A mistake at Apple (AAPL): No share buyback

Nice article
great work keep it up
by arul vigg.

gud

Apple is currently at about the same level it was in August 2007. Amazon, Ebay, and Adobe,(and I am sure many other internet or tech companies), are all well below the level they were at last August. This is just a general market sell-off. You say 'Apple's faithful are concerned'. Analysts are the only ones concerned because they always have to have something to say. Apple have the hottest phone, a new iPod Touch selling incredibly well and likely to take up any slack in the rest of the iPod range.

Cash means strength. Apparently, you don't understand that. As a matter of fact, having read some of your stuff, I have to say that I have no respect for your intelligence. Almost everything you write is utter nonsense. You have no understanding of how business works. You have the perspective of a WallStreeter who is only concerned about minute-to-minute movement in stock prices. Give it up. You are wasting your time.

Thanks for the encouraging comments.

"Cash means strength" That is not true for a company that never makes acquisitions and continues to generate cash each quarter.

In this case, cash earns 4%.

Doug, Are you really saying that a company that has made money for quite some time now is useless because it didn't decide to give you and your mates a backhander?

you sir are a twit of the highest order and you and your corrupt friends can go back and live under the stone you came from...

Sorry folks, Doug is absolutely correct that Apple should consider buying back some shares if they believe they will continue to perform at a ROE of 29%. Having $20 billion earning 4% is a drag on overall earnings. Apple is not Berkshire Hathaway, they cannot invest like 'my pal Warren'on their own.

They do not have to start a regular dividend either. It could be a one time pay out. Keeping the cash reserves at such a high level shows concern about the future to me.

I don't see where ou get the "useless" part.

Douglas, I don't think it's really fair to say that Apple's Execs are to blame for a stock fall from 202 to 124 in two months. How about the speed of the rise leading up to that 202? How about the now multi-year market-beating return on share performance? No longer a growth stock? Are you mad? Sorry I don't get that one. The people who drive Apple's price up and down are guys like you who try to pick on the minutae of detail mentioned in depatches by Apple Exec's or horror of horrors rumours reported as fact by "new media".

Apple in the current climate is as good as stock as you will find. Their basic fundamentals have not changed. Sure there is the environmental factor of the external economic influences affecting the whole market just now - but that is affecting most companies in this market, not just Apple. A shar ebuy-back would simply be a false device to pick the share price up a few notches.

I am looking forward in a big way to the next quarterly results - I think the analysts seem to constantly misread Apple's conservative guidance. Having over-egged things on the lead up to the holiday quarter, the analysts have now swung the other way on the upcoming quarter. I expect the results to be very good - the Mac platform is the stalking horse here. Every other day I hear of friends of mine buying a Mac for the first time.

I'm still very happy with my Apple share performance and still rate them as a buy on every sign of market weakness towards them - this is one of those buying periods. Best one for a long time.

Douggie, Ye of little brain,

Let me explain to you what "Cash is strength" means since you don't seem to have even the most basic understanding of how business works.

It means:

1) Not having to cut prices substantially in an economic downturn, thereby cheapening your brand. It also helps that fixed assets as a % of total assets is small, so that they don't have to worry about covering fixed costs.

2) Being able to continue with planned R&D investment and product development without worrying about a dip in sales in a recession.

3) Not having to layoff employees in a downturn because, "Hey. Don't worry. We have plenty of cash and we are not cutting compensation, either." Think about the terrific impact on employee loyalty. And, when the economy rebounds, the company does not have to spend additional time and effort on hiring.

4) Great leverage with business partners.
"You want to sell NAND to us. We want a lock on supply at great prices because we will pay cash."
" You, China Mobile, don't want to offer the iPhone on our terms? Take a hike. We can wait until you come around, or we will find some other partner in your market." By the way, see how China Mobile has changed their tune? First, they said they will not revenue share. Now, they are saying they are willing to discuss.

5) Being able to continue with the growth strategy of expanding worldwide retail footprint. Having the cash means they can get great deals on retail leases.

You see, Douggie, if you understood how business works, you would understand the power of cash (and no debt).

As I said before, give it up. You are an embarrassment to yourself.

The flaw in the logic is simple. Even if all you say is true, they don't need $20 million

Douggie,

There is no flaw in the logic. What qualifications do you have to say how much cash is enough? Do you have any knowledge about Apple's plans?

All you are doing is blowing hot air through you-know-what.