Apple’s Board should put a dividend of $4 per share in place and buy back 25% of the stock immediately

“Nothing lasts forever. Academics rightly point out that the average lifespan for a growthie is 5 years. Only a handful hold their primacy for a decade or more. Polaroid flamed out. Xerox ended up buying a brokerage house,” Martin Sosnoff writes for Forbes. “The Watsons called in an outsider, Lou Gerstner to reorganize the structure and tiers of management at IBM.”

“Carl Icahn probably topped out Apple with his noisy acquisition of a 1% holding and afterward his pronouncement that Apple was headed to $250. Luck and pesetas, Carl,” Sosnoff writes. “Nobody wants to face clear indicators of market saturation of the worldwide iPhone market. Further, Apple’s diversification and new product development outside telephony is long cycle in nature.”

“What investors have to work with is Apple’s balance sheet and income statement, which is as powerful as it gets. From a liquidity standpoint Apple is a financial fortress with enormous free cash flow and a low multiple of enterprise value to free cash flow of 6.4 times,” Sosnoff writes. “Apple’s quarterly dividend is currently 52 cents a share. Assuming Apple falls into the no-to-minimal growth category comparable say with AT&T, Pfizer and Verizon Communications, it would need a 4% dividend yield to attract value and income biased shareholders.”

“The history of growth companies making great acquisitions or major diversification gambits is nearly entirely negative. Apple’s board of directors should pound the table. Put a $4 a share dividend in place and buy back 25% of the stock tout de suite,” Sosnoff writes. “Apple is a wait ‘n’ see piece of paper, best underweighted.”

Read more in the full article here.

MacDailyNews Take: For 30+ years, people have underestimated Apple. When Apple IIe was selling like hotcakes, these zero imagination dullards thought that was all there was. That’s it. Just like Polaroid. A one-hit wonder.

Puleeze. You don’t have the foggiest understanding of Apple, Marty.

36 Comments

  1. Thats just silly. Dividends are a waste of money…let me see the company I own stock in pays taxes on the money when they make it…they I pay taxes on the money when they give it to me as a dividend. Stock buyback! Yes PLEASE!

  2. They should kill the the buy back program. They should move to percentage based dividends. ( make more payout more, make less pay less, in dividends ) This way the dividend floats, and that’s fine. It would look bad if they raised it only to have to lower it at some point.

  3. They should buy back and retire shares, less shares out there means it’ll be worth more. I Wouldn’t mind a $4/share dividend! I was wondering if they have a lot of cash over seas, why not purchase Their own stock via shell company on foreign markets?

  4. He’s quite right – Apple is no growth engine it was. Perhaps it might be again one day, but it’s hard to grow the largest business in the world at the pace of a startup. Impossible really.

    Buy backs enrich the directors, not the shareholders. A decent dividend would also reduce volatility in the stock – the mum’s and dads would be more likely to hang in there for the dividends – at .5% they won’t.

    I don’t think Apple need to buy any more shares back – just spend the money on dividends.

    Android has caught up with iPhone now – in technology, apps, style… There are advantages and disadvantages to both platforms but no killer advantage for either. Yes, Apple continues to innovate, but it’s incremental and Samsung has it within months.

    Apple are off the boil. The standard has dropped, especially in everything else except iPhone. OS/X has been diabolical for two years and, though it’s better now, it’s tired and ignored – mail, for instance, is very old and needs a rewrite – and Apple continue to impose their mail filtering, including the secret filtering which deletes mail before it ever gets to your Mac.

    People are leaving and recruitment sources say it’s an unhappy place to work – long hours, screaming managers, secretive and unrewarding. Tesla’s graveyard according to one wag…

    In the rest of the world Apple is taking a lot of stick for clever tax arrangements. It’s not good PR and it’s costing Apple business. If you are a Brit or an Aussie you can’t help but ask yourself whether buying an Apple product is the right thing to do when they don’t pay any tax.

    They are becoming an ordinary American company, just like people said they would once Steve was gone. There is still some of that brilliance there but it’s rough around the edges and not as convincing as before. They’re just capable now, not brilliant.

    Dividends are the best way forward for the share price.

    1. Interesting fantasy you got there. Appreciate the unintended hilarity. Apple’s heard it all before from buffoons like you. You needn’t bother writing their epitaph. They’ll be writing your epitaph before Apple fails.

    2. @SunbeamRapier

      I agree wholeheartedly!

      Apple products are not just ordinary, they are borderline ridiculous:

      – 16GB iPhone in 2016?

      – A Mac Pro that can’t ever be upgraded?

      – A laptop with a single, basically unheard of port?

      – An Apple TV that doesn’t support 4K in 2016?

      – An iPad Pro without ‘Pro’ features?

      – A premium music service that breaks iTunes?

      – An already dated watch that can’t last a day on a single charge, but can possibly cost as much as a decent automobile?

      – Speaking of automobiles… the possibility of a buggy, poorly made, launch botched, Apple Car (frankly, I would be scared to drive one)?

      And Apple fans actually wonder why investors have concerns. They have concerns because quality and innovation at Apple disappeared some 5-years ago!

  5. After Stve passed away the said growth was over at Apple, Apple can’t inn0vate anymore, etc….

    WELL THEY WERE WRONG WEREN’T THEY???

    And they are wrong again. How could they be right on anything Apple, these wall st annalists and gamblers, when they don’t even know how to value the stock or count all the generating revenue streams?

    Apple’s got plenty juice left, for years to come.

  6. …lol record breaking quarter.. 200k less phones out of 75millionish . One slow quarter guidance …given massive headwinds..
    And look at the stupid doom and gloom , end of apple as we know it Bull crap…

    But hey i would take 4% yield 😉

  7. Dunno if it is legal. But I would love to see dividend payouts as a function of how long you have owned the shares. Short term owners get no dividend; sorry, not the owners Apple wants. Long-term owners get bigger dividends, proportional with length of ownership. Long-term investors are the ones most companies want to own their shares. So reward them!

      1. Capital gains tax treatment applies to shares held at least 1 year. Big deal. I am talking about people who have held Apple shares for _much_ longer time periods than that! 5, 10, 12 years.

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