3 ms·

Is this really an "absurd" take? How else do you increase stock price so easily and manipulate key metrics for investing (EPS)? Is the point of AAPL at this po

by dpflan 3y ago

Is this really an "absurd" take? How else do you increase stock price so easily and manipulate key metrics for investing (EPS)? Is the point of AAPL at this point to make computers or increase share holder value? Is a stock buyback truly a sign of confidence in the company?

mypastself 3y ago
If the company (and the industry) is maturing, then buybacks and dividends are indeed a sign of confidence.
- diggan 3y ago
  Confidence and maturation, or stagnation? I can see good arguments being made for both directions.
- ozborn 3y ago
  Dividends are taxed directly and generally aren't tied to CEO compensation, unlike buybacks. Buybacks are more a sign of management incentive structure.
  - mypastself 3y ago
    The filing references dividends in addition to buybacks, stating that their ratio to R&D indicates anti-competitive behavior.
- phil21 3y ago
  Buybacks are a tax dodge. Nothing else. Dividends are the proper way to pay out excess cash the enterprise generates. Society decided how much to tax such distributions, and a certain class of people didn't like paying even that laughably small share. Buybacks were justified by a whole lot of things that simply are outright lies. Take away the tax benefit and you'd see them go away overnight.
  - mypastself 3y ago
    Discussions on the morality of buybacks are unrelated to the question of whether or not Apple’s ratio of R&D to buybacks (and dividends, which are also referenced in the filing) indicates lack of confidence in the company’s prospects.
brightball 3y ago
Is it? Or is it a sign that the company is confident in itself? What is the difference between a stock buy back and a dividend? Both increase shareholder value by returning cash to investors. If not share buy backs, they would just issue a special dividend to accomplish essentially the same thing just without reducing the outstanding share count. If companies have the ability to issue new shares, why shouldn't they have the ability to reduce the shares with a buy back? What is the negative consequence? Further, if a company is flush with cash but the stock price is too low, is there any reason they shouldn't be allowed to buy it back to tell the market that they're wrong?
- mlfreeman 3y ago
  > What is the difference between a stock buy back and a dividend? A dividend payout is cash in your hand, a share buyback is theoretical gains that may be gone by the time you sell.
- dpflan 3y ago
  Confidence? Increase the stock price simply buy taking excess money and reducing share supply, that doesn't seem like confidence, but it is a short term price gain -- whether it is long-term price gain would be to-be-determined. Re-issuing shares because there buybacks intentionally change the price, seems like the financial engineering aspect of huge corporations, not really anything related to R&D creating new revenue streams. I don't know, I'm not convinced yet, buybacks just seems like a fast way to increase price/"returns on investment in the stock" and market cap and appease investors with large holdings. Surely, yes, you could take loans out against the new market cap or issue debt, but why not just have used the existing cash to do that already. The only explanation could be that investors can cash out and different taxes have affect (or not!) and innovation is less of a need than continuing to exist and buy back stocks.
  - brightball 3y ago
    Or it could be that the stock market unrealistically expects stock prices to constantly increase in perpetuity and if this doesn't happen, the stocks are penalized by wall street market manipulation, shorts and investors with short term expectations?
flutas 3y ago
I’ve long wondered if Apple (or anyone targeted by sites like a 9to5[brand], or other niche blogs) use them as an unofficial mouthpiece. Get someone from management on their good side with planted leaks, then drop something like “wow, management is talking about how absurd this comparison is, I mean look!!1!! this is absurd” to them. Bam you have yourself a stew of PR.
northhanover 3y ago
Yeah it’s pretty crazy. The DOJ is going to start ascribing appropriate capital structures I guess. Eventually they can get everything so regulated it’s essentially state owned.

by dpflan 3y ago

mypastself 3y ago

If the company (and the industry) is maturing, then buybacks and dividends are indeed a sign of confidence.

diggan 3y ago
Confidence and maturation, or stagnation? I can see good arguments being made for both directions.
ozborn 3y ago
Dividends are taxed directly and generally aren't tied to CEO compensation, unlike buybacks. Buybacks are more a sign of management incentive structure.
- mypastself 3y ago
  The filing references dividends in addition to buybacks, stating that their ratio to R&D indicates anti-competitive behavior.
phil21 3y ago
Buybacks are a tax dodge. Nothing else. Dividends are the proper way to pay out excess cash the enterprise generates. Society decided how much to tax such distributions, and a certain class of people didn't like paying even that laughably small share. Buybacks were justified by a whole lot of things that simply are outright lies. Take away the tax benefit and you'd see them go away overnight.
- mypastself 3y ago
  Discussions on the morality of buybacks are unrelated to the question of whether or not Apple’s ratio of R&D to buybacks (and dividends, which are also referenced in the filing) indicates lack of confidence in the company’s prospects.

brightball 3y ago

Is it? Or is it a sign that the company is confident in itself? What is the difference between a stock buy back and a dividend? Both increase shareholder value by returning cash to investors. If not share buy backs, they would just issue a special dividend to accomplish essentially the same thing just without reducing the outstanding share count. If companies have the ability to issue new shares, why shouldn't they have the ability to reduce the shares with a buy back? What is the negative consequence? Further, if a company is flush with cash but the stock price is too low, is there any reason they shouldn't be allowed to buy it back to tell the market that they're wrong?

mlfreeman 3y ago
> What is the difference between a stock buy back and a dividend? A dividend payout is cash in your hand, a share buyback is theoretical gains that may be gone by the time you sell.
dpflan 3y ago
Confidence? Increase the stock price simply buy taking excess money and reducing share supply, that doesn't seem like confidence, but it is a short term price gain -- whether it is long-term price gain would be to-be-determined. Re-issuing shares because there buybacks intentionally change the price, seems like the financial engineering aspect of huge corporations, not really anything related to R&D creating new revenue streams. I don't know, I'm not convinced yet, buybacks just seems like a fast way to increase price/"returns on investment in the stock" and market cap and appease investors with large holdings. Surely, yes, you could take loans out against the new market cap or issue debt, but why not just have used the existing cash to do that already. The only explanation could be that investors can cash out and different taxes have affect (or not!) and innovation is less of a need than continuing to exist and buy back stocks.
- brightball 3y ago
  Or it could be that the stock market unrealistically expects stock prices to constantly increase in perpetuity and if this doesn't happen, the stocks are penalized by wall street market manipulation, shorts and investors with short term expectations?

flutas 3y ago

I’ve long wondered if Apple (or anyone targeted by sites like a 9to5[brand], or other niche blogs) use them as an unofficial mouthpiece. Get someone from management on their good side with planted leaks, then drop something like “wow, management is talking about how absurd this comparison is, I mean look!!1!! this is absurd” to them. Bam you have yourself a stew of PR.

northhanover 3y ago

Yeah it’s pretty crazy. The DOJ is going to start ascribing appropriate capital structures I guess. Eventually they can get everything so regulated it’s essentially state owned.