“Apple has wasted $100 billion on dividends and buybacks over the last 2 years (they’ve spent another $30 billion since the end of the year on the failed policy),” Eric Jackson writes for Forbes. “They should have used that money on M&A instead, in my view. If they had, I believe Apple’s stock would be $50/share higher than it is today.”
“In September 2012, Apple had a $560 billion market cap, $120 billion in cash, no debt, and $55 billion in trailing 12 months EBITDA. The stock price topped out that month around $100/share (in today’s dollars),” Jackson writes. “Today, Apple has a $654 billion market cap, $200 billion in cash, $55 billion in debt and $77 billion in trailing 12 months EBITDA. The stock price – as I write this – is $114/share. That’s obviously a 14% increase in the last 3 years – or about 4.6% a year. The Nasdaq is up about 57% over that time – or about 19% per year.”
“During this time, Apple has disgorged $130 billion in cash (had they done no capital return plan, they would now have $330 billion in cash on their balance sheet as Ben Evans tweeted last month). They’ve also added $55 billion in debt. It’s low cost debt – just like you might get from a credit card company for a 12 month teaser rate – but of course it needs to be paid back one day,” Jackson writes. “Besides the dividends which Apple has paid out, it’s reduced its share count by about 14%.”
“What does this all mean? It means that in exchange for a program that’s spent $130 billion cash and saddled the company with $55 billion in debt, after growing its profitability by about 50% over 3 years, Apple has been rewarded by Wall Street for listening to what it wanted by receiving a 4.6% annual increase in the stock price over a time when the Nasdaq clocked an average annual gain of 19%. And Apple’s multiple has shrunk to boot,” Jackson writes. “Congratulations, Tim Cook. You’ve truly gotten nothing for something.”
Much more in the full article here.
MacDailyNews Take: As Jackson points out, for $130 billion Apple could have tried to buy Facebook for $100 billion back after it got valued at $50 billion as well as Twitter and Tesla and have had money left over. If Apple had done so, what would AAPL be trading at today? Would any combination of those acquisitions have hurt Apple more that they helped? Certainly there are arguments pro and con for the whole idea of buybacks vs. acquisitions just as there are for Apple buying Facebook or Twitter vs. something like Tesla.
One advantage Apple gains by a buyback is that it makes it much harder for active investors like Carl Ichan to do damage. Ironically it was Ichan who first d minded it
Gods, fuck off “analysts”. These clowns are the ones demanding Apple do something with their ever inflating cash balloon in the first place.
If any of you are actually into stocks, just how much attention do you actually pay to these fucking morons?
And to think that APPLE management has given billions to WS thru the buy backs, for literally nothing. Buy backs for most companies are a scam to hide options grants that would have diluted shares. If they really want align management with shareholders the should just have given dividends. $130 billion would be the equivalent of 25% return to a stockholder given current pops.That would be 30 times what one would have earned from a bank and the stock would probably be twice the value (that would still make it a 12% return). At this rate even Buffet would have bought in. I would hope Cook and company would be different but the WS shysters allow most companies to reprice the options plus turn a blind eye to loan forgiveness grants. In this way again no alignment with shareholders.
The buy backs are the biggest scam costing Apple shareholders while WS laughs. Let me sum this up assuming $40 billion in buy backs.
Loan $40 billion WS fees (30 basis points): $120 million
Buy shares transaction fees: (30 basis points): $120 million
Sell shares transaction fees: (30 basis points): $120 million
Based on the fact that buy backs are negotiated prices and past history (Q average pps was 124 while buy back price was 134) WS has another spread of 10/124 = .08 x $40 billion = $3.2 billion.
Total WS: $3.5 billion while Apple share holders loss in equity $150 billion from price manipulation. Mind you this is not counting the options sales that WS can arbitrage based on the negotiated price of the buyback.
Cook is so naive. They are after him. They want another ex-soda salesman like in there. Already other carnival barkers are after that position. They are salivating about the chance to get a piece of the cash hoard.
Why do you think one company is trying to say that they are in the forefront of car and battery technology? Their genius of a CEO will then be first in line for replacing Cook. Apple’s skunk works is partly about cars and batteries. Cook will be/is being stabbed in the back by apple’sfinancial folks and the board of directors.
Now if the buy backs were instead pure dividends the stock would not have lost its value. The clamor will rise for Cook’s replacement.
With another ex-soda salesman like person in place, apple’s technology will be shared with others plus ARMwill be replaced by intel. You can iCal this.
It is both comic and tragic that Cook has given WS the funding/means to do what they have always wanted to do to Jobs. I really miss the guy. He was the only one who could stand up to these shysters.