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This would result in the board being sacked for sitting on spare cash and not maximising shareholder return.

by swarnie_ 7y ago

chewz 7y ago
Did Apple board got sacked?
- zaroth 7y ago
  Apple has done more buybacks than anyone! And pays a dividend. > Since 2012, Apple has been buying back shares at the extraordinary rate of around $10 billion per quarter. Shareholders demanded it.
  - QuesnayJr 7y ago
    Apple has gigantic amounts of free cash flow, which is why they have $100 billion of cash on their balance sheet, despite their buybacks.
    - zaroth 7y ago
      Just back of the envelope, if every Fortune 100 had $100 billion in cash, that would be $10 trillion sitting in accounts as, what, a rainy day fund? Apple keeps a massive cash hoard in case they want to do a very large strategic acquisition. Airlines would be doing mergers not acquisitions. IMO it’s entirely appropriate that if a black swan even cripples an industry like air travel for a government to offer low-interest loans until they can start generating cash again. This is actually significantly more efficient than each company having to put billions of capital on the sidelines “just in case” their entire multi-billion dollar revenue stream goes to $0 for a few months. Capital efficiency is very important to overall economic growth.
      - chewz 7y ago
        Money is returned to shareholders as buyback or dividend and shareholders can capitalize company in times of need (or when they see an opportunity for expansion or market takeover). This is more effective, quicker and cheaper way of capital alocation. It also eliminates political agenda.
      - QuesnayJr 7y ago
        It's not on the sidelines. Like 0.001% of "cash" is actually cash. Apple holds like a third of its "cash" in equities. Airlines could do the same, or hold short-term debt, or pay down their own debt (which would free up capital for other uses). (They could also hold long-term debt in other companies, but I'm not sure where that shows up in the balance sheet.)

This would result in the board being sacked for sitting on spare cash and not maximising shareholder return.

chewz 7y ago

Did Apple board got sacked?

zaroth 7y ago
Apple has done more buybacks than anyone! And pays a dividend. > Since 2012, Apple has been buying back shares at the extraordinary rate of around $10 billion per quarter. Shareholders demanded it.
- QuesnayJr 7y ago
  Apple has gigantic amounts of free cash flow, which is why they have $100 billion of cash on their balance sheet, despite their buybacks.
  - zaroth 7y ago
    Just back of the envelope, if every Fortune 100 had $100 billion in cash, that would be $10 trillion sitting in accounts as, what, a rainy day fund? Apple keeps a massive cash hoard in case they want to do a very large strategic acquisition. Airlines would be doing mergers not acquisitions. IMO it’s entirely appropriate that if a black swan even cripples an industry like air travel for a government to offer low-interest loans until they can start generating cash again. This is actually significantly more efficient than each company having to put billions of capital on the sidelines “just in case” their entire multi-billion dollar revenue stream goes to $0 for a few months. Capital efficiency is very important to overall economic growth.
    - chewz 7y ago
      Money is returned to shareholders as buyback or dividend and shareholders can capitalize company in times of need (or when they see an opportunity for expansion or market takeover). This is more effective, quicker and cheaper way of capital alocation. It also eliminates political agenda.
    - QuesnayJr 7y ago
      It's not on the sidelines. Like 0.001% of "cash" is actually cash. Apple holds like a third of its "cash" in equities. Airlines could do the same, or hold short-term debt, or pay down their own debt (which would free up capital for other uses). (They could also hold long-term debt in other companies, but I'm not sure where that shows up in the balance sheet.)