4 ms·

If you don't agree with the financial management of a company, then don't invest in it. Dividends are only one way to get value out of cash reserves in a compa

by crusso 14y ago

If you don't agree with the financial management of a company, then don't invest in it. Dividends are only one way to get value out of cash reserves in a company. I'd argue that if the company knows what the hell it's doing, handing away the fuel that helps it to execute on its strategy (cash) is the worst thing to do.

TimGebhardt 14y ago
Except that Tim Cook has said on shareholder calls that they have more cash than they know what to do with. At that point they should distribute more to shareholders.
- crusso 14y ago
  Know what to do with at the moment is not the same as having no idea what they would ever do with it so should give it so someone. Having cash reserves sor which you have no immediate plans is itself a strategy that may have extra benefits, like it or not.
btian 14y ago
have you ever heard of the term "activist investor"?
thematt 14y ago
Not to mention the whole "double taxation" thing. Dividends aren't exactly an efficient way to return value.
damoncali 14y ago
It's implicit that they think Apple does not know how to reinvest that cash in a way that will provide a return that is commensurate with the risk of Apple stock. I don't think that is a stretch, given how much they have. If my cash is sitting in a bank account at Apple my investment is exposed to Apple's risk, I'm going to be upset about it. If they can't invest it in a way that covers their cost of capital, it is their duty to pay it out, not to sit on it.
- crusso 14y ago
  I just don't get it. If you think that Apple exposes you to too much risk then don't invest in them. it is their duty to pay it out How so? Did they commit to giving out dividends as a part of your purchase of their stock? Are they siphoning the cash out of the company to avoid giving shareholders value? Sitting on cash has been an Apple strategy for a very long time, even before Jobs came back. How have they deceived shareholders by continuing with it?
  - damoncali 14y ago
    Not investing the money at a risk-adjusted profitable return is the same thing as taking money from shareholders. Think about it this way. If there was one owner in the company, and the CEO just couldn't figure out a way to invest the company's cash at a profitable rate (again, risk-adjusted), what would the owner do? He'd take it out of the company and invest it elsewhere or just buy something - because he owns the company and it's his money. When you have multiple shareholders, the concept is the same, it's just harder to hold management's feet to the fire. This is different than "sitting on cash" as a strategic decision. It is wise to do so - there might be investment opportunities or hard times down the road. But we are talking about excess cash - cash beyond the level that is reasonable to sit on for strategic purposes. To sit on excess cash (which is admittedly a judgement call) is to hold your shareholders' money hostage in an unprofitable manner. Given how much cash Apple has, I don't think it's unreasonable for shareholders to grumble a bit.

by crusso 14y ago

TimGebhardt 14y ago

Except that Tim Cook has said on shareholder calls that they have more cash than they know what to do with. At that point they should distribute more to shareholders.

crusso 14y ago
Know what to do with at the moment is not the same as having no idea what they would ever do with it so should give it so someone. Having cash reserves sor which you have no immediate plans is itself a strategy that may have extra benefits, like it or not.

btian 14y ago

have you ever heard of the term "activist investor"?

thematt 14y ago

Not to mention the whole "double taxation" thing. Dividends aren't exactly an efficient way to return value.

damoncali 14y ago

It's implicit that they think Apple does not know how to reinvest that cash in a way that will provide a return that is commensurate with the risk of Apple stock. I don't think that is a stretch, given how much they have. If my cash is sitting in a bank account at Apple my investment is exposed to Apple's risk, I'm going to be upset about it. If they can't invest it in a way that covers their cost of capital, it is their duty to pay it out, not to sit on it.

crusso 14y ago
I just don't get it. If you think that Apple exposes you to too much risk then don't invest in them. it is their duty to pay it out How so? Did they commit to giving out dividends as a part of your purchase of their stock? Are they siphoning the cash out of the company to avoid giving shareholders value? Sitting on cash has been an Apple strategy for a very long time, even before Jobs came back. How have they deceived shareholders by continuing with it?
- damoncali 14y ago
  Not investing the money at a risk-adjusted profitable return is the same thing as taking money from shareholders. Think about it this way. If there was one owner in the company, and the CEO just couldn't figure out a way to invest the company's cash at a profitable rate (again, risk-adjusted), what would the owner do? He'd take it out of the company and invest it elsewhere or just buy something - because he owns the company and it's his money. When you have multiple shareholders, the concept is the same, it's just harder to hold management's feet to the fire. This is different than "sitting on cash" as a strategic decision. It is wise to do so - there might be investment opportunities or hard times down the road. But we are talking about excess cash - cash beyond the level that is reasonable to sit on for strategic purposes. To sit on excess cash (which is admittedly a judgement call) is to hold your shareholders' money hostage in an unprofitable manner. Given how much cash Apple has, I don't think it's unreasonable for shareholders to grumble a bit.