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View Diary: Is Apple about to pull off one of the largest tax dodges in history? (64 comments)

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  •  Stock buybacks are not a waste of capital (6+ / 0-)

    if the company has far more capital than it can effectively use and the current market valuation of the stock is on the low to fair side.

    The most important way to protect the environment is not to have more than one child.

    by nextstep on Wed Apr 24, 2013 at 10:48:08 AM PDT

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    •  Disagree (0+ / 0-)

      Simple supply and demand.  If I take more of my stock off the market, that stock price should go up.  But in the case of Cisco and Microsoft, their stock prices have not moved for years even though the market as a whole has performed well.  So if buying up your stock is not increasing the stock price then you're essentially throwing it in the trash.  

      I can guarantee you that Apple's stock will not rise based on this stock buy back plan.  In fact, a few investment houses have cut their estimates on Apple moving forward meaning the announcement will likely cause the stock to drop.  Therefor, waste. of. money.

      •  From the corporate side... (5+ / 0-)
        Recommended by:
        Odysseus, nextstep, FG, erush1345, VClib

        ...a stock buyback represents the idea that the company feels their stock is undervalued, and with a P/E ratio in the single digits, it probably is.

        It also helps Apple compete for talent in Silicon Valley, as the stock option packages matter a lot more than raw salary to the engineers around here.

        Any sufficiently advanced technology is indistinguishable from magic. -- Clarke's Third Law

        by The Technomancer on Wed Apr 24, 2013 at 11:03:51 AM PDT

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      •  Cisco & Microsoft had extremely high P/Es (3+ / 0-)
        Recommended by:
        Odysseus, FG, erush1345

        and they were coming down after the tech bubble.  So you are looking at a balance of movements - some that move the price up and others that move down - the fact that the net movement was down does not mean the up movements did not have an impact.

        Stock buybacks when the stock had high valuations (such as when the P/E was greater than its organic growth rate) are mis-timed buybacks - consistent with my above comment.

        Companies that have large excessive cash frequently have the problem that management spends the cash by overpaying for bad acquisitions - which is far worse than a buyback that does not result in an increase of the stock price.

        The most important way to protect the environment is not to have more than one child.

        by nextstep on Wed Apr 24, 2013 at 11:12:25 AM PDT

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      •  It is true that in general stock buybacks (0+ / 0-)

        mean that the Company can't think of anything better to do with their money, and that may really be true in Apple's case. However, if you are a Company officer or Board member, you might appreciate some efforts to push up the value of your equity. It may be one reason why Warren Buffet opposes granting of stock options.

        For if there is a sin against life, it consists perhaps not so much in despairing of life as in hoping for another life and in eluding the implacable grandeur of this life. - Albert Camus

        by Anne Elk on Wed Apr 24, 2013 at 01:11:13 PM PDT

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        •  Anne - Buffet opposes stock options? (0+ / 0-)

          What I have read many times is that Buffet was one of the strongest advocates for having options show up in GAAP P&Ls as a compensation expense charged against current earnings. If you have a link to something that states that he opposes the granting of stock options to employees I'd like to read it.

          "let's talk about that"

          by VClib on Wed Apr 24, 2013 at 10:04:51 PM PDT

          [ Parent ]

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