Yesterday’s “earnings report marks the point at which Apple is officially no longer a high-growth tech stock, valued on its monster potential. Instead, it has become a cash cow, valued on its ability to pump hundreds of billions of dollars into its shareholders’ pockets,” Felix Salmon writes for Reuters. “That’s the main lesson from the big news of the day, which is that Apple is going to return $100 billion to its shareholders by the end of 2015. By comparison, Apple closed Tuesday with a market capitalization of $380 billion. And its $145 billion cash pile isn’t going to get any smaller: the newly-announced program merely brings its dividend and share-repurchase expenditures up to roughly the level of its current free cash flow. Apple will still have more than enough money to invest as much money as it likes in anything it likes.”
“Apple says that its new capital-return scheme ‘translates to an average rate of $30 billion per year from the time of the first dividend payment in August 2012 through December 2015’; it’s pretty hard to imagine that number falling thereafter,” Salmon writes. “If you assume fungibility of dividends and share repurchases, then you can express that number as an effective dividend yield: a $30 billion dividend, divided by a $400 billion market cap, works out to a yield of a whopping 7.5%.”
Much more in the full article here.
MacDailyNews Take: Apple is no longer a high-growth tech stock if you think Tim Cook, Jony Ive and the rest of Apple Inc. are incompetents and/or that Steve Jobs left his left’s work high and dry. Neither idea seems plausible to us.
Watch and see.
[Thanks to MacDailyNews Reader “Brian” for the heads up.]
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