“Apple Inc. Chief Executive Officer Tim Cook just bought himself more time to prove doubters wrong over the company’s growth prospects,” Adam Satariano reports for Bloomberg.
“Cook yesterday took dual steps to reassure investors who have raised questions about whether the company’s most robust gains are behind it. Apple reported surging sales of iPhones, with 43.7 million purchased in the fiscal second quarter after the handset became available through the world’s largest wireless carrier, China Mobile Ltd.,” Satariano reports. “Apple also said it will increase its share repurchase authorization by $30 billion, boost its dividend and split its stock 7-for-1.”
“The actions are the strongest retort yet from Cook, who has been under pressure to reignite growth in the absence of any new hit products. The skittishness showed itself in the stock declining 6.5 percent for the year and 25 percent from its all-time high in 2012 through yesterday. Cook said on a conference call yesterday that the current stock price doesn’t reflect the company’s proper value,” Satariano reports. “‘Apple has created tremendous value for shareholders by developing great products that enrich people’s lives and that will always be our top priority and driving force,’ he said. ‘The size of the share buyback increase is a signal of the board and the management team’s strong confidence in the future of Apple.'”
Read more in the full article here.
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Ignorant question… surely the $3.29 per share dividend will be divided by 7 when the shares split, right?
Correct. 47¢.
Shirley.
“And don’t call me Shirley.”
It is the same increased return on your investment. It just was broken into 7 pieces. If someone offered you a dollar and instead, gave you 4 quarters, are you Ok with that?
So, the $3.29 for each share will become $0.47 per share on 7 times as many shares. Same return on your investment. Apple wanted to use the 7 to 1 split and $0.43571 a share wouldn’t work so the old $3.05 number was moved up to $3.29.
You are Ok. It is more on the same money you invest on AAPL.
The 7 to 1 split just pulled the all-time high in 2012 down to $100. An easy ceiling for most investors to get past in their minds. 7 to 1 was a great mind game move for Apple.
The logic of keeping AAPL expensive (above $500) is that it keeps the riffraff out – only serious investors with real money can could afford to enter into. The 7-1 stock split is huge reversal of this thinking – it encourages the little guys invest in Apple too. It’s a wise change, given the unfair and hostile way big money has treated AAPL over the recent years.
Yes, but when you have the big investors, like hedge fund managers actively manipulating the stock to turn a quick buck…
It’s time to dampen that by opening it up to everyone.
Apple must have something big up their sleeve to do all this stuff at once…more than just buying time. If they had nothing, later they know the bottom would fall out. They are confident about something.
Being a longtermer, I just love when the shorts get shorted…they forgot that the turtle won the race.
Hopefully Cook knows that he can’t ever win trying to please Wall Street/media, so hopefully he has something more revolutionary than evolutionary to present. WWDC should be interesting. Now is time to expect iPhone 6 holdouts to affect numbers for the next quarter. Analysts forget just how many subscribers China Mobile has. Love their “shoot in the dark” guesswork, but it makes them round everything up in the future, which hurts Apple’s safe guidance predictions.
I am right there with you istepchild! I never have had such strong of a sense of impending “insanely greatness” in all my 24 years of AAPL ownership. Great times ahead…
It is now alot easier for many average investors to trickle their dividend straight back into AAPL.
An orangutan could run Apple today, if all they’re going to do is play the incremental upgrade game.
I suppose an orangutan is already running Apple, and it’s albino and gay to boot!
Look at the iPad slow down. If that lazy twinkie would’ve released an iPad Pro, iPad sales would be surging. Yet that would require innovation.
The most innovation we’re EVER going to get out of Timid Cook is the bright color he decides to let his life partner use to paint his toenails.
I never ever use profanities in my comments but… what an asshole!
Fuck you loser.
Exactly how did you know it’s a bright colour?
Hey, what’s up. Where are the “fire Tim Cook” naysayers and the Samsung Trolls?
Come on guys, we need another good laugh today!
Jay Morrison is licking his wounds, and is likely masquerading as some other buffoon… perhaps orandy, above.
Stock split….
There is no meaningful (and definitely no long-term) benefit of stock splits. The total valuation of the company stays the same; the actual value of the stock holdings remains the same (except you now have seven times as many as before), nothing really changes other than the price of an individual share.
About the only valid reason for this would be to make it eligible for inclusion into the Dow Jones Industrial Average index. Now that it is in the $70s, DOW can consider including it in the index, and will most likely do that next time this comes up. And when that happens, every investment company that offers products based on indices will have to buy AAPL for their DJIA index fund, in order to reflect their DJIA. That one-time purchase will likely provide a one-time kick for the stock.
Another very minor factor may be the residual effect of this DJIA inclusion. The investment companies that offer DJIA index funds will buy and hold AAPL for as long as AAPL is in the fund, and as long as their customers buy these funds. Since people usually buy into index funds in order to hold onto them for a long period of time (rather than day-trade them on the gyrations of DJIA), there will be a small number of AAPL shared that will essentially be taken off the daily market by parking them in index funds, which mostly sit there without that much action. Reduction in volatility will likely work well for the stock.
The important point is that both of these effects are very negligible, underscoring the point that stock splits bring very, very little value to the stock.
“The important point is that both of these effects are very negligible, underscoring the point that stock splits bring very, very little value to the stock.”
Unless … you increase the number of shareholders a lot and increase the mindshare amongst the smaller investors which changes the momentum Apple gets.
Stock split won’t increase the number of share holders, and it most certainly won’t increase the mindshare amongst smaller investors.
AAPL is the company with the highest valuation in the world. When a person decides to invest in stocks, one of the first companies they will learn about will be AAPL, regardless of the share price.
No investor with any brain would look at just price as a measure of the value of a company (otherwise, penny stocks would be the most attractive investments). Berkshire-Hathaway Class A stock price is $191,000 (today). Even if you don’t have $200k to buy a single share of BRK-A, you can still buy a fraction of it through various services out there.
The point is, AAPL has no greater potential to appreciate from $80 than it did from $560; the underlying P/E and other indicators are exactly the same as they were before, and they reflect the current value and potential of the company.
Lastly, small investors represent miniscule percentage of ownership of the current outstanding stock. Most of it is owned by institutions anyway. Bottom line, stock splits have no long-term value and a very minimal short-term value at best.
If you are a long term investor with Apple a split is great news, if you are a day trader it is not so great for you. A split and dividends are good, buy backs are not. I wished Apple had done a 2 for 1 split in 2010.