Apple Announces 2 for 1 Stock Split

neosar82 writes "Yahoo has a story about Apple's stock split. Apple Computer Inc. whose shares have almost quadrupled in value over the last year on the success of its iPod music player, on Friday said it set a 2-for-1 stock split, and its shares rose almost 4 percent. Under the share split, Apple shareholders of record at the close of business on Feb. 18 will receive one additional share for every outstanding share held. Apple said trading will begin on a split-adjusted basis on Feb. 28."

Shoulda coulda woulda

[aventius]

For over a year I've been thinking of how I should buy stock in Apple... A year ago it was going up and I thought they had a good short-term future prospect but I never got around to buying stock. Guess thats what happens when you're a poor college student. Dammit!

Not even that

[Uber Banker]

Share splits:

Before share split: 50,000 shares own a company. Compant has $1m earnings, makes $20/share earnings

Stock splits 2:1 but company fundamentals stay the same (simplisitc, but no reason splits affect the earnings of a company).
,br> Company still earns $1m. But not t has 100,000 shares that makes it $10/share. If shares are values on a fundamental basis it makes no difference. If shares are viewed on a tachnical basis (see technincal analysis [wikipedia.org], the opposite of 'fundamental analysis') it also makes no difference as price charts auto-adjust splits.

The reason share prices may react positively to share splits is because it increases lqiuidity in shares (lower prices making them more accessible to small-time retail mom-and-pop investors who may just buy 1 or 2 shares, though this is less so in an era of mutual fund saving), or as ait signals to investors that management are tuned into them - just a communication/signalling mechanism. It may also trigger second-thing-n guessing of other investors betting against each other's reactions, but this is market-situation rather than company speculation.

Share splits are the result of good news and really not good news in themselves.

Re:I'm a stupid fucking dumbass, should've bought!

[Anonymous Coward]

The main reason the stock is this high is RDF. Fanboys don't just buy Apple products, they buy Apple Stock too. I mean, the iMac G5 and Mac Mini are certainly OK machines, but they don't fundementally change Apple's outlook in any way. (Best case is their 10 year long marketshare collapse actually stops.)

bought apple stock after OSX

[ndunn]

That was about 3+ years ago, at one of Apple's low points. The stock has about quintipled ($10/80). OSX was so clearly in the right direction, albeit broken that it was indicitive of good things (iPod,Mini, Xserve clusters, etc.) of things to come.

There formula for success is the same as google's. Build an efficient user-experience over a solid backend.

Re:Shoulda coulda woulda

[Suburbanpride]

I bought a powerbook and an ipod with apple's "cram and jam" program for college in the fall of '03. After one week of using it, I was convinced that I should buy some apple stock. I was amazed at how beautiful and powerful OS X was, and how easy to use the iPod was. I thouhgt that if Apple kept up the marketing, they could takeover the mp3 player market and make a dent in the laptop market I tired to convince my parents to give me some money to invest, but they thouhgt that they were already spending enough on my tution, plus my laptop. I think apple stock was in the high teens at that time. If i had gotten to put the grand I wanted to into apple, I would have enough money to buy myslef a dual g5. next time I have an inkling about a company with an awesome product, I'm jumping on it.

Re:I'm a stupid fucking dumbass, should've bought!

[constantnormal]

*ANY* company's stock is not simply a measure of "what it's worth" -- it also includes expectations of what it might become. In the case of Apple's current stratospheric valuation, one might look at the current market share enjoyed by Apple in the personal computer world (around 3%), and wonder what if they were able to do there what they have done in the personal music player marketplace?

Let's suppose that J. Q. Publicus *is* approaching a tipping point with regard to frustration about virus/worm/adware crap. If that 3% market share were to grow to, let's say, just for purposes of illustration, 9%, then the earnings contribution by Mac sales will AT LEAST triple, due to manufacturing efficiencies, no additional development expenses, yada yada yada. Suddenly today's pricing of the stock doesn't look so extreme anymore.

That is a simple rationale. Others are based on the theory that the world market for digital music will grow A LOT -- and since Apple *owns* that market, their revenues will grow with it.

One is (or should be) always looking for instances of where the "efficient market" is out of step with reality. Many times, one is wrong. But the essence of investment theory is to search out, using various metrics (technical "analysis", Ben Graham's work on valuation, astrology, whatever works), these instances of where the efficient market isn't, evaluate the risk, take a position, and wait for reality to catch up.

Those who invest via the "driving throught the rear view mirror" approach are destined to run off the road and crash. To properly invest, one has to look ahead (as well as behind and side-to-side), and not drive faster than conditions dictate (i.e., if you leverage yourself to the hilt and can't react quickly enough to the potholes in the road...), and be cognizant that the road ahead (that would be the future) is almost always enshrouded in fog.

As to whether Apple is priced fairly today, it depends upon exactly what future unfolds for it.

BTW... I *did* buy back then (a bit later, actually), based upon valuations and the huge pile of cash Apple was sitting on. I'm still holding it, waiting to see where it will peak. I look for it to sell off a bit sometime this year, and if there are signs that the Mini Mac is selling strongly into the Windows domain, I'll probably buy some more. However, it could just as well turn out that Apple drops the ball and is unable to satisfy demand, or that the hoped-for demand never materializes.

If you can't identify market inefficiencies, or foretell the future with some degree of accuracy, stick to index funds.

Re:I'm a stupid fucking dumbass, should've bought!

[BigusDickus]

Take some advice from an old timer:

Be happy with the profits you made and don't cry over profits you missed.