Apple Has Too Much Money 570
Hugh Pickens writes "AP reports that last week during a question-and-answer session at the company's annual shareholders' meeting CEO Tim Cook said he believes Apple has more money than it needs and his next challenge is to figure out whether Apple should break from the cash-hoarding ways of his predecessor, the late Steve Jobs, and dip into its $98 billion bank account to pay shareholders a dividend this year. 'Frankly speaking, it's more than we need to run the company.' The question of how to handle Apple's cash stockpile is a touchy one, partly because company co-founder Jobs had steadfastly brushed aside suggestions that the company restore its quarterly dividend which Jobs suspended in 1995 when it was in such deep trouble that it needed to hold on to every cent to keep from going bankrupt. Marketwatch analyst Mark Hulbert writes that a compelling case can be made that a huge cash hoard actually represents grave danger for Apple. That's because too much cash often burns a hole in managers' pockets, and they end up doing a poor job of investing that cash—engaging instead in foolish pursuits like empire building. Hulbert adds that a good strategy for ensuring that Apple remains a hungry, growth-oriented entrepreneurial company might be for it to distribute much of its cash to shareholders."
I sold my Apple stock in 2005 (Score:5, Funny)
I thought I was a genius for doubling my money.
Re:I sold my Apple stock in 2005 (Score:5, Funny)
"I thought I was a genius for doubling my money."
Sigh. Me too. Instead I have a PowerMac that effectively cost me a quarter of a million dollars.
A.
Re:I sold my Apple stock in 2005 (Score:5, Funny)
You bought ram from Apple when you ordered your mac too?
Re:I sold my Apple stock in 2005 (Score:5, Insightful)
Like I said to my sister in 1999, there's no way not to hate yourself if you invest in stocks. What are your options?
Buy a stock and it goes down, apparently forever. What a dope I am.
Buy a stock and it goes up. Sell, and it goes up further. Damn, I knew I got out too early.
Buy a stock and it goes up then back down. Shit! I got greedy and lost money.
Buy a stock and it goes up, you sell, then it goes down. I knew I had that stock figured out! Why the hell did I only buy 200 shares?
So sure, you can make money, or you can lose money, but there's really no way to be happy with the outcome. ;)
(Haters please note that this is intended as humor. I'm sure that, aside from the universally felt twinge at having left money on the table, parent poster is perfectly happy to have "only" doubled his/her money.
Greater fool (Score:5, Insightful)
The old school way which is now gaining popularity again is to buy companies that pay dividends. This gives you a return without finding a fool to sell to or cashing out. It's how it's supposed to work. If the stock goes down, it's not even relevant unless they cut the dividend (there is eventually a correlation there). Now a few words about yield. A company can only pay (long term, at most) a dividend of 1/PE where PE is the price/earnings ratio. So a PE of 20 means they can potentially pay a 5% dividend if they pay out all the earnings. A PE of 10 is potentially "undervalued" in this regard. Apple with a PE around 15 isn't actually bad, they should probably just start paying a dividend based on earnings and keep the pile of cash for a rainy day. Then the dividend could be kept up during tough times.
Re:Greater fool (Score:5, Insightful)
But you don't have to find a "fool" because market makers are always there to facilitate liquidity. And if there's a good amount of volume, you won't have trouble selling at the price you want.
Re: (Score:3, Insightful)
Re: (Score:3)
If the real liquidity goes away, the fake "liquidity" that "market makers" are providing dries up at the same time.
Again, there's no distinction between "real" and "fake". In other words, if the liquidity goes away, then there's no liquidity. That's a routine tautology there.
You have the same amount of real ability to sell your stocks, it just looks like more on paper because the house uses similar transactions to take their cut.
The market is the "house" and its cut typically is very small.
Re:Greater fool (Score:5, Interesting)
The problem is you're playing the greater fool game. If you intend to make money by selling a stock at a later date, then what you're saying is that you think you can find someone willing to buy AFTER you got the value out of it. Your buying strategy is also then based on inside information, "intuition" or some other divine insight, otherwise people would have already known and driven the price up. Another downside is that you have to actually SELL your assets to get any money from them.
That's not how it works. The stock price of a company has at least some relationship to the value of the company -- certainly it will almost never fall substantially below the liquidation value, because if it ever falls below it, there are plenty of vultures who will swoop in and buy it for just under that amount and then liquidate the assets at a profit.
So if you buy a stock for $100 and it goes up to $120, that is usually because the company is now worth more money. They might have more money in the bank, or their products might be more popular in the market and the expected future profits are higher, etc. The person who buys it is not (necessarily) a sucker -- they're buying something ostensibly worth $120 for $120.
What you're probably referring to is the efficient market hypothesis, which basically says that the risk-adjusted return for any stock is the same, because if it wasn't then market participants would sell stocks with lower risk-adjusted returns (thus lowering their price) and buy stocks with higher ones (thus raising their price), until the risk-adjusted return for both stocks is the same. (The ironic thing about the efficient market hypothesis is that it only works if market participants assume it isn't true -- because if people assume it's true it encourages people to be lazy in evaluating bargains and then it ceases to be true; but since they generally don't assume it's true, it tends to be true. Another way of saying this is "people who trade stocks on the basis of the efficient market hypothesis are suckers.")
But that doesn't have anything to do with whether someone who buys at a higher price is getting a better or worse deal. Stocks with higher volatility (like a lot of tech stocks, because fortunes change overnight in this industry) tend to have higher returns when they're doing well, because the probability is higher that you'll see losses than you will if you buy e.g. Walmart. In other words, the returns can be higher with Apple because the risk is higher which makes the risk-adjusted expected returns the same for both Apple and Walmart (and, if you buy the efficient market hypothesis, all other securities). There is no reason to expect that you'll do better buying Apple vs. Walmart, regardless of their past performance or anything of that nature ("past performance is no guarantee of future results"), because if there was any reason to expect that then the respective prices of those stocks would almost immediately change to reflect it and it would case to be the case.
The point being that if you buy a stock and then later sell it for a higher price, neither you nor the buyer are necessarily suckers. You just have different valuations of the value of the stock -- and the difference may be very small. If you think it isn't worth more than $100 and someone else thinks it's worth $100.20, you aren't having some great existential disagreement about the future of the company. You're disagreeing about whether the future risk-adjusted returns will be two tenths of a percent higher or lower and comparing that favorably or disfavorably with the risk-adjusted returns for other investments (which will be in the same range).
The old school way which is now gaining popularity again is to buy companies that pay dividends. This gives you a return without finding a fool to sell to or cashing out. It's how it's supposed to work. If the stock goes down, it's not even relevant unless they cut the dividend (there is eventually a c
Re: (Score:3, Insightful)
Apple is neither an investment bank nor a venture capital firm. That is not their field of expertise, and it's likely that they won't make the most optimal decisions with the money. (It also creates a principal-agent problem where company executives have the incentive to invest in what they know and understand rather than what is most economically efficient.)
Anyone with 98 billion dollars can afford better expertise than they can get from hiring investment banks or VC firms, which come with their own principal-agent and conflict of interest problems. They can afford to buy Goldman Sachs outright (Twofer: Apple's lobbyists would become largely redundant) or to partner up 50:50 with, well, most of the VC firms. They'd still have plenty left over for a massive stock buyback.
I think the only way dividends will become popular again is if:
1. legislation passes
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you're theoretically correct, but in practice, most (non-institutional) investors don't have the technical chops and the market knowledge/connections to judge valuations that well, so they are essentially betting (i.e., they're potential suckers - i'd guess that even professional investors often gamble based on intuition rather than analysis).
Of course they are. And for that reason they regularly get taken for a ride. But the market price for anything that even resembles a blue chip stock is set almost entirely by the institutional investors. They have by far the most capital behind them. Which isn't at all to say that their evaluations are perfect, but rather to say this: If you think you can do better than they can, you're probably wrong. (Though if you're right you'll make a mint.)
Buy low sell high. (Score:3)
Missing option.
Buy shares. It goes up. It goes down. Market crashes, it goes down more. Buy more at fire sale prices. It goes up slowly.
Remember, buy low, sell high. You may have to wait for the high and resist selling in a panic.
When people were getting out of the market, I got in.
Re:Buy low sell high. (Score:5, Insightful)
Remember, buy low, sell high. You may have to wait for the high and resist selling in a panic.
Yes, but markets can be irrational for much longer than you have the money to keep up.
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Yes, but markets can be irrational for much longer than you have the money to keep up.
Standard investment advice is that as you get older, you pull money out of the stock market for exactly that reason.
But if you're 30~40 years old, you can wait the decade or two it takes for even the most fucked market to bounce back.
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Re:Buy low sell high. (Score:5, Insightful)
Missing option.
Another missing option: Don't gamble, or try to make money from literally nothing. -- What, pray tell, social benefit does moving numbers around actually do? You shift them around smartly and the numbers get bigger? Oh I see...
It gives companies something to borrow against when people think highly of them at the cost of having the rug ripped out from under them (and their shareholders) at any given moment by mere rumors... Companies that don't borrow against their stock price can survive even terrible market conditions by PROVIDING BENEFIT to their customers alone.
Don't get me wrong, I understand investments. It's just that the stock market isn't the only way to invest. When I invest in something, it's because I actually believe in the company based on something more than just erratic market trends. The value of my investment doesn't fluctuate with the moronic whims of a fickle market -- My returns actually reflect the company's profits. If they don't seem to be performing well, then that's my fault for not doing my research, or just bad luck. "Shit Happens."(tm)
Now if I can sell my failing investment to someone else, then I've just made some poor fool a sucker. The stock market is full to the brim with suckers... I may have dodged that bullet, but I actually don't do this unless absolutely necessary -- Instead I try to see if there's some way to fix the issue instead of bailing out at the first sign of trouble (unlike a stock marketeer). I sleep better at night, and make better investments, because I have a vested interest in actual, not momentary, success and don't play in the stock cesspool.
Another fly on the wall heard from (Score:3)
Apple is one of the most successful companies in the world -- right now.
But everyone with a soap box seems to think they know better than Apple management how the company should be run.
If they are really that smart go start your own company and beat Apple at it's own game.
Apple's management doesn't know either. (Score:3, Interesting)
But everyone with a soap box seems to think they know better than Apple management how the company should be run.
If they are really that smart go start your own company and beat Apple at it's own game.
They don't know either.
If Apple's management were such geniuses, then why don't they take that cash and start another business line that will make them even more successful?
Or for a bad idea, buy a company that will add to their business - like Intel? (Using cash for acquisitions almost always turns out to be a bad decision. )
Sitting on a load of cash is a sure sign that management doesn't have any good ideas in the pipeline to keep the business growing and the company is headed towards stagnation.
It happen
Re: (Score:3, Funny)
Re:Apple's management doesn't know either. (Score:5, Interesting)
"If Apple's management were such geniuses, then why don't they take that cash and start another business line that will make them even more successful?"
By and large that's actually what Apple has been doing. To wit:
- They were a computer/software maker and started making money doing that thanks to the iMac. So, they:
- Started up the iPod business selling music players that were pretty easy to use and fill up. So they:
- Started up the iPhone business, selling phones that were pretty neat along with apps that can be used to fill 'em up. So they:
- Started up the iPad business, selling tablets that were pretty neat compared to anything out at the time, along with even more apps that can be used to fill 'em up.
The problem for them is figuring out what the next "So they" should be. In my opinion, unless they have some really amazing stuff hidden (like AR glasses or something similar), I don't see them having an easy time bringing out yet another class of "must have" gadget.
But I could see them essentially buying up huge chunks of content - music, movies, television catalogs - in a way that gives them complete and total control over how they are able to run the content part of iTunes.
I could see them trying to set up their own cell/data provider, starting with the most advanced networks they could.
The problem with those would be that, given the way Apple has historically handled negotiating with the content providers and their network carriers, Apple made the lion's share of the profits and had the relatively easy part while the providers and networks made money but had to deal with the more difficult parts (like provide service).
I could see them doing something like taking a lot of that money and starting up their own idea incubator - they have a LOT of very smart people working for them and wanting to work for them - and just basically being a venture capital group. That's been done before, of course, but I could see Apple trying to do it again, but this time "right" since that's one thing they tend to do well.
As for what such a load of cash is a sign of - I think in Apple's case it's more a sign that they REALLY didn't anticipate the level of success that they had. Usually in business it's a very good idea to plan for as many failure modes as you can think of as well as how to build on successes, but most people don't go, "Gee, and if we sell 20x as much as we think we could we should buy everyone ponies and have free ice cream day!"
If they were completely out of ideas, I don't think we'd see Tim Cook walking around saying "We're trying to think of the best way to handle this" - I think he'd be flat-out lying and saying "We have amazing things in store for these funds" while trying desperately to see if there's anything "magical" they can pull out of their asses.
Re: (Score:3)
That cash belongs to the stockholders, for one.
Nope. It belongs to the corporation, who are governed by a board, who are elected by the stockholders. To say the stockholders own the cash is to deeply misunderstand the process.
Re:Another fly on the wall heard from (Score:4, Interesting)
That list is pretty terrible criteria for 'successful'.
One, its mostly data from over a year ago.
Two, the revenue numbers don't correlate well to each other as they represent different dates and different fiscal calendars with different companies being impacted by various degrees economic conditions changing over time.
Three, revenue is perhaps one of the weakest indicators of 'success'. If you get 1 trillion in revenue but had 1.1 trillion in expense, you are the worst company in the world practically speaking but would be number one in that list. By profit, Apple is likely easily in the top10 (data I could find put them at #8 in 2010, but a lot has changed since then). By Market cap, Apple is 487 billion, with Exxon at 413 billion, which is a strong indication of how valuable a company is perceived.
Re:Another fly on the wall heard from (Score:5, Interesting)
Didn't Tim Cook take over day to day operations of Apple in 2006? Steve Jobs was always the official CEO, but Steve had been grooming Tim Cook for almost half a decade when he finally stepped down. Most of the decisions made in the last six years have been, in part, made by Tim Cook.
I don't think you really know what you're talking about when you say things like "So far, Tim Cook hasn't really done anything significant one way or another and has been kind of 'coasting' on the companies success." when in actuality he has been running the company for 4+ years.
Re:Another fly on the wall heard from (Score:5, Interesting)
There are two aspects, reality and perception.
For reality, it's hard to say. Through the end of 2010, all choices had to go through Jobs. Even if you can fairly say Cook 'made the decision', Jobs had final say and might have even vetoed some moves we never heard of. It seems unlikely that Cook was operating fully indpendently.
In terms of perception, Jobs was undeniably CEO until 2011 and his name was attached to all of the right decisions, whether earned or not. Without Jobs, the shareholders may be putting quite a different set of pressures on Cook. Even absent of that, I would expect Cook not making decisions conscious of how Jobs would think of them, rather as official CEO or as chairman of the board. It might be a full year before the body of shareholders and management really start showing how they will be different or not in a post-Jobs world.
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Re:Another fly on the wall heard from (Score:5, Insightful)
And ignoring sensible dividends and going hell for leather for growth is what did for the likes of Enron.
The 'fraud on a massive scale' thing probably had something to do with that one...
Re:Another fly on the wall heard from (Score:4, Informative)
So far, Tim Cook hasn't really done anything significant one way or another and has been kind of 'coasting' on the companies success.
Tim Cook has been Chief Operating Officer. Now that means different things to different companies but for Apple, that position is responsible for running the day to day operations of the company. He has to deal with the gritty details of running Apple in areas like supply chain logistics which are boring as hell to most people. One of the details that emerged about Cook after he was named interim CEO by Jobs was Cook is responsible for the current advantage Apple has when it comes to parts. Through negotiations, Apple made long term contracts with Flash memory makers many years ago that locked them into stable supplies at stable prices. He was probably instrumental in securing the vast majority of the world's 10" displays that went into the iPad. This advantage helped them with costs and supplies in making their 10" tablet and why few other makers offered a 10" version initially and those that could had to start at prices higher than Apple. It's not an attention-getting position but a vital one. If he was getting publicity then he was doing the wrong job.
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Tim Cook is responsible for Apple's supply chain, the envy of the industry right now. And he's been running parts of Apple for awhile now as people below mentioned. It is not fair to claim he's been coasting on Jobs' success since neither one of us actually knows how much of Apple's decisions were Cook's or how much Job's took Cook's advice. For all we know, they could have been making decisions in tandem since Jobs knew the end was coming for at least a few years.
Re:Another fly on the wall heard from (Score:5, Informative)
Or they could.. (Score:3, Insightful)
just start charging less for their wares? Ya know, give back to the suckers that made them rich in the first place?
Re:Or they could.. (Score:4, Insightful)
just pay more to the people who produce their wares? Ya know, give back to the suckers that made them rich in the first place?
There, fixed that for you,.
Re:Or they could.. (Score:4, Insightful)
Fund some partially Apple owned startups . . . (Score:5, Insightful)
. . . pick some good staff and management to run them, let them come up with some good ideas. And just wait and see where they go. If nowhere, tough luck, but the mother ship's kids won't go hungry. On the other hand . . . maybe they might end up with a valuable subsidiary.
Giving cash to shareholders won't work. They will just use the cash to go out and buy yet again more Apple products.
So then Apple will be stuck with the money again, and not know what to do with it.
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That doesn't (or didn't) sit well with their insistence on controlling everything. I'd also suggest maybe funding some causes that help humanity, or technology in general, rather than just the bottom line.
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Give half the money to the 3 big stakeholders (Score:3)
Take half the money, divide it into 3 piles, for the 3 stakeholders:
1) Shareholders in the form of a one-time dividend.
2) Employees get a one time bonus
3) Customers get a gift card based on their purchases in the past quarter.
Apple is still left with 50 Billion, and keeps everyone happy.
When they hit $100B again, rinse & repeat.
Re:Give half the money to the 3 big stakeholders (Score:5, Insightful)
1995? (Score:5, Insightful)
How did jobs manage to suspend Apple's dividend in 1995 when he was still working at NeXT??
Re:1995? (Score:5, Informative)
That's because Jobs didn't suspended the dividend. It was ended by Gil Amelio:
http://news.google.com/newspapers?nid=1755&dat=19960214&id=sRYcAAAAIBAJ&sjid=6HwEAAAAIBAJ&pg=3973,6289068 [google.com]
Why not just buy out every hardware vendor? (Score:3)
Here's an idea: buy up all patents on H.264 and make them freely usable. Then W3C would have no arguments not to use it in HTML5, google will have no excuse not to implement it, apple will have a head start on getting it implemented on all their devices, and we can have the fucking internet back.
Foot In Mouth (Score:4, Informative)
They would not, in any terms, give away what they develop on their own.
Grand Central Dispatch
Zeroconf (bonjour)
LLVM
The list goes on and on... Apple continues very much to give away a lot of things as open source.
Um, what? (Score:5, Insightful)
I couldn't read the linked article (I seriously need to log in to view an AP news article hosted by Google? That's rich!) but that's not at all what I have heard Cook discussed. He downplayed the likelihood of a dividend payout and made it sound much more likely that Apple would find other ways to invest the money. In fact, his quote (re dividend payouts) was "My message there is that the board and the management are thinking about this very deeply... and we will do what we think is in the best interest of shareholders." Call me crazy but that sounds an awful lot like "look, we're not going to outright say it, but we're NOT paying dividends. We're thinking of other ways to invest the money that are better for the company which is, in our opinion, better for the shareholders."
Look, I know investors _REALLY_ want a dividend payout because it amounts to free cash (and lately the trend is "Apple, you have tons of cash - GIVE ME SOME!!") but, face facts people, the company has a history of not paying dividends, they don't feel it's a good use of their money, and they feel there are better ways to invest the money. Just accept it and move on.
Want to get dividends? Invest in stocks that pay dividends.
Re: (Score:3)
Its not "free cash" its very direct ROI. Investors generally want dividends when they don't feel the cash a company is holding is being leveraged properly. The reason you invest is because you expect the asset will grow. If all a company you have stock in is doing is holding a bunch of cash in bank accounts well; shit you could do that; without the risks.
APPL needs to either needs to tell investors it has some plan to exercise that money or it should disperse it as dividends. Dividend disbursements are
Cash hoards like this should be taxed (Score:3)
...as an incentive to either pay out dividends or to put the capital to work.
And not that businesses shouldn't have the ability to build cash reserves, but US corporations are sitting on something like $2 trillion in assets. Some have so much cash that banks are charging steep fees to handle it.
At some multiple of earnings, these cash hoards are actually a drag on the economy. For one, they represent underutilized capital -- generally a firm's cash is tucked into short-term securities for liquidity, mean
Empire building (Score:4, Funny)
Brain: We must prepare for tomorrow night
Pinky: Why, what are we doing tomorrow night?
Brain: We're going to go to Cupertino.
Pinky: What will we do when we get there?
Brain: The same thing we do every night, Pinky - try to take over the world!
They could buy NASA... (Score:3)
Poor timing (Score:3, Insightful)
Abysmal timing to announce "we have more money than we actually know what to do with" so hot on the heels of the negative stories about workers rights in the factories making Apple (and other) components. Perhaps they wouldn't have the "problem" of having such a colossal cash mountain if all workers in the supply chain were paid a fair wage?
And depressing that the best suggestion for dealing with the cash mountain is to distribute it to investors (to keep already highly valued share prices inflated), rather than any one of a hundred other uses- from increased pay, smaller profit margins on sale prices, increased R&D to come up with some truly innovative technology, or even just good old fashioned philanthropy.
Re:Poor timing (Score:4, Insightful)
That's retarded. They already covered their costs, Apple is not a charity, they bought labour at fair wages (market value, as opposed to what you want obviously). Companies EXIST to make money for their INVESTORS, nobody else. All the wealth (products, services) and all the wages and taxes they pay are completely incidental to their goal (which is why free market the best tool for creating wealth in the first place).
They need to do one thing for sure though - diversify out US denominated assets (though they already have their production capacity in Asia and other places), but they need to look at moving money out of US dollars and probably into other businesses, unrelated to tech - energy, mining, agriculture, whatever - just not in socialist 'paradise'. Paying out dividends to their investors is a completely reasonable suggestion, in fact they should do that too.
the labor market in china is not a free market (Score:5, Insightful)
i dont understand why people who believe in the free market keep looking to China as some kind of model on a hill. China is run by the Communist Party, and the corporations over there are part owned by the same party.
There are no labor unions, there are no workers rights laws, there are no environmental laws. There are mines and factories that are run on prison labor - 'criminals' being people who speak things the government doesnt like. Criminals being people who mention forming a union. That is not a 'free market' upon which wages were decided. That is a captive market, not a free competitive market.
In case you have forgotten, slavery was what the Republican Party was founded to eliminate from the face of the Earth. Not to make a profit off of it by claiming it was 'fair'.
The idea that someone should not have to inhale N-Hexane on an assembly line to save 1% on the cost of a product has nothing to do with 'socialism'. It is about basic human decency, basic morality, basic common sense. It is about the difference between a civilized society and lawless barbarism.
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Obviously. People still do not understand what 'free market' means, it literally means free from government intervention, they don't understand it, they think it's 'free of any regulations', which is not the case. Free of government regulations - yes. Free of all regulations - no. The real regulations can never be removed. Real market setting real prices on real things, real money - this always exists. Governments can push these underground, into grey and black markets, but they can't win against real marke
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Government intervention is the fundamental root cause of the American recessions starting 1913. So the depression of 1921, which ended in under 2 years because Harding cut gov't spending by 70% was caused by Federal reserve printing. In 1925 they started printing again, in much more quantity to buy bad UK debt, trying to save UK pound, this created inflation that caused the stock market bubble in agriculture (mostly) that blew up in 1929, sending US into recession. I made a comment some time ago, with date [slashdot.org]
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Nowhere does that mean the government can't use fake money as a means of expenditure.
- WRONG. It tells explicitly in the Constitution of the United States of America that the federal government is created to make a more perfect union for the GENERAL WELFARE of all the people, not for individual welfare of any particular person, and general welfare of all people is absolutely not helped at all, but hurt, by government destroying the economy because it prints money, which allows government to grow enormously and that's what destroys the economy.
You are wrong - gov't is not set up without goa
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Except what are these mythical 'benefits'? China gets to produce, but not to consume what they produce, they can't afford it, because their gov't is destroying their currency, making their own products too expensive for their own citizens, while giving a huge discount to their products to people from other countries. This is the worst thing governments can do - steal from their own people via the inflation tax.
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Yeah, I didn't say that the cash was in USA, I said that the cash was likely in US denominated assets (say dollars or US bonds or even APPLE BONDS!) Why is it important for Apple to diversify out of Apple bonds? Well, because under the system, US gov't is liable for all of the debt, but WHO is really liable? Who is government going to tax, to pay that debt (and obviously nobody will be paying that debt, it will be inflated away). Well, all of the US people and companies are liable for that debt. Under inf
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Also there is always another reason to diversify out of your own stock - it's better not to hold all eggs in one basket, so Apple should diversify out of their own stock and invest into other businesses in other industries, the best being mining and agriculture.
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No. Companies exist for the benefit of society.
- do you want a bet? A gold ounce? Companies exist for the benefit of their investors, people don't wake up one morning and say: gee, wouldn't it be great to start a company that exists for people other than investors, not to make money of your own work, but to work, so you can give money and wealth/products to others.
Yes, things like that happen, there are non-profit organisations, charity and such, but companies that people start where they go to work and make money, those exist to make investors richer,
Re: (Score:3)
So to reiterate: what/how are you improving your own circumstance for doing all this posting?
- I want a better economy, it's all for completely selfish reasons - I was born in USSR, wouldn't want the economies of the world to go that same route. Understanding the issues is half way to fixing the problem, and I am willing to do just a little work to undo just a little damage that the system causes because I am still in that system unfortunately for me. People need to understand economics, because this understanding helps the economic situation of those people.
If one person's assets are saved, bec
Re:Poor timing (Score:5, Informative)
Perhaps they wouldn't have the "problem" of having such a colossal cash mountain if all workers in the supply chain were paid a fair wage?
Do you know what is a fair wage in China is? Most people only look at the wage in US dollars and immediately claim to be unfair without ever looking at what people are paid relatively in China. The wages at Foxconn plants are slightly better than average for factory workers in China. Apple pays those that work on their products more than competitors do at Foxconn.
how much could i pay you to justify (Score:5, Insightful)
making you work 80 hours a week, making you live in a tiny room with 20 other people, make you use dangerous chemicals that damage your brain, threaten you with prison for even talking about a union, etc?
Re:how much could i pay you to justify (Score:5, Informative)
making you work 80 hours a week, making you live in a tiny room with 20 other people, make you use dangerous chemicals that damage your brain, threaten you with prison for even talking about a union, etc?
1. I'd like to see evidence of working 80 hours at week. Plus Foxconn actually pays overtime for every additional hour worked; many companies in the USA don't pay anything for overtime.
2. Foxconn doesn't make anyone live in a tiny room with 20 other people. They offer accomodation in dormitories with 8 people per room, at a cost of less than 10 hours salary per month. Perfect for someone who wants to work for 3, 6 or 12 months, save as much money as possible, and return to their home village with a big pile of cash. These people are free to find other accomodation, which will cost them more.
3. There are no dangerous chemicals in use anywhere in the USA. Not anywhere. Never. Ever. Do you believe that? Shit happens, and responsible companies like Apple act when shit happens.
4. Chinese employees are free to join a union. The company even has to pay for the majority of union fees. Now it is true that you can't start a union other than the state union, but you _can_ join a union.
Re:how much could i pay you to justify (Score:5, Interesting)
Re:Poor timing (Score:5, Insightful)
They are paid so terribly, that thousands of Chinese line up and wait for hours for a chance to work at Foxconn. And the job ad even says the starting wage is $261:
http://micgadget.com/21420/thousands-line-up-for-foxconns-jobs-in-zhengzhou/ [micgadget.com]
Re: (Score:3, Insightful)
Apple is of course being exploitive, but I think the local population would rather be exploited than nothing. If Apple funded a wage that wouldn't repulse a United States Citizen, then they'd probably be paying US citizens for an even bigger PR boost of 'made in america'' and those 'lucky' Foxconn employees would then get nothing.
The problem is that you're defining the wage to what someone in the US makes in nominal values. The cost of living is different in different parts of the world and you have to use relative values. Where I live my salary is decent; if I move to New York City and make the same amount, I'd be living in squalor.
Re: (Score:3)
Re:Poor timing (Score:5, Informative)
to keep already highly valued share prices inflated.
By P/E ratio Apple is valued less than Google, Amazon, Verizon, ATT, Oracle, LinkedIn, NetFlix. It is one of the CHEAPEST tech stocks in the markets it competes in (devices, media, mobile), even though it continues to see phenomenal growth.
time to rob the company and sell it off (Score:3, Insightful)
congratulations, capitalism. after Jobs passed away, it took less than a month for the hedge funders to begin the pillaging of the organization for their own personal aggrandizement.
apple will soon become 'the next HP', a gutted wretch whose main business is screwing people out of toner ink. bravo.
Re: (Score:3)
But Jobs was pretty much afforded free reign. He was pretty well allowed to do as he saw fit because he drove the company to success and shareholders formed a strong correlation between Jobs and the success of Apple. If the shareholders were ever dissatisfied, they didn't act on it because they wouldn't want to kill the goose that lays golden eggs. Now with Jobs gone, it's less certain that the shareholders will permit the CEO the same allowances and push for more 'pillaging'.
eh (Score:4, Interesting)
I know they get criticized for it, but until there's a shareholder revolt and/or people stop buying the stock (fat chance), I don't see the "need" to pay out a dividend. Apple could instead do one or more of the following:
1. Lower its profit margins and steal even more market share from its competitors. Tons of people already buy Apple products; imagine if they were that much cheaper.
2. Hire an even more talented workforce by offering "way above market" pay. Establish a threshold like 10%. Fire the lowest performing 10% of Apple employees. Technical, design, sales, the whole nine yards. Then give everybody who's left a 25% raise. Then fill the vacant positions with "superstar" caliber replacements. (Note: it shouldn't do this unless it's confident it can accurately gauge employee performance.)
3. Get into a market it doesn't yet play in and dominate it. This with the understanding it will incur a short-term financial loss. Prior to the iPhone's release, who would have ever thought the most popular phone in 2012 would be from Apple? Not me.
Jobs wanted to go "Thermonuclear" on Android (Score:3)
Now, Jobs is gone. So, unless the current board has plans to go "Thermonuclear" on someone, it's time for some dividends.
cure cancer (Score:3, Interesting)
They could spend 50 billion of it on curing cancer. You know, I wondered why Steve Jobs didn't do that .. I kept putting off writing to him to tell him to do that -- I now regret that. All he had to do was get all the world's top cancer scientists together to work on the problem in a focused way. He did that with computer animation and it worked. He did that with smartphones and it worked. Why can't it work for cancer or for regenerative medicine (growing new body parts)?
And yes, it would be massively profitable .. they can charge the equivalent of 1 or 2 years of chemotherapy for the cure. The insurance companies would gladly pay for it (it'll be cheaper than paying for 3-5 years of various expensive chemotherapy drugs and tests that the average cancer patient needs).
They would get their invested money back within months.
Re:cure cancer (Score:4, Insightful)
I guess you don't know this but cancer is a collection of heterogeneous diseases whereby cells grow out of control. They range from the benign (eg basal cell carcinoma) to the guaranteed death sentence (eg grade 4 astrocytoma). And they all have different genetic causes. So being able to identify the cause, preventing it, and then curing one particular cancer may not help for other types (eg just cut out basal cell carcinoma and you're cured, but there is no true cure for chronic melogenous leukemia other than stem cell transplant or gene therapy to correct the genetic mutation).
Anyway, finding a "cure for cancer" leads to the question: which one?
The value of a stock (Score:5, Insightful)
Won't someone think of the lawyers?! (Score:3)
All those starving lawyers out there and all that cash laying around... obscene amounts of cash... private army amounts of cash... could buy a dozen small to medium sized nations for that amount of cash.
Apple could buy every politician on the planet for just about that amount of cash. They could sustain legal aggression against competitors indefinitely for that amount of cash.
But don't even THINK about bringing manufacuring and support back to the US... Apple doesn't owe anyone anything.
Steve Jobs's Passing (Score:3)
Through last summer I hemmed and hawed about whether to hold or sell; my Apple shares had gone up 500% and were hovering around that point. Then Jobs passed, and I kicked myself for not having pulled the trigger before then. The share price dipped, of course, and the temptation to join those heading for the exits was strong.
But it was reading Slashdot that kept me on board. I had not been aware that Tim Cook had already been running the company for quite a while, that he had been thoroughly groomed by Jobs, and that Jobs had left a roadmap for several years of products.
Flash forward to February 2012 and the share price is up 700% from where I bought it, and they're mulling a dividend. Thanks, Slashdot!
Thought experiment: make Apples in USA (Score:3)
Ok, here's something that I'm sure will piss off a lot of people, (maybe even myself if I think about it!) but why doesn't the US enact a law that mandates a majority of Apple products SOLD in the US be MADE in the US? (not just designed)
I know this would suck for consumers (and the corporate planners at Apple which would have to deal with the havoc this would cause their supply chains) but it would bring back manufacturing jobs to the US (now we'd just have to keep those pesky migrants from taking them!). I mean, this wouldn't be illegal by international trade rules would it? (Brazil has a similar policy and it's still a member of the WTO). Also the auto industry has something like this in place, lots of foreign car companies manufacture cars in the US.
Like I said, this is not going to be popular with lots of people, even me a (very) happy Apple shareholder. However, as a committed well-off Democrat, I'm used to advocating positions that might not be good for my own self-interest IN THE SHORT RUN in support of the common good. Maybe I should be committed! ;)
Reducing cash reserves now would be damaging. (Score:5, Insightful)
They should not, under any circumstance, reduce cash reserves at this point. Re-establishing a dividend might make sense, but not an excessive one, and not as a means of managing capital.
Do you know why it took a year for competitors to bring out a real iPad competitor? It wasn't because Apple had much better tech, or because the others didn't have the prototypes - it was because no one could order parts. Before Apple launched the iPad, they bought up so much of the manufacturing capacity for key components - screens, especially - there was no way that Samsung could contract enough suppliers to bring a competitor to market.
Doing this takes a lot of capital. If they're talking about reducing operating capital, that tells me they don't have a "Next Big Thing" that they're planning on launching like they did the iPhone and iPad. That means drastically lower long-term growth.
Stifle innovation (Score:5, Funny)
I hope they use that money to further stifle innovation. All these technological novelties and the accompanying technobabble are growing over my head.
NASA (Score:3)
that fire is under control.... (Score:3)
"That's because too much cash often burns a hole in managers' pockets, and they end up doing a poor job of investing that cash—engaging instead in foolish pursuits like empire building."
Siri, PA Semi... appear to have been wise purchases. All of these (purchases/acquisitions since 2008) seem to have, for the most part, worked out well. (not counting the last 3 since it's too early). 2-3 billion.. of almost 100 in the bank. they could have bought those companies with the interest.
April 24, 2008 P.A. Semi Semiconductors United States US$278,000,000 [31] Apple A4, A5 (SoC)
July 7, 2009 Placebase Maps United States — [32] Maps
December 6, 2009 Lala.com Music streaming United States US$17,000,000 [33] iCloud, iTunes Match
January 5, 2010 Quattro Wireless Mobile advertising United States US$275,000,000 [34] iAds
April 27, 2010 Intrinsity Semiconductors United States US$121,000,000 [35] Apple A5 (SoC)
April 27, 2010 Siri Software United States — [36] Siri
July 14, 2010 Poly9 Web-based mapping Canada — [37] Maps
September 20, 2010 Polar Rose Face-Recognition Sweden US$29,000,000 [38] iPhone software (camera)
September 14, 2010 IMSense High Dynamic Range Photography United Kingdom — [39] iPhone software (camera)
August 1, 2011 C3 Technologies 3D Mapping Sweden US$267,000,000 [40] Maps
December 20, 2011 Anobit Flash Memory Israel US$390,000,000 [41] iPhones and iPads
February 23, 2012 Chomp App-search software United States US$50,000,000 [42]
I'll bet a significant chunk of that money would be well spent tooling OTHER manufacturers facilities to make Apple parts. Spend the money to upgrade a factory to make the seamless glass panes they used in the NYC store (for example) and they get really good prices on that glass for another construction project.. the new HQ.. which apparently has all glass exterior walls (and no right angles).
spend the money to upgrade the CNC machines to tool unibody chassis, and no other vendor can use that facility (because Apple bought exclusivity). OR they bought all the machines (since it literally takes HOURS to cut a chasis out of a billet http://plasticsnews.com/china/english/chinablog/2011/12/apple_turns_to_new_materials.html [plasticsnews.com])
Corning shelved Gorilla glass because they couldn't find a market for it. along comes Jobs... next thing you know, Corning is making Gorilla glass screens for everyone. I don't think Apple paid to re-tool... but probably gauranteed a shit ton of units ordered to get them to start making Gorilla glass in mass.
you can complain all you want about their marketing, their products, whatever. but you CANNOT, in any way, argue that their business model isn't ROCK SOLID.
as the saying goes.. if it ain't broke....
Law against perpetuities (Score:3)
Can anybody who's a real lawyer say anything about perpetuities?
I thought I read about a case where a huge sum of money was to keep accruing interest forever.
The state disallowed it because they didn't want to allow the creation of a monster.
Aside from legal aspects, if Apple wanted, couldn't it create a fund which would eventually dwarf all other financial entities on Earth? And even own everything? I mean, if they don't give out a dividend, that's where it's going eventually anyway.
outsourcing (Score:3)
Re:Some ideas (Score:5, Insightful)
Well, multiple problems.
One, why in the hell would you want Apple to sink Google, AMD, Intel, or Microsoft? From a user perspective killing any is bad. Alternatively, why the hell would Apple care to sink AMD or Intel, neither of which compete with Apple? If your claim is to stop other computer vendors from using the same instruction set as OSX systems, Apple has a pretty tight grip on OSX without instruction set lock-in (yes there are hackintoshes, but exceptionally rare in the scheme of things.
Second, that would be a fast way to draw attention for anti-competitive moves. Both from a regulator standpoint and quickly making enemies of a lot of companies with a lot of resources. They have a pretty comfortable competitive landscape right now, and a drastic move represents some huge unknowns that could be pretty devastating.
Finally, they frankly can't afford to buy most of those companies. Market cap is generally a good relative indicator of theoretical buy-out requirements:
Google: 200 billion
Intel: 134 billion
Microsoft: 265 billion
I don't know what percentage of shares is realistically available or how sky-high the price would be driven if Apple attempted a hostile takeover, but even baseline the market cap is beyond their reach. If they do have 98 billion cash on hand, then AMD is the only one they'd likely be able to subsume, but with a huge question of 'why would they?'.
Re:Some ideas (Score:4, Informative)
Most, possibly, but at least Google with its two types of shares is reasonably immune to that: Larry and Sergey alone still control more than 50% of the voting power.
Re:Some ideas (Score:5, Insightful)
The problem is, this kind of acquisition often doesn't make sense. For example, one proposal was that Apple would buy ARM. They could afford to without making a significant dent in their cash reserves, even if they paid double the current market cap. But would Samsung want to license CPU designs from Apple? Almost certainly not - they'd just drive the other mobile device makers to designs licensed from MIPS or even Intel. The net result would be that Apple would end up paying a much larger share of the R&D costs. This was one of the main reasons why they switched to Intel chips in Macs: they were IBM's only laptop / desktop CPU customer and so were paying for all of the R&D, while they only pay something like 5-10% of Intel's R&D costs. Buying other companies on their supply chain would have the same problems.
If I were in their position, I would do the same thing a number of other successful tech companies have done and set up an in-house VC program. If an employee has a cool idea that is not a market that Apple currently wants to be in, then Apple should front them the cash to set up their own company, own 50% of the shares, and let the employee go on sabbatical and return if the company fails.
Re: (Score:3)
Re:Maybe distribute some money to customers... (Score:4, Informative)
Prices are deduced by how much people value the products and are ready to pay for them, not by how much it costs to produce them.
Re:The stockholders can't afford a dividend (Score:4, Informative)
Sounds like more right-wing clap-trap about the underprivileged and under-appriciated 1%. Your going to have to do better than generalities to claim that 80% of the value of a dividend would be eaten in taxes. First my understanding is that Apple only pays the difference in corporate taxes from what it pays overseas and what the US tax if all the money had been made here. So that takes a good chunk out of your 30%. Secondly long-term cap gains is 15% but that shouldn't be added on to the cost of the dividend to the shareholder, since the shareholder gets that on any dividend. I never heard of this 35% tax (80 - 30 - 15 = 35) of which you refer to for simply issuing a dividend.
I would be leery too if I were them of issuing dividends, but not for tax reasons. The principle appears to have served them well. They are probably working on some sort of optimal ratio of cash to operational costs (or some other relevant factor) to aim for and then figure out a dividend that can glide to that ratio so they don't feel the need to yank it back later when the competition starts to tighten up again.
Dividend payments thought would also engender some good will towards them. Just like when Microsoft started paying dividends the effect was seen in personal income on a national levels, an Apple dividend would help spur the US economy.
Re: (Score:3, Informative)
One doesn't get to pay long-term capital gains rates on dividends, so the appropriate figure to use is the marginal rate. As an Apple shareholder, for me, that is over 30%.
Only if you flip your shares within 30 days of the dividend. If you hold for more than a 30 day window surrounding the div, it will almost certainly be "qualified" for th 15% rate cap. This is why Romney's effective tax rate is 15%: both cap gains and most dividends are taxed at 15%. When a company makes a major, one-time dividend, investors may even end up with capital losses on the share price to offset the dividend.
Re:The stockholders can't afford a dividend (Score:4, Interesting)
I hate stock buyback plans, but this is one of the few times it would make sense
It's worse that that. The stock price is so high because investors expect the company to be profitable in the future; but if those profits are never distributed to the stockholders then where's the value? In order to be worth the current price the investment has to pay some return (ignoring the dot-com type of speculation that drives up the price of a company's stock before it comes crashing down as we saw in the 90's).
If Apple distributes the cash as dividends the stock price will (probably) drop in proportion to the amount of money that's distributed, unless stockholders think there's potential for even bigger profits and another dividend in the future.
Re: (Score:3)
So, we need to reduce the corporate tax-rate so that "trickle-down" economics will let large companies like Apple invest in new business?
Instead these companies just hoard vast amounts of cash.
The right wing economist as so full of shit it you could only possibly vote republican if your either stupid or not following.
Obama just proposed a decrease in the US corporate tax rate, which is one of the highest in the world.
Re: (Score:3)
Trickle down economics are fine and dandy, they just don't help those, who consume and don't produce. You see, 'trickle down economics' is working in China, where this stuff is produced, not in USA, where none of it is.
Re:Dividends? Ridiculous. (Score:4, Insightful)
Re:Dividends? Ridiculous. (Score:5, Insightful)
Re:Dividends? Ridiculous. (Score:5, Insightful)
When you buy stock you own part of the company. Isn't it kind of silly to not take any of the profit out of the company you own once it's mature and has all the money it needs for operations into the indefinite future. Intentionally deciding not to get paid as the owner of a company seems silly.
Re: (Score:3)
Apple tried servers, they pretty well failed at it in the market. The problem being that Apple wants ludicrous margins for not particularly more customer service cost. In the consumer market, they have marketing efforts and brand value driving people to pay more for their products and experience than they would be willing to pay any other brand for the exact same experience.
Going into the server arena, companies need something a bit more concrete. Either hardware operating on razor thin margins, or if t
Re: (Score:3)
Statistically speaking, the Foxconn suicide rate is lower than the US college suicide rate.
Re: (Score:3)
Re: (Score:3)
Apple has too many US DOLLARS, that's its problem. With 15% inflation it is insane to keep savings in that currency, they need to come up with a diversification strategy. However paying dividends to shareholders is also a very reasonable suggestion.
Too many eggs in one basket, I'd look at completely different businesses (agriculture, mining, but obviously not in US, it's too dangerous, there will be more nationalisation and more taxes and more inflation and other types of theft by government).
They definitely need to diversify out of their own bonds, which are dollar denominated though. Again - buying up some mining businesses, joint venture into energy, metals, agriculture.
15% inflation? What are you talking about?
Re: (Score:3, Insightful)
I am talking about real inflation, the real money printing that causes it and the increase of prices that is coming to USA due to it, though it was able to severely delay that by exporting all of that inflation (specifically because the printed money leaves the country to buy foreign goods, where it is accumulated).
Real inflation, the kind of inflation that should have been used as deflater to the fake GDP numbers (GDP has been shrinking in USA for over 20 years, not growing, and in all cases, GDP is 70% sp
Re:Diversify (Score:4, Insightful)
Keynesian ideas to economics are what foreskin is to a Hasidic Jew.
However I am very well versed in relative value of things - did you know that in gold and silver oil prices are not only staying steady, but are falling somewhat? All that while paper currencies of the world are being destroyed, I might add.