They’re practically giving Apple away

“Tim Cook, who has famously told investors he doesn’t care about his stock price, actually cares a lot about his stock price,” Dana Blankenhorn writes for TheStreet. “With a $50 billion share buyback fueled by cheap debt, plus a higher dividend, Cook signaled to investors when he released earnings on April 23 that Apple is determined to raise its share price.”

“Since that announcement, it’s up 13%. That’s better than Microsoft, which is up just 10% in that time,” Blankenhorn writes. “But go back a month and Microsoft’s gains are 17%, Apple’s just 9%. Apple is practically having to pay people to hold its stock in order to keep up with its Redmond rival.”

Blankenhorn writes, “What’s going on? Microsoft isn’t paying people to own its stock. It’s not gaining market share. Apple is doing both, yet it lags. The truth is that, in technology, no one cares about what you’ve done but what you’re going to do… Put a market multiple of 14.5 on the $41.89 in earnings Apple achieved in the last four quarters and this is a $600 stock… Microsoft, by contrast, is already trading at a premium to that, a hefty premium, with a PE of 17.36.”

Read more in the full article here.

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15 Comments

    1. The $50 billion stock buy back might be “phase 1” of taking Apple private. Of course, no one has enough money to buy the whole company outright – and even if Apple did have enough money, this probably wouldn’t the best way for them to spend it.

    2. I almost never use caps, so please take heed. This is a STUPID thing to say, yet you keep repeating it. XS just compounds the stupidity by confusing Apple’s assets with money that some mythical person could use to buy Apple and “take it private.”

      Apple is owned by the shareholders. I actually own a minuscule piece of it. And I am not going to let someone take my piece of the assets and use it to buy my piece of the assets. Get it?

      In order to take Apple private, some group wold have to come up with the current market capitalization (~$460B) plus a premium – possibly a very large premium – above that value. The offer could be funded in a variety of ways, but you are talking about at deal on the order of at least $550B and probably much more.

      Quit it.

  1. This saying comes to mind. ‘What goes up must come down.’ On Wall Street the reverse of this is also true. What goes down must go up. At least most of the time.

  2. Blankenship is a waste of time. He has literally, 10 shares of Apple, and most of the time he’s been a Microsoft and Google supporter until he bought his 10 shares.

  3. The share buy back doesn’t necessarily mean Cook cares about stock price.

    It more likely means that Apple realizes that the best place to invest $50 billion is in their own stock. It’s simply a good financial move if you really have confidence in the company’s future.

    SMART investors would take note of that…

  4. Okay and what has Microsoft done to show any difference? There crappy failed surface? Is that a reason to lift Shares for M.S.? There failed Windows 8?
    Okay so far 2 failures and I’m not seeing a real reason as you explain in your article for showing a reason why M.S. shares grew and Apple shares did not. Apples products are still selling at record rates while M.S. products are not selling.
    Apple has future products in the works but as everyone is well aware of Apple will not publicly announce future products EVER! So the reasoning behind Apple’s growth in the market is B.S.!!!!! Anal-ists are the ones trying to control Apple’s business by degrading Apple’s stock
    price for there own GREEDY purposes. However 1 thing you will never get Apple to do is to have them announce future products before there release. Why has this changed? Apple as I have said before has never announced new products
    before there released since Jobs took over and
    started the turn around. So why are anal-ists bent up on new product announcements now?
    This is pure greed showing, nothing else.

  5. So what does Microsoft have in the pipeline that allows it to have such a high P/E in comparison to Apple’s P/E. Has Microsoft announced some major new products that are going to raise Microsoft’s revenue or profits considerably. I have to call foul if Apple isn’t worthy of having a P/E closer to Microsoft’s. Why give one company a free pass at having a bright future and not another. Surely Microsoft’s desktop empire is on the wane and it’s mobile platform has yet to gain any serious traction, so what exactly would give Microsoft a P/E ratio edge over Apple except some blind faith of Microsoft investors.

  6. The news that the percentage of AAPL owned by retail investors is growing is interesting. Is that good or bad? Fewer shares for the big institutions to manipulate but more ordinary investors to feed off of.

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