02/29/2008, 4:40pm, EST
Friday, February 29th
Apple's cash could benefit investors
Apple's cash reserve of $18.5 billion could benefit shareholders in a big way moving forward, according to BusinessWeekcolumnist Arik Hesseldahl. The cash amounts to $21 for each share of company stock, and Hesseldahl believes Apple should return some of that money to shareholders in the form of a buyback. "The time to buy back Apple stock is now," he writes. Shares are 40 percent below a historic high, and Wall Street is focusing on concerns that Apple will suffer as the economy slumps.
The columnist says an aggressive stock repurchase plan will do three good things for Apple: it will send an unambiguous signal that management believes the company's best days are still ahead; word of a buyback would likely give the stock price "the kind of upward lift it needs;" and reducing the number of shares outstanding -- which currently number around 879 million -- would raise earnings per share for investors.
"The size of that boost would depend on how much Apple is willing to spend to buy back its stock," Hesseldahl said.
Apple CFO Peter Oppenheimer told investors and analysts on January 22nd during a conference call that the company prefers maintaining a "strong balance sheet in order to preserve our flexibility to make strategic investments and/or acquisitions." The Cupertino-based company has a strong track record of acquiring very small companies still in the earliest stages of development, leaving many to wonder why it keeps so much cash on hand.
Hesseldahl makes a case that Apple could easily enact a $10 billion repurchase, which would leave ample cash for opportunistic acquisitions as well as flexibility for negotiations of component supply deals.
"How much more flexibility does Apple need," Hesseldahl asks. "And how much bigger does that pile of cash need to be before it's enough?"
Filed under: Investor, Apple
Other story tags: business, stock, shareholders
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Firstly, Apple's price is in the stratosphere compared to comparable tech companies and has bucked recent slight trends for the market to sink a little.
Secondly, we again here this bunk about a recession. A recession? Certainly a small percentage of a small percentage of home owners took too-good-to-be-true home loans from investment/mortgage firms pushing the housing market bubble as far as it can go during a period of growth. However, this doesn't necessarily effect other industries. If anything is pushing for this 'recession,' it is the media bias beating the drum of pessimism.
To a degree, such views might be effective. Recent independent polls show that 80%+ of people polled believe they are doing fine financially, but they are worried about the state of the economy.
We'll see a jump in Apple stocks when we see some new market share numbers- mark my words.
A red light could mean stop
You might be reading this headline right now
http://www.smartmoney.com/stockscreen/index.cfm?story=19990728intro
So at this point Apple should do what you would think would be absolutely the worst thing for them to do, like artificially boosting their share price which is already over valued with a buy back - or maybe better still, they could buy Yahoo!
By the way the same goes for home economics, if you are poor you should get a loan and spend it like there is no tomorrow (because probably there isn't). Capiche?
Buying back stock is a waste and weaken's Apple.
I highly refuse this suggestion. And I am an Apple stockholder.