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Apple can't "buy itself" with its cash any more than you can use your credit card to pay your credit card bill. Apple is owned by its shareholders. That cash p

by bonaldi 14y ago

Apple can't "buy itself" with its cash any more than you can use your credit card to pay your credit card bill. Apple is owned by its shareholders. That cash pile ultimately belongs to them. To "buy itself", it would have to purchase itself from its owners. It can't use their money to do that, can it? (NB: Don't get confused by stock buybacks: they keep the value of the company the same, they just concentrate it in fewer shares. It doesn't transfer the ownership from shareholders to "Apple")

fleitz 14y ago
It's easy to pay a credit card with a credit card, you go to an ATM take out the minimum payment, and then go to the teller with the cash and make the payment. If you have two credit cards or online banking you can do it from home. I've bought houses on credit cards, you just need the right paperwork and the knowledge of how financial leverage works. The primary reason why APPL can't buy itself back with $500 billion in the bank is because not everyone wants to sell, and would only sell if they were offered a premium such as $750 billion. If AAPL wanted to buy itself it would use a leveraged buyout. It's certainly in a position right now to buy itself. GS, etc would love to issue an interest paying loan and/or bond to AAPL for $750 billion instead of having it in T-bills paying nothing.
- bonaldi 14y ago
  I'm talking about paying off a credit card with the same credit card. And the leveraged buyout, yes, the board could pretty much raise the cash to buy control -- but, and this is the point, they couldn't do it with Apple's cash pile, which is what the OP was suggesting.
  - meric 14y ago
    Actually, they can. They can offer a deal with shareholders where at the end of it Apple's cash pile will go to the shareholders instead of staying in the company. Typically this means the price of buying the company is reduced by that much, which is practically using Apple's cash pile to partially pay for Apple.
    - jarek 14y ago
      I read OP's question as intending to use the cash pile to fully buy the company, rather than leveraging the pile and paying partially.
    - a2patel 14y ago
      This happens all the time. Some former companies were 'acquired' this way. Portal Player and Transmeta for example. In Transmeta's case, they were acquired for $255M in cash, and Transmeta had $255M in cash. The only cost to the acquirer (in this case Intellectual Ventures) were salaries till the deal closed and executive golden parachutes - totaling about $11M.
  - deleted 14y ago
    [deleted]

by bonaldi 14y ago

fleitz 14y ago

It's easy to pay a credit card with a credit card, you go to an ATM take out the minimum payment, and then go to the teller with the cash and make the payment. If you have two credit cards or online banking you can do it from home. I've bought houses on credit cards, you just need the right paperwork and the knowledge of how financial leverage works. The primary reason why APPL can't buy itself back with $500 billion in the bank is because not everyone wants to sell, and would only sell if they were offered a premium such as $750 billion. If AAPL wanted to buy itself it would use a leveraged buyout. It's certainly in a position right now to buy itself. GS, etc would love to issue an interest paying loan and/or bond to AAPL for $750 billion instead of having it in T-bills paying nothing.

bonaldi 14y ago
I'm talking about paying off a credit card with the same credit card. And the leveraged buyout, yes, the board could pretty much raise the cash to buy control -- but, and this is the point, they couldn't do it with Apple's cash pile, which is what the OP was suggesting.
- meric 14y ago
  Actually, they can. They can offer a deal with shareholders where at the end of it Apple's cash pile will go to the shareholders instead of staying in the company. Typically this means the price of buying the company is reduced by that much, which is practically using Apple's cash pile to partially pay for Apple.
  - jarek 14y ago
    I read OP's question as intending to use the cash pile to fully buy the company, rather than leveraging the pile and paying partially.
  - a2patel 14y ago
    This happens all the time. Some former companies were 'acquired' this way. Portal Player and Transmeta for example. In Transmeta's case, they were acquired for $255M in cash, and Transmeta had $255M in cash. The only cost to the acquirer (in this case Intellectual Ventures) were salaries till the deal closed and executive golden parachutes - totaling about $11M.
- deleted 14y ago
  [deleted]