10 ms·

Apple’s loudest activist investor just dumped his stake

86 points by Doolwind 10y ago

bydo 10y ago
Bad press, but good riddance. I can't imagine Apple has much use for out-of-touch "activist" investors clamoring for short term growth and dividends while complaining about their lack of "innovative" new products like … television sets.
- wvenable 10y ago
  Ultimately what is Apple going to do with that 230 billion? Sitting on a hoard of cash is no benefit to the company or investors.
  - dv_dt 10y ago
    It isn't generating cashflow, but it can still be benefiting the company as a risk buffer. Cash to live through downturns, or purchasing new companies, or financing capital outlays for the production logistics which would be impossible for other companies. That last one can be huge - if none else can build certain components for the same cost/volume as Apple then that's a key competitive advantage.
    - petra 10y ago
      I wonder what would happen if Apple opened a public venture capital company, that also offers help. Wouldn't any company in the relevant areas prefer to come to them first ?
  - calgoo 10y ago
    Is there interest they could earn on that cash?
    - pg_is_a_butt 10y ago
      you'll be able to read all about the numerous off shore companies they use in the next panama papers release.
  - brandonmenc 10y ago
    > Ultimately what is Apple going to do with that 230 billion? Break into a capital intensive industry.
    - JustSomeNobody 10y ago
      Apple bank.
      - Corrado 10y ago
        I think this is more likely to happen than not. With all of their cards on Apple Pay I can see them turning the banking industry on its head, which wouldn't be a bad thing. Have you been to a "real" bank lately? My local PNC branch generally has 2 tellers and a 3rd "greeter", even when the line is 10 people deep. Then there are things like charging for deposit slips and other necessary forms, and their online presence is terrible. I can't pay bills between 2AM - 7AM because: the system is down, or my loan balance is $0, or isn't in US funds anymore. WFT?! And the security is laughable (at least for a bank). When will they incorporate MFA? I think this is where Apple could really shake up the world, just like they did with cell phones and GUI computers before then.
    - ridgeguy 10y ago
      Making cars is a capital intensive industry.
      - wklauss 10y ago
        Not necessarily. Some part of car manufacturing is capital intensive but electric vehicles are far easier to make than gas ones and a lot of the parts that go into any car, no matter what brand, are usually bought to third party suppliers.
  - uptown 10y ago
    Go private.
    - gozur88 10y ago
      That makes no sense. Apple management is going to buy out stockholders with their own money? When you take a company private you have to bring in money from the outside, either using investor groups or borrowing.
      - brisance 10y ago
        Why not? If Apple's management and investors believe that the market is not pricing AAPL fairly, it makes perfect sense to go private.
        gozur88 10y ago
        Yes, but they can't do it with money that belongs to Apple, because the shareholders, i.e. the people that need to be bought out, already own that money.
        dazmax 10y ago
        They could just do buybacks until no one else has any shares left? http://seekingalpha.com/article/1725412-buyback-apple-could-go-private-by-2020 http://seekingalpha.com/article/1725412-buyback-apple-could-...
        brisance 10y ago
        Not true. A company can definitely take itself private by using its own money. It's already happening when a company is buying back its shares. i.e. reduction in equity by using cash, one on each side of the balance sheet. The shares are then entered on the books as treasury shares.
        gozur88 10y ago
        So the last guy to own a share owns the company?
  - gnoway 10y ago
    Charlie Stross submitted[0] a link to a post on his blog[1] touching on this last month. [0] https://news.ycombinator.com/item?id=11373605 https://news.ycombinator.com/item?id=11373605 [1] http://www.antipope.org/charlie/blog-static/2016/03/follow-the-money-apple-vs-the-.html http://www.antipope.org/charlie/blog-static/2016/03/follow-t...
  - Analemma_ 10y ago
    Despite their current dominance, Apple knows that downward swings of fate come fast and hard in the tech industry. Consider that 10 years ago, the biggest names in mobile were Palm, Nokia and Blackberry, and now they're either gone or hollow shells. You can think farther back and find plenty more examples of unassailable kings who went bust in a hurry. Then compare that to e.g. Microsoft, who at one point looked doomed but managed to get relevant again by using their huge cash pile to break into a capital-intensive business, which they wouldn't've been able to do without it. I imagine in this sector more than most there's a strong temptation to amass a huge safety net so you can ride out getting "disrupted". As a leftist Keynesian I don't particularly like it-- seeing all that money sitting there doing nothing drives me crazy-- but I understand the motivation.
    - apr 10y ago
      In the big scheme of things all that money are not "sitting there doing nothing". They are probably invested in some short term bonds and therefore they make some other capital expenditures possible somewhere in the overall economy.
    - EGreg 10y ago
      Where exactly is it sitting? Most money which is "saved" finds way back into the economy via fractional reserve lending by banks where it is stored. It's very hard to just make money "sit" somewhere these days when financial institutions all compete to lend and invest money. Seems like Apple's money is invested in a diverse portfolio of equity markets: http://www.zerohedge.com/news/2012-09-30/presenting-worlds-biggest-hedge-fund-you-have-never-heard http://www.zerohedge.com/news/2012-09-30/presenting-worlds-b...
    - raverbashing 10y ago
      > so you can ride out getting "disrupted" They do get disrupted. By themselves If Apple manages to continue to do that, then they will go on
  - iQuercus 10y ago
    Why do you save money?
- raverbashing 10y ago
  This "Activist investors" are essentially parasites, as they are only interested in short-term profit
  - mathattack 10y ago
    They may be, but the stock price benefits of the activism persist after they leave. [0] The shareholders (many of whom are employees) do benefit from their activity. For every case of an out-of-touch activist damaging a great company, I see many more companies where the management is looting the value at the expense of the owners. [0] http://www.columbia.edu/~wj2006/HF_LTEffects.pdf http://www.columbia.edu/~wj2006/HF_LTEffects.pdf
    - shmulkey18 10y ago
      The paper looks interesting; thanks for sharing the link!
  - adventurer 10y ago
    I think curious the headline reads like he just dumped his 53 million shares overnight. It's not like the company is dead, he just doesn't see growth.
- ProAm 10y ago
  > out-of-touch "activist" investors clamoring for short term growth and dividends The company has 230 billion in the bank, they can surely remunerate their investors. OR invest in their own company more, quality is down over the past 5 years, they can invest in more engineers. The hardware lives extremely lengthy update cycles (on average 3 years? MacBook?) There is a lot they can do with their capital that will provide them with long term growth. Products like the Apple Watch wont do it.
  - sib 10y ago
    "Apple's board of directors authorized the buyback on "strong" results, setting a repurchase authorization at $175 billion, up from $140 billion announced last year. Combined with past returns, the company plans to dish out a total of $250 billion to shareholders by the end of March 2018." It sounds like they are remunerating their shareholders.
    - jsmeaton 10y ago
      I would imagine investors would prefer dividends to having their shares bought back, no?
      - wklauss 10y ago
        They also give those.
      - prewett 10y ago
        Dividends are taxed, stock buybacks are not, so if the company repurchases shares at reasonable prices (often not the case, imho) repurchases are more advantageous. (Stock buybacks are not forced, the company purchased them from people wanting to sell)
  - pg_is_a_butt 10y ago
    so... the current engineers are producing at lower and lower quality, so your solution is to "invest in more engineers"... and who will train them? what will they do? more of what the old engineers did to tank quality? they should invest in far less engineers. they only need 1. he's dead. #SELL
- Esau 10y ago
  Good riddance indeed. Icahn is the kind of guy who you throw a going away party for after he leaves.
- bparsons 10y ago
  Their products are becoming commoditized, and other companies are selling similar products cheaper, and with faster turnaround than Apple. This doesn't mean that Apple won't remain on or near the top of the heap when it comes to hardware, but it means that the era of explosive growth is likely over. Over time, the price of all technology races toward zero. Unless APPL has a battery that can last for an entire week, or is first to market with an affordable car that can drive itself, it cannot sustain the levels of growth investors have gotten used to in the medium to long term.
r00fus 10y ago
Good riddance. Apple literally can't issue enough dividends or buyback enough of their stock to not grow their cash stockpile. Why shouldn't Apple just go private?
- mikeyouse 10y ago
  How exactly would Apple go private? Someone would have to show up with ~$600B in cash to buy all outstanding shares at a decent premium.
  - misnome 10y ago
    > How exactly would Apple go private? Slowly, over time? It's not as though $600B cash is exactly out of reach for Apple.
    - padmanabhan01 10y ago
      //Slowly, over time? It's not as though $600B cash is exactly out of reach for Apple You do know that the cash Apple has in its balance sheet belongs to its shareholders and that Apple can't use that to buy itself and go private?
      - djrogers 10y ago
        >You do know that the cash Apple has in its balance sheet belongs to its shareholders and that Apple can't use that to buy itself and go private? Not really true - what exactly do you think the current stock buyback program consists of? Apple is using it's cash to buy it's own stock from the market.
        padmanabhan01 10y ago
        Share buy back is one thing. Going private using share buyback is another thing. share buy back cancels the shares that are bought back and that enriches the value of all remaining shareholders. to go private an individual has to buy back shares so his ownership gets to 100% which involves a lot more than a company using it's cash in balance sheet to buy back shares. not the same thing.
jbob2000 10y ago
I dunno, seems pretty reasonable to want a dividend payment. Apple is just sitting on a mountain of money and not doing anything with it, why keep all that cash out of the market?
- davidw 10y ago
  How much of it is actually in the US? That might be a factor.
  - coldcode 10y ago
    Most of it isn't.
- joezydeco 10y ago
  Perhaps so they're not beholden to the whims of the casino^h^h^hStock Market when it comes time to raise cash for a new factory, headquarters building, or engineering project?
  - gozur88 10y ago
    That's far more cash than they could possibly need.
    - deleted 10y ago
      [deleted]
    - joezydeco 10y ago
      My name isn't Tim Cook, and I'm guessing yours isn't either. Neither of us are qualified to know Apple's plan.
      - gozur88 10y ago
        It doesn't matter what the plan is. There are practical reasons why they can't spend that kind of money unless they just throw it away somehow.
nodesocket 10y ago
I find it a bit ridiculous Carl Icahn can go on "Power Lunch" on CNBC, speak for a few minutes, and cause investors to go into a selling frenzy (not only AAPL, but the entire market NASDAQ and DOW was affected). Securities are so easily multiplated and affected by CNBC and their interviews, it is a bit scary. Perhaps even more scary are reporters who basically write opinion pieces and affect security prices. Looking on Carl's twitter (https://twitter.com/Carl_C_Icahn/status/725717908056330241 https://twitter.com/Carl_C_Icahn/status/725717908056330241) he even said he was going on "Power Lunch" before he did. Of course it would be hard to know what news he was going to deliver, but you have to think some people "in the know" had an idea and made some money today.
- sremani 10y ago
  All Carl Icahn has to do it is tweet, he does not even has to go to CNBC.
  - rhizome 10y ago
    He's got 279K followers, what's CNBC (or Power Lunch's) viewership, and how many of the viewers also follow him on Twitter?
    - 1123581321 10y ago
      CNBC averaged around 200k viewers during daytime recently: http://www.wsj.com/articles/cnbc-to-stop-using-nielsen-for-ratings-1420520556 http://www.wsj.com/articles/cnbc-to-stop-using-nielsen-for-r... In 2009, Power Lunch supposedly had about 400k viewership, but it's declined annually since then. I would guess there is not a large overlap between CNBC viewership and Icahn's Twitter followers, but I don't have any data for it. However, anything significant Icahn tweets is amplified beyond his readers. I've long wished Twitter would show embeds alongside favorites and retweets, because embeds contribute substantially to a tweet's views.
      - rhizome 10y ago
        Yeah, pass-along would easily be higher for Tweets.
draw_down 10y ago
Uh oh, they're doomed! DOOMED!!!
- orionblastar 10y ago
  There used to be an Apple Doomsday Clock website in the 1990s. Geekforce saved some of the pages but recently got rid of them. It took the Think Different campain and made a mockery of it showing pictures of Hitler, Stalin, Mao and others. At times it was funny at other times it was offensive. But they would talk about how Apple was doomed. Until Steve Jobs came back and fixed the company and then they were pro-Apple. But it was a good satire and sarcasm site like The Onion is today.
abhi3 10y ago
Interesting insight, Apple's market cap is $600 B while it has ~$250 B cash/equivalent. So net of all their businesses valuation is more like $400 Billion? Less than Google and Microsoft? Anyway I don't think it is unfair for an investor to want company to pay dividends when it has no good use for that cash. Remember, Carl Icahn was the guy who spun off paypal from the sinking ship that is ebay.
- abritinthebay 10y ago
  > when it has no good use for that cash Except Apple does have use of that cash. It's just not the short-term thinking that Wall Street and cheap get-rich-quick investors like.
  - abhi3 10y ago
    Good use for 250 billion dollars? What is it that Apple needs 250 billion for that google can do for 70 Billion (still too much) or Tesla can do at 1.5 Billion (more appropriate)
    - mkehrt 10y ago
      There was that time Apple bought 1.25 billion dollars worth of flash [1]. And it's later made similar payments for similar things [2,3]. 220 billion in the bank is pretty excessive, but 1.5 billion is way too low for the sorts of things they want to do. [1] http://appleinsider.com/articles/05/11/21/apple_to_prepay_125b_for_ipod_flash_memory.html http://appleinsider.com/articles/05/11/21/apple_to_prepay_12... [2] http://appleinsider.com/articles/09/07/21/apple_prepays_for_a_half_billion_dollars_in_flash_memory http://appleinsider.com/articles/09/07/21/apple_prepays_for_... [3] http://arstechnica.com/apple/2011/12/apple-lays-down-half-a-billion-to-secure-its-flash-storage-future/ http://arstechnica.com/apple/2011/12/apple-lays-down-half-a-...
      - abhi3 10y ago
        I meant Tesla's 1.5B is appropriate for their scale. Apple would obviously need more but not 250 Billion.
programmer1234 10y ago
I know this is massively simplistic, but a lot of people were predicting the downfall of Apple as soon as Steve's cancer was revealed to the public. A lack of freshness is starting to creep in to their product line. Cook is great but as far as I know he isn't really a product guy. He needs someone like Ive to come up with new products, and maybe Ive needed to be babysat by Steve for the magic to happen. Apple can't support its current valuation without making new products that are in some way drastically better than their competition's so people will pay the premium price.
blabla_blublu 10y ago
Good riddance. He's this noise box who keeps clamoring all the time.
matwood 10y ago
"Just?" He finished his position in February. It almost feels like he sees stock pressure and is piling on to get back in at a lower price.
deleted 10y ago
[deleted]
coldcode 10y ago
People go nuts over Facebook selling, again, $1/month per subscriber. Their entire income is 50% of Apple's profit. People go nuts over Amazon finally profiting 500M in a quarter which is 1/20th of Apple. If Facebook got $1/month for every living person on earth they still wouldn't get close to Apple's non-hardware income ($10B). Maybe Carl can go irritate them for a while.
- mcphage 10y ago
  > People go nuts over Amazon finally profiting 500M in a quarter which is 1/20th of Apple. Amazon profiting 500M is interesting not because they previously couldn't, but that they always chose not to, and so people are wondering the cause for the change.
partiallypro 10y ago
I wonder how many people here read/looked at the interview. Icahn said he was interested in buying Apple again, but thinks there are market risks and that the Chinese government seems keen on interfering with American tech companies. He said that he has faith in Apple as a company, just not the stock at its current level in this environment. All very sensible reasons to get out of a position if you think it may be dead money for a few years. He made millions/billions from his position (he did the same in Netflix and sold that entire position.) Icahn is no dummy. Those calling "activist" investors as all Gordon Gekko types, looking to gut companies, are living in fantasy. In his interview Icahn actually calls out CEOs for running companies into the ground and using golden parachutes.
ageofwant 10y ago
I always wondered what the effect would be if all stock trade transactions has a minimum 24h ownership requirement. You MUST hold a stock/option/hedge for at least 24h before trading it off. I picked the 24h period rather arbitrarily. Would anyone who actually knows anything about this care to enlighten me ?
- nopzor 10y ago
  Liquidity would go down. Spread would be up. Market makers would have a hard time.
ksec 10y ago
I have been asking this question for a long time, and yet fail to find or get an answer that i could understand. Why did Apple choose to buy back stocks? Was there any need for it? What has buying back stocks and wipe them off ( instead of keeping them ) benefited to me as a shareholder? Some would argue without the buyback, their share prices would have dropped even more, but that would at least create a chance for me buy a more for what i think is of value. Now as far as i have concern, they have merely make the stock a lot less volatile with NO / little dividends. What has buying back stocks and wipe them off ( instead of keeping them ) benefited to Apple as a company? Those money could have been used somewhere else to create EVEN more VALUE instead of buying back?
- nopzor 10y ago
  Buying back stock decreasing the amount of outstanding shares. Decreasing the amount of outstanding shares means each share has more share of the earnings (earnings per share). Buying back stock does not benefit Apple as a company, but if the shares are undervalued it benefits you as a shareholder.
spriggan3 10y ago
With all the cash they have Apple could go private, what is the rational for staying public?
- mcphage 10y ago
  What's the rationale for going private?

86 points by Doolwind 10y ago

bydo 10y ago

Bad press, but good riddance. I can't imagine Apple has much use for out-of-touch "activist" investors clamoring for short term growth and dividends while complaining about their lack of "innovative" new products like … television sets.

wvenable 10y ago
Ultimately what is Apple going to do with that 230 billion? Sitting on a hoard of cash is no benefit to the company or investors.
- dv_dt 10y ago
  It isn't generating cashflow, but it can still be benefiting the company as a risk buffer. Cash to live through downturns, or purchasing new companies, or financing capital outlays for the production logistics which would be impossible for other companies. That last one can be huge - if none else can build certain components for the same cost/volume as Apple then that's a key competitive advantage.
  - petra 10y ago
    I wonder what would happen if Apple opened a public venture capital company, that also offers help. Wouldn't any company in the relevant areas prefer to come to them first ?
- calgoo 10y ago
  Is there interest they could earn on that cash?
  - pg_is_a_butt 10y ago
    you'll be able to read all about the numerous off shore companies they use in the next panama papers release.
- brandonmenc 10y ago
  > Ultimately what is Apple going to do with that 230 billion? Break into a capital intensive industry.
  - JustSomeNobody 10y ago
    Apple bank.
    - Corrado 10y ago
      I think this is more likely to happen than not. With all of their cards on Apple Pay I can see them turning the banking industry on its head, which wouldn't be a bad thing. Have you been to a "real" bank lately? My local PNC branch generally has 2 tellers and a 3rd "greeter", even when the line is 10 people deep. Then there are things like charging for deposit slips and other necessary forms, and their online presence is terrible. I can't pay bills between 2AM - 7AM because: the system is down, or my loan balance is $0, or isn't in US funds anymore. WFT?! And the security is laughable (at least for a bank). When will they incorporate MFA? I think this is where Apple could really shake up the world, just like they did with cell phones and GUI computers before then.
  - ridgeguy 10y ago
    Making cars is a capital intensive industry.
    - wklauss 10y ago
      Not necessarily. Some part of car manufacturing is capital intensive but electric vehicles are far easier to make than gas ones and a lot of the parts that go into any car, no matter what brand, are usually bought to third party suppliers.
- uptown 10y ago
  Go private.
  - gozur88 10y ago
    That makes no sense. Apple management is going to buy out stockholders with their own money? When you take a company private you have to bring in money from the outside, either using investor groups or borrowing.
    - brisance 10y ago
      Why not? If Apple's management and investors believe that the market is not pricing AAPL fairly, it makes perfect sense to go private.
      - gozur88 10y ago
        Yes, but they can't do it with money that belongs to Apple, because the shareholders, i.e. the people that need to be bought out, already own that money.
        dazmax 10y ago
        They could just do buybacks until no one else has any shares left? http://seekingalpha.com/article/1725412-buyback-apple-could-go-private-by-2020 http://seekingalpha.com/article/1725412-buyback-apple-could-...
        brisance 10y ago
        Not true. A company can definitely take itself private by using its own money. It's already happening when a company is buying back its shares. i.e. reduction in equity by using cash, one on each side of the balance sheet. The shares are then entered on the books as treasury shares.
        gozur88 10y ago
        So the last guy to own a share owns the company?
- gnoway 10y ago
  Charlie Stross submitted[0] a link to a post on his blog[1] touching on this last month. [0] https://news.ycombinator.com/item?id=11373605 https://news.ycombinator.com/item?id=11373605 [1] http://www.antipope.org/charlie/blog-static/2016/03/follow-the-money-apple-vs-the-.html http://www.antipope.org/charlie/blog-static/2016/03/follow-t...
- Analemma_ 10y ago
  Despite their current dominance, Apple knows that downward swings of fate come fast and hard in the tech industry. Consider that 10 years ago, the biggest names in mobile were Palm, Nokia and Blackberry, and now they're either gone or hollow shells. You can think farther back and find plenty more examples of unassailable kings who went bust in a hurry. Then compare that to e.g. Microsoft, who at one point looked doomed but managed to get relevant again by using their huge cash pile to break into a capital-intensive business, which they wouldn't've been able to do without it. I imagine in this sector more than most there's a strong temptation to amass a huge safety net so you can ride out getting "disrupted". As a leftist Keynesian I don't particularly like it-- seeing all that money sitting there doing nothing drives me crazy-- but I understand the motivation.
  - apr 10y ago
    In the big scheme of things all that money are not "sitting there doing nothing". They are probably invested in some short term bonds and therefore they make some other capital expenditures possible somewhere in the overall economy.
  - EGreg 10y ago
    Where exactly is it sitting? Most money which is "saved" finds way back into the economy via fractional reserve lending by banks where it is stored. It's very hard to just make money "sit" somewhere these days when financial institutions all compete to lend and invest money. Seems like Apple's money is invested in a diverse portfolio of equity markets: http://www.zerohedge.com/news/2012-09-30/presenting-worlds-biggest-hedge-fund-you-have-never-heard http://www.zerohedge.com/news/2012-09-30/presenting-worlds-b...
  - raverbashing 10y ago
    > so you can ride out getting "disrupted" They do get disrupted. By themselves If Apple manages to continue to do that, then they will go on
- iQuercus 10y ago
  Why do you save money?
raverbashing 10y ago
This "Activist investors" are essentially parasites, as they are only interested in short-term profit
- mathattack 10y ago
  They may be, but the stock price benefits of the activism persist after they leave. [0] The shareholders (many of whom are employees) do benefit from their activity. For every case of an out-of-touch activist damaging a great company, I see many more companies where the management is looting the value at the expense of the owners. [0] http://www.columbia.edu/~wj2006/HF_LTEffects.pdf http://www.columbia.edu/~wj2006/HF_LTEffects.pdf
  - shmulkey18 10y ago
    The paper looks interesting; thanks for sharing the link!
- adventurer 10y ago
  I think curious the headline reads like he just dumped his 53 million shares overnight. It's not like the company is dead, he just doesn't see growth.
ProAm 10y ago
> out-of-touch "activist" investors clamoring for short term growth and dividends The company has 230 billion in the bank, they can surely remunerate their investors. OR invest in their own company more, quality is down over the past 5 years, they can invest in more engineers. The hardware lives extremely lengthy update cycles (on average 3 years? MacBook?) There is a lot they can do with their capital that will provide them with long term growth. Products like the Apple Watch wont do it.
- sib 10y ago
  "Apple's board of directors authorized the buyback on "strong" results, setting a repurchase authorization at $175 billion, up from $140 billion announced last year. Combined with past returns, the company plans to dish out a total of $250 billion to shareholders by the end of March 2018." It sounds like they are remunerating their shareholders.
  - jsmeaton 10y ago
    I would imagine investors would prefer dividends to having their shares bought back, no?
    - wklauss 10y ago
      They also give those.
    - prewett 10y ago
      Dividends are taxed, stock buybacks are not, so if the company repurchases shares at reasonable prices (often not the case, imho) repurchases are more advantageous. (Stock buybacks are not forced, the company purchased them from people wanting to sell)
- pg_is_a_butt 10y ago
  so... the current engineers are producing at lower and lower quality, so your solution is to "invest in more engineers"... and who will train them? what will they do? more of what the old engineers did to tank quality? they should invest in far less engineers. they only need 1. he's dead. #SELL
Esau 10y ago
Good riddance indeed. Icahn is the kind of guy who you throw a going away party for after he leaves.
bparsons 10y ago
Their products are becoming commoditized, and other companies are selling similar products cheaper, and with faster turnaround than Apple. This doesn't mean that Apple won't remain on or near the top of the heap when it comes to hardware, but it means that the era of explosive growth is likely over. Over time, the price of all technology races toward zero. Unless APPL has a battery that can last for an entire week, or is first to market with an affordable car that can drive itself, it cannot sustain the levels of growth investors have gotten used to in the medium to long term.

r00fus 10y ago

Good riddance. Apple literally can't issue enough dividends or buyback enough of their stock to not grow their cash stockpile. Why shouldn't Apple just go private?

mikeyouse 10y ago
How exactly would Apple go private? Someone would have to show up with ~$600B in cash to buy all outstanding shares at a decent premium.
- misnome 10y ago
  > How exactly would Apple go private? Slowly, over time? It's not as though $600B cash is exactly out of reach for Apple.
  - padmanabhan01 10y ago
    //Slowly, over time? It's not as though $600B cash is exactly out of reach for Apple You do know that the cash Apple has in its balance sheet belongs to its shareholders and that Apple can't use that to buy itself and go private?
    - djrogers 10y ago
      >You do know that the cash Apple has in its balance sheet belongs to its shareholders and that Apple can't use that to buy itself and go private? Not really true - what exactly do you think the current stock buyback program consists of? Apple is using it's cash to buy it's own stock from the market.
      - padmanabhan01 10y ago
        Share buy back is one thing. Going private using share buyback is another thing. share buy back cancels the shares that are bought back and that enriches the value of all remaining shareholders. to go private an individual has to buy back shares so his ownership gets to 100% which involves a lot more than a company using it's cash in balance sheet to buy back shares. not the same thing.

jbob2000 10y ago

I dunno, seems pretty reasonable to want a dividend payment. Apple is just sitting on a mountain of money and not doing anything with it, why keep all that cash out of the market?

davidw 10y ago
How much of it is actually in the US? That might be a factor.
- coldcode 10y ago
  Most of it isn't.
joezydeco 10y ago
Perhaps so they're not beholden to the whims of the casino^h^h^hStock Market when it comes time to raise cash for a new factory, headquarters building, or engineering project?
- gozur88 10y ago
  That's far more cash than they could possibly need.
  - deleted 10y ago
    [deleted]
  - joezydeco 10y ago
    My name isn't Tim Cook, and I'm guessing yours isn't either. Neither of us are qualified to know Apple's plan.
    - gozur88 10y ago
      It doesn't matter what the plan is. There are practical reasons why they can't spend that kind of money unless they just throw it away somehow.

nodesocket 10y ago

I find it a bit ridiculous Carl Icahn can go on "Power Lunch" on CNBC, speak for a few minutes, and cause investors to go into a selling frenzy (not only AAPL, but the entire market NASDAQ and DOW was affected). Securities are so easily multiplated and affected by CNBC and their interviews, it is a bit scary. Perhaps even more scary are reporters who basically write opinion pieces and affect security prices. Looking on Carl's twitter (https://twitter.com/Carl_C_Icahn/status/725717908056330241 https://twitter.com/Carl_C_Icahn/status/725717908056330241) he even said he was going on "Power Lunch" before he did. Of course it would be hard to know what news he was going to deliver, but you have to think some people "in the know" had an idea and made some money today.

sremani 10y ago
All Carl Icahn has to do it is tweet, he does not even has to go to CNBC.
- rhizome 10y ago
  He's got 279K followers, what's CNBC (or Power Lunch's) viewership, and how many of the viewers also follow him on Twitter?
  - 1123581321 10y ago
    CNBC averaged around 200k viewers during daytime recently: http://www.wsj.com/articles/cnbc-to-stop-using-nielsen-for-ratings-1420520556 http://www.wsj.com/articles/cnbc-to-stop-using-nielsen-for-r... In 2009, Power Lunch supposedly had about 400k viewership, but it's declined annually since then. I would guess there is not a large overlap between CNBC viewership and Icahn's Twitter followers, but I don't have any data for it. However, anything significant Icahn tweets is amplified beyond his readers. I've long wished Twitter would show embeds alongside favorites and retweets, because embeds contribute substantially to a tweet's views.
    - rhizome 10y ago
      Yeah, pass-along would easily be higher for Tweets.

draw_down 10y ago

Uh oh, they're doomed! DOOMED!!!

orionblastar 10y ago
There used to be an Apple Doomsday Clock website in the 1990s. Geekforce saved some of the pages but recently got rid of them. It took the Think Different campain and made a mockery of it showing pictures of Hitler, Stalin, Mao and others. At times it was funny at other times it was offensive. But they would talk about how Apple was doomed. Until Steve Jobs came back and fixed the company and then they were pro-Apple. But it was a good satire and sarcasm site like The Onion is today.

abhi3 10y ago

Interesting insight, Apple's market cap is $600 B while it has ~$250 B cash/equivalent. So net of all their businesses valuation is more like $400 Billion? Less than Google and Microsoft? Anyway I don't think it is unfair for an investor to want company to pay dividends when it has no good use for that cash. Remember, Carl Icahn was the guy who spun off paypal from the sinking ship that is ebay.

abritinthebay 10y ago
> when it has no good use for that cash Except Apple does have use of that cash. It's just not the short-term thinking that Wall Street and cheap get-rich-quick investors like.
- abhi3 10y ago
  Good use for 250 billion dollars? What is it that Apple needs 250 billion for that google can do for 70 Billion (still too much) or Tesla can do at 1.5 Billion (more appropriate)
  - mkehrt 10y ago
    There was that time Apple bought 1.25 billion dollars worth of flash [1]. And it's later made similar payments for similar things [2,3]. 220 billion in the bank is pretty excessive, but 1.5 billion is way too low for the sorts of things they want to do. [1] http://appleinsider.com/articles/05/11/21/apple_to_prepay_125b_for_ipod_flash_memory.html http://appleinsider.com/articles/05/11/21/apple_to_prepay_12... [2] http://appleinsider.com/articles/09/07/21/apple_prepays_for_a_half_billion_dollars_in_flash_memory http://appleinsider.com/articles/09/07/21/apple_prepays_for_... [3] http://arstechnica.com/apple/2011/12/apple-lays-down-half-a-billion-to-secure-its-flash-storage-future/ http://arstechnica.com/apple/2011/12/apple-lays-down-half-a-...
    - abhi3 10y ago
      I meant Tesla's 1.5B is appropriate for their scale. Apple would obviously need more but not 250 Billion.

programmer1234 10y ago

I know this is massively simplistic, but a lot of people were predicting the downfall of Apple as soon as Steve's cancer was revealed to the public. A lack of freshness is starting to creep in to their product line. Cook is great but as far as I know he isn't really a product guy. He needs someone like Ive to come up with new products, and maybe Ive needed to be babysat by Steve for the magic to happen. Apple can't support its current valuation without making new products that are in some way drastically better than their competition's so people will pay the premium price.

blabla_blublu 10y ago

Good riddance. He's this noise box who keeps clamoring all the time.

matwood 10y ago

"Just?" He finished his position in February. It almost feels like he sees stock pressure and is piling on to get back in at a lower price.

deleted 10y ago

[deleted]

coldcode 10y ago

People go nuts over Facebook selling, again, $1/month per subscriber. Their entire income is 50% of Apple's profit. People go nuts over Amazon finally profiting 500M in a quarter which is 1/20th of Apple. If Facebook got $1/month for every living person on earth they still wouldn't get close to Apple's non-hardware income ($10B). Maybe Carl can go irritate them for a while.

mcphage 10y ago
> People go nuts over Amazon finally profiting 500M in a quarter which is 1/20th of Apple. Amazon profiting 500M is interesting not because they previously couldn't, but that they always chose not to, and so people are wondering the cause for the change.

partiallypro 10y ago

I wonder how many people here read/looked at the interview. Icahn said he was interested in buying Apple again, but thinks there are market risks and that the Chinese government seems keen on interfering with American tech companies. He said that he has faith in Apple as a company, just not the stock at its current level in this environment. All very sensible reasons to get out of a position if you think it may be dead money for a few years. He made millions/billions from his position (he did the same in Netflix and sold that entire position.) Icahn is no dummy. Those calling "activist" investors as all Gordon Gekko types, looking to gut companies, are living in fantasy. In his interview Icahn actually calls out CEOs for running companies into the ground and using golden parachutes.

ageofwant 10y ago

I always wondered what the effect would be if all stock trade transactions has a minimum 24h ownership requirement. You MUST hold a stock/option/hedge for at least 24h before trading it off. I picked the 24h period rather arbitrarily. Would anyone who actually knows anything about this care to enlighten me ?

nopzor 10y ago
Liquidity would go down. Spread would be up. Market makers would have a hard time.

ksec 10y ago

I have been asking this question for a long time, and yet fail to find or get an answer that i could understand. Why did Apple choose to buy back stocks? Was there any need for it? What has buying back stocks and wipe them off ( instead of keeping them ) benefited to me as a shareholder? Some would argue without the buyback, their share prices would have dropped even more, but that would at least create a chance for me buy a more for what i think is of value. Now as far as i have concern, they have merely make the stock a lot less volatile with NO / little dividends. What has buying back stocks and wipe them off ( instead of keeping them ) benefited to Apple as a company? Those money could have been used somewhere else to create EVEN more VALUE instead of buying back?

nopzor 10y ago
Buying back stock decreasing the amount of outstanding shares. Decreasing the amount of outstanding shares means each share has more share of the earnings (earnings per share). Buying back stock does not benefit Apple as a company, but if the shares are undervalued it benefits you as a shareholder.

spriggan3 10y ago

With all the cash they have Apple could go private, what is the rational for staying public?

mcphage 10y ago
What's the rationale for going private?