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Apple Announces 2 for 1 Stock Split 73

Posted by Zonk
from the double-for-nothing dept.
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."
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Apple Announces 2 for 1 Stock Split

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  • by aventius (814491)
    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!
    • See, Apple still remains true to it's values: You always could have done better with them, no matter how well you've done already. :)

      With hardware, they'll upgrade before you have have time to put your card back in your wallet.

      With software, it's often the same - unfortunately, those sellouts at Cupertino at making upgrades cheaper, or free (a la FCP-HD).

      I must say, this is a very refreshing move. Let's see how long it takes them to get to $80 again :)
    • by Suburbanpride (755823) on Friday February 11, 2005 @10:19PM (#11649067)
      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.
      • If you invest every time you get that feeling about a product, you can't go wrong. Screw technical analysis, day trading, etc. Buy comapnies that make stuff you think is cool.

    • Heh. I'm kicking myself for not taking all my available cash out of the bank last summer and buying a pile of $45 November AAPL calls. Those options were cheap back then.

      -jcr

  • by skweegee (755245)
    generate wealth. It just allows people to buy shares at a lower price. Stock splits are overhyped.
    • No shit dumbass. But stock splits occur after the stock has gone up and is expected to go higher. Stock splits are just an indication of a healthy investment.
      • Mods must be on crack. I state a simple fact that should be known and someone calls me a dumbass and he gets modded up.

        Talk to anyone with some knowledge on investment, finance, or accounting they'll tell you the same. If you think you're going to make money off of a split go ahead keep thinking that, but you're wrong. Your gain won't be a result of the split that's for sure.
      • I disagree. You can also split your stock in order to *give people the impression* your stock is going to somehow increase in value. Warren Buffett's Berkshire Hathaway has never split its stock, which is all you need to know about stock splits, AFAIC.
        • by SteeldrivingJon (842919) on Friday February 11, 2005 @09:48PM (#11648943) Homepage Journal
          Warren Buffett's Berkshire Hathaway has never split its stock, which is all you need to know about stock splits, AFAIC

          True, but the price of Berkshire Hathaway stock is currently $91,000 per share.

          While nice for the stockholders, I'd expect that to limit liquidity somewhat, because there just aren't as many people with funds to buy stock at $91,000/share. Today only 290 shares traded. 3 month average volume is 393 shares. (It'd probably be harder to make an option-based incentive program work with so few shares outstanding. And you can pretty much forget about non-executive employees having stock in the company.)

          Like it or not, many (probably most) investors are not perfectly rational creatures. They'll buy a stock, after a split, because the share price drops into a range that they find attractive or accessible.

          If someone would like to invest in Apple right now, they might not have $8,000 available to buy 100 shares. On February 28, they'll be able to buy 100 shares for $4000 or so, which perhaps they can afford.

          Now, if you're Homo Economicus ( a runtlike feral creature recently discovered in fossils on an island in Southeast Asia) you understand that halving the price doesn't necessarily make Apple any better of a buy. It's not like a half-price sale.

          But most people aren't that rational. They invest like it is a half-price sale. Never mind that you're getting half as much of Apple when you buy a share.

          Splitting a stock helps companies take advantage of this kind of behavior. At a given price, there will be people who want to buy, but can't. Halve the price with a split, and those people will buy, unless the fundamentals are atrocious. If the company was good enough to buy, pre-split, but cost too much, they'll buy post-split, which helps drive the price up again.

          There's a big psychological factor. It's also part of why companies occasionally do a reverse split, to raise the price of their stock. If a stock is down around $5 or less, like Sun's, it just looks like a loser, fading into inconsequence.
          • If someone would like to invest in Apple right now, they might not have $8,000 available to buy 100 shares. On February 28, they'll be able to buy 100 shares for $4000 or so, which perhaps they can afford.

            It would seem to be a heck of a lot less paperwork to just make the minimum tradeable parcel be 50 shares instead of 100. Then they wouldn't have to send out new certificates to everyone.

            Actually, I've got no idea why it's so high in the USA in the first place. Here in New Zealand most companies keep
          • I'd expect that to limit liquidity somewhat, because there just aren't as many people with funds to buy stock at $91,000/share.

            That's why they issue Series B [yahoo.com] shares, which have considerable volume.

            That's all I've been able to afford so far. It's a nice hedge against trendiness in the market, yet typically yields better than a bond fund.
            • That's why they issue Series B [yahoo.com] shares, which have considerable volume.

              Considerable, compared to the other Hathaway stock, but still only 19,000 shares or so. That's orders of magnitude smaller than most stocks.

              Also, at over $3,000 per share, it's still too pricey for most investors, who'd rather not risk so much of their money on a single stock.
              • Also, at over $3,000 per share, it's still too pricey for most investors, who'd rather not risk so much of their money on a single stock.

                Exactly right, and this is on purpose. Here's Buffet's take on it:

                To the extent possible, we would like each Berkshire shareholder to record a gain or loss in market value during his period of ownership that is proportional to the gain or loss in per-share intrinsic value recorded by the company during that holding period. For this to come about, the relationship betwee

          • It's also part of why companies occasionally do a reverse split

            The other reason to do a reverse split is that the Nasdaq and NYSE both have minimum price requirements to be listed on their exchanges. If a company's price per share drops below a threshold value for a certain amount of time (something like under $1.00 for a week or more) then it can be delisted (the actual process is much more complicated than this). From there, the company goes into the murky world of Over-the-Counter (OTC), Bulletin Board
        • Stocks are split to allow the middle class continue to invest in the company. What middle class investor do you know that invests in Berkshire? Do you have Berkshire stock? I highly doubt it. Sure some companies misuse the purpose of splitting stock as a PR con job to hide the fact that they are the next Enron but you can't blame the act of splitting stock for lame business practices from even lamer companies. If IBM never split its stock, it would be worth $293488998923949.62**** a share but then who
        • That Warren Buffet may be right on some things but it doesn't mean he is right on everything.

          Stock splits are actually an anachronism going back to the 60's when stocks were traded as either even lots (multiples of 100 shares) or odd lots (anything else). Even lots had the advantage of lower commisions. Companies would split their stock in order to bring the price of an even lot down to an affordable level thereby boosting demand. Individuals made up the bulk of trading back then.

          Take BH, for example. Not
      • ...and is expected to go higher.

        Before you start going around calling people dumbasses, do you remember what happened the last time AAPL split?
    • Not even that (Score:3, Insightful)

      by Uber Banker (655221)
      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') i
  • by mrighi (855168) on Friday February 11, 2005 @08:12PM (#11648304) Homepage
    ...let's hope they don't find a worm inside.

    Or even worse, half a worm.

    (I know, I know, corny old joke... but I just couldn't resist!)
  • by ElGanzoLoco (642888) on Friday February 11, 2005 @09:05PM (#11648683) Homepage

    About 2-3 years ago I almost convinced myself that I should buy Apple stock. At that time, each share cost about 16 bucks...

    I didn't buy any, thinking that I was maybe being a victim of St. Steve Job's reality distortion field (I'm as big an Apple fan as you can get) and that maybe the stock would plunge. After all, we were stuck with that damn G4. (And it kinda feels strange to buy stock when you're still in high school.)

    Then iTunes Music store came out of nowhere. The stock litteraly exploded. Still didn't buy, thinking "economics 101: buying when high (the price, not me ;) is plain stupid". Then the stock exploded again with the iMac G5's introduction. Still didn't buy, for the exact same reason.

    Now the stock is at 81 dollars, that's a 65 $ increase per share, damnit. And yaknowhat? I still won't buy, cause I really don't see how it would rise again?! Maybe if Apple announces OS X for PC (see "Fortune" article). Maybe if they sell half a billion mac minis. Maybe if someone finds out that the iPod shuffle solves cancer, AIDS and world hunger. Maybe.

    Anyways, it sort of confirms what I always thought about stock markets: those fucking "analysts" are on crack all the time. I mean, that Apple stock was vastly underrated three years ago. Now it's completely overrated, Apple is in good shape and all, but it's simply not that worth! There's no way in hell Apple is worth 72,9 BILLION dollars (900 million shares @ 81 dollars. I know, I'm vastly oversimplifying, but still...)

    • There's no way in hell Apple is worth 72,9 BILLION dollars (900 million shares @ 81 dollars

      You're right, they aren't. They are only worth half that. Apple's market cap is currently at 33.18 Billion (408 million shares at ~$81).

      Splitting your stock doesn't affect your market cap. When the stock splits the price per share will be halved. So they will still be worth 33.18B (816 million shares at ~$40.50).
      • No, no, there already are 900 million Apple shares on the market right now. After the split, there will be 1,8 billion shares.

        Apple Announcement [apple.com]:

        CUPERTINO, California--February 11, 2005--Apple® announced today that its Board of Directors has approved a two-for-one split of the Company's common stock and a proportional increase in the number of Apple common shares authorized from 900 million to 1.8 billion.

        (IANASME: I Am Not A Stock Market Expert)
        • OK, whatever. I was going by what a stock report site said. Their market cap is still ~33B and it still won't change after the split. The parent poster seemed to think that splitting stock caused market cap to double.
        • You are confusing "authorized shares" with "outstanding shares". I'll explain the difference.

          In the corporation charter, there is a statement that the the company is authorized to issue x number of shares. The company is allowed to sell to the market any number of shares up to that number. Essentially, it is a license for the company to print its own money. The currency in this case is shares. And just like any currency, if you print too much the value of each share will go down. That's why shareholders
    • Anyways, it sort of confirms what I always thought about stock markets: those fucking "analysts" are on crack all the time.

      I started playing the market decades ago. I realized early on that analysts are good at picking stocks after the stock moves. Do you own research. My tip for you: Buy companies that have no debt.

      Two years ago, at AAPL's low of $14.25, here's why it was screaming buy:

      1) Cash per share at around $11. That means you get the rest of company for $3 a share.
      2) No debt (see above).
      3) Not s
      • 4) Not dependant on other people's technology. Unlike HP, Gateway, etc.
        Well, no. They have lots of dependancies on other people's technology, which is why they sat so long at 500Mhz waiting for Motorola to get off their can. They are as dependent as anyone on suppliers. For instance, on IBM, for CPUs, the various disk drive makers for disk drives (particular of a size appropriate to the iPod), memory makers, etc. No company is an island.
    • I'm irritated that I bought at $23/share then sold a couple weeks ago at $73/share. Yeah, 200% profit, but I could have made it to 250% profit! Or more!

      And yes, I'm entirely serious about this. The thing is, being me, it was only 20 shares. Still, an extra grand I didn't know I'd have a few years ago...best investment I've ever made. Well, best one I've made and cashed out already. The others are yet to be seen.
    • by constantnormal (512494) on Saturday February 12, 2005 @12:06PM (#11651861)
      *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.
    • I think the stock will jump big time when we see the first episode of The Simpsons or perhaps a Pixar movie available on iTunes. It could be a great thing for people with Mac Mini's connected to their television. They've already got music videos on demand for free. It beats Netflix or Tivo. With Netflix I have to wait a few days before my DVD arrives in the mai where as with iTunes I'd wait about 30 minutes for my 230MB episode of Sex and the City. With Tivo I'd have to wait until Sex and the City was broa
  • by ndunn (171784) on Friday February 11, 2005 @10:15PM (#11649050)
    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.
    • Yup. I too saw the OSX handwriting on the wall. I knew the analysts were wrong, having used Macs for 16 years, I know this company inside and out. I could tell that Steve and OSX and the iMacs were the right direction (especially after the mid 90's). I finally bought some stock when it was at $13 and was ridiculed by several people. I told a couple people they should get on the bandwagon while the gettin' was cheap and they laughed.

      Look who's laughing now!
  • ...and now I have 2! AHAHAHAHAHAHHAAHA! Love, Mister Funnypants http://www.deadtroll.com/ [deadtroll.com]
  • Have the stock but (Score:1, Interesting)

    by Anonymous Coward
    unless Apple starts to pay dividends, the split means very little to me. Give me my cut and I'll be a quite happy after the split.
  • beleaguered (Score:4, Interesting)

    by chia_monkey (593501) on Saturday February 12, 2005 @02:26AM (#11650039) Journal
    Damn beleaguered company...

    'Nuff said.
    OK, maybe it's not. Let us all try to remember the number of times that adjective was used to describe the company. I don't think I can count that high. And yet...yet there are STILL nay-sayers...
  • by Anonymous Coward
    Just as the Mac Mini is enabling many consumers to finally get a taste of Apple excellence, a lower stock price will enable smaller investors to get on board.

    It is the board of directors that okays the stock split and I would guess that they wouldn't want a repeat of what happened after the split in 2000 where it plummeted in value. Rather, it is likely that the board believes that there is real room for growth. For me this is a more reliable indictor than, as one poster put it, a bunch of "crack smoking
  • Bought shares during Amelio's reign, when word got out that NeXT's OS was being considered as a replacement for Copland, and got used to Wall Street geniuses ignoring Apple. Believed that someday Apple's particular business values (innovation over commoditization) would pay off. Felt like a fool sometimes. Held on anyway, especially when Michael Dell said that Apple should close its doors, sell the assets, and return the money to its shareholders (bought more shares). Always bought and loved the products. N
  • by This is outrageous! (745631) on Saturday February 12, 2005 @02:57PM (#11653119)
    Obviously a mousebutton split is to follow. And Apple will never be the same. Mark my words.
  • A Random Walk (Score:4, Informative)

    by grolaw (670747) on Saturday February 12, 2005 @09:34PM (#11655765) Journal
    Stock splits are exactly that - a quick way to issue double that class of stock.

    If Apple is trading at pretty close to the top of their market ( aside from Tiger and the new Apple Portable Campstove a/k/a a G-5 laptop and whatever the Mini turns out to be) and there doesn't seem to be any Insanely Great stuff in the pipeline. . .then this is not the time to buy.

    Buying at or around the split is buying "high" - however, if the Mini really does make significant inroads into the Wintel world or becomes a home entertainment center - then the split allows more shares to trade and trade volume could increase....and, share price might go up.

    If you want to wager - well, the market odds are not as bad as a casino... most of the time (e.g. ENRON).

    Stick with a well-diversified portfolio and enjoy the fact that the Bond market will beat Bush into line sooner or later over the deficits.
  • About 15 years ago, Apple stock was trading around $45 dollars and then a few things happened and it dropped to $35. I bought 100 shares, cause I thought it might go up again. I'll soon have 400 shares. There were a lot of better places to put my money, but I put it where my heart was. After 15 years, it's been an OK stock to have. It's been fun to ride and, overall, right now I'm getting about a 11% annual return.
    • That must have hurt in '97. Which is of course when I wish I had bought it, when it was going for $13 a share, a few splits ago. :)
  • OMG (Score:4, Funny)

    by anaesthetica (596507) on Monday February 14, 2005 @02:16PM (#11669622) Homepage Journal
    Apple's stock price dropped by 50% in one day!??!

    Wall Street Confirms it: Apple is dying.

  • by Anonymous Coward
    I've been an Apple fanatic most of my life. When I finally started earning my own money (about 1995), the first stock I bought was Apple. Ever since then I've been watching the stock and the company like a hawk. I was able to determine after a while when its peaks and valleys would be. I ended up buying a ton of shares at really low values and my average per share price is about $14 a share. There was a time when they hit a low of $12 and I was telling everyone I know to buy Apple stock. I just wish I bough
  • by xjerky (128399)
    I never bought any Apple stock, but I did buy $2000 worth of CSCO stock for $74/share one month before the bubble burst. Double sigh.

    And that was my brief foray into the stock market....

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