & Numbers, update Bento for use with Pages and Numbers in data analysis and selective Mail Merge)

    iLife – (iMovie still can’t work with 1080 60P video which has been standard on almost all new cameras for the last two years). This standard feature has been supported by most Windows apps now for at least a year.

    iPhoto for the Mac is behind the iPad and iPhone editions. Customers pay $2,000 to run inferior software. Thank you Apple!

    Release a new iWeb designed from the iBook publishing software. Provide integration between Pages, Numbers & Bento for easy web updates. Integrate the software with shopping cart services. This will be big with small businesses all over the world.

    Either purchase Quicken for the Mac and update it extensively, or create a competitor or encourage a third party to create a category leading application. Provide integration with iWeb, Bento and Numbers for online sales support.

    Include this software suite with every new Mac. This is how Microsoft won the Office wars back in the 90′s. Why not turn the table on Microsoft. Provide an obviously superior value – a turn key solution right out of the box.

    We tested this proposition with MBA students who currently are not using Mac’s. Almost 90% stated that they would switch if Apple provided a turn key solution such as the one proposed above. Why? A turn key solution reduces research time involved in the purchase, learning time (similar interfaces), and incompatibilities.

    Finally, Apple needs to hold quarterly webinars with users of its software and hardware products.

    The purpose: Research. Steve Jobs informally did this when he visited with customers in the early days of the Apple stores.

    Steve Jobs gained valuable insights this way. Several of his friends have stated that he would have made a very good investigative journalist.

    Without Jobs playing the role of investigative journalist, Apple may slack off slightly and lose the creative edge.

    Ron Johnson was successful at Apple because of Steve Jobs informal yet extensive research. We have all seen how successful he has been without Jobs research.

  7. I wish that Apple had never paid the recent dividends because all it did was to generate an endless flow of greedy investors wanting more, more, more. If you want a stock that pays dividends, then go buy one. Don’t buy one that doesn’t pay dividends and then complain about it to the point that you trash the stocks value.

  8. The idea that apple would give the money back is just stupid. What would that accomplish? The idea of being in business is to make MORE money not make a pile and then give it away.

    I also don’t think apple would purchase any of these various failed business’s that get suggested. Why throw good money after bad?

    So what could apple do with that money? Not develop a new product, expensive but not that expensive. So again, what costs that kind of money? What have they been saving up for? The only things I know of that are that expensive would be a media company, media rights, or some type of physical infrastructure. Since Apple doesn’t seem big into owning anything then I think they will purchase the “rights” to something.

  9. yes, I’m going to do a dramatic move

    when the spaceship campus is done I’m going to fill the center of it with dollar bills: like jelly in a donut.

    Every other CEO , tech journalist and financial analyst on the planet can come see it and WEEP.

  10. They should buy a streaming company like Netflix, Hulu or Redbox now that Redbox has a streaming plan. Redbox might be the cheapest.

    Any user that has an Apple device, would get free streaming of a base plan. To continue building the brand and have revenue for the potential purchased company, they could still offer the service/App on Android, Windows, etc with the full pay version. But hey, the benefit of buying an Apple device is that you get a $7 a month service for free now, or a discounted price as an Apple device user. It also gets Apple a company that currently has tv media relationships in place, and we all know Apple is trying to negotiate that piece of the eco system now.

    Nintendo had a value of $10 Billion not long ago, I’m not sure if that is even lower now with the disaster they have in the new console launch. But much like Disney bought Lucas for a brand/content, Nintendo has a lot of the same. We know that a full size TV might come with integration to the current Apple TV features, but does that then mean the little puck goes away? How about buying Nintendo, create a $400 puck that is a gaming system and media device. This puts them in a nice place against Sony/Microsoft in the fight for the living room. I’ll bet money that Samsung will if Apple doesn’t. You can still have a TV set if they so choose, but they could make the puck much more with Nintendo content.

    I have no clue what any of the health/fitness companies are worth, but I’m sure one of the cheaper ones would not be over $1 or $2 billion. Wearables(Watch) and fitness/medical add-ons are going to be a big thing. Jawbone has the UP, Fitbit has devices and companies I don’t know the names of have medical devices that work with mobil devices. I’m sure there is an easy ROI in a business there and a marketing gold mine they could tie to an iPhone waiting in that world of devices. Hell, anything sold in the health world to doctors is marked up 10,000%. They could create an app and have a blood pressure pump/cuff that they sell to doctors at $1,500 each, costing $11 in China to make.

    I would much rather see the money invested to innovate so that Apple could be MORE, thus MORE return and growth of income. Give the money back to investors now, and that is a play that the success they have now, on the exact products they have now, are all people will ever desire. It’s a play that the products they have now, at their current innovation pace, will continue to keep people hooked. I think that plan is a fail.

    When they hit with the first iPhone, that was that out of the blue jump for the world. It was so earthshaking and such a leap forward, that the next couple of years worth of upgrades were still miles ahead. Fast forward to 5 1/2 years later, competitors have caught up in many ways. Innovation or leaps are hard to make now. The money needs to go towards finding the next leap, innovation or temporary niche that gives you a major advantage for a year or two.

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