Apple To Launch Largest Stock Repurchasing Plan In History

An anonymous reader writes "In conjunction with its earnings report for the second quarter of 2013, Apple issued a press release announcing some major plans for its ever growing stockpile of cash. It is increasing its quarterly dividend payout to investors by 15%. What's more, the company will spend $60 billion in stock repurchases, making it in Apple's words, 'the largest single share repurchase authorization in history.'"

Re:what does this actually do?

[hedwards]

No, they're not.

Dividends encourage investors to hold their shares for long periods of time by giving some income along the way. A buy back is something which boosts the price of the shares, but does nothing to generate a revenue stream for the investor. And if it doesn't inspire new investors to buy in, it can result in little or no benefit to the investor.

What's more, you can issue a dividend regardless of what the price of the stock is with respect to it's actual worth, whereas you shouldn't be buying back stock unless the shares are worth less than the management thinks they're worth.

Dividends themselves are generally something that only make sense when the firm doesn't have somewhere to invest the money themselves. It basically says to the investor that you're going to make more money investing the money elsewhere than we're going to derive by investing it ourselves. And frequently that means that the business can't expand any further for regulatory reasons.

Re:Apple stock = Apple products

[Anonymous Coward]

$60 Billion is only a small fraction of the company's overall value

The current market cap is $381B. $60B is an enormous buyback.

Re:Why?

[Tough Love]

It is a myth that dividends drive up the price of stock. The simple relation is this: after the dividend is paid, the company no longer has the money so the stock is worth less. You can easily verify this, just look at the price of any stable company on the ex div date. It will be lower by roughly the dividend.

Re:Dumbest idea, ever

[bloodhawk]

It really isn't so much that they are going to waste it (though that is always a concern). investors/shareholders make money from one of 2 ways (like it or not investors are their to make money), either the shares go up in value or they receive an income as dividend from those shares. Apple doesn't have to provide stellar growth, they can continue on with their excellent profit and earnings with no growth, however to do so they need to change the way they are returning value as without growth shareprice will stagnate which means you have just removed the traditional way that Apple investors were getting value from the shares. buybacks and dividend allow investor returns while also bolstering the shareprice through desirability as an investment. What they are doing makes sound business sense even if like me you despise them.

Re:Dumbest idea, ever

[bughunter]

This is one of the most insightful comments I've ever seen attached to a /. story with 'Apple' in the title.

(I know, that's faint praise...)

Re:Why?

[Alomex]

You are wrong. Stocks that pay dividends show this wave pattern where the price rises just before the dividend as it approaches. However this crest pattern does not preclude nor negate a long term gain in the stock price.

Re:Why?

[Tough Love]

If a stock rises as the dividend date gets closer, purely because of the dividend then those new buyers are just gullible, and the everybody who failed to value the company accurately is just stupid. Proof: if we could rely on a stock price increasing just before the dividend then we would bid up the price right now, well before the dividend. And so the stock would not rise in advance of the dividend because it was already fully valued. See?

If you don't see, then I have a perpetual motion machine to sell you.

Re:Dumbest idea, ever

[Karlt1]

It strange that now Slashdot Wisdom(tm) is Apple came out with new ideas every year when SJ was alive.

Apple's market changing innovations were.....

1998 - iMac

2001 - iPod

2003 - iTunes

2007 - iPhone

2010 - iPad

So, by that pattern, this would be the year that Apple "needs to innovate". But there is no conceivable market larger than the phone market.

Re:They have lots of new ideas, some still from Jo

[Anonymous Coward]

I feel stupid having to add a disclaimer, but even someone that isn't a huge Apple fan (namely me) can admit that, between ipods, iphones, and ipads... they really did break their respective markets wide open.

Mp3 players existed before the ipod, but they were borderline niche devices. Business types had Blackberrys and some people had shitty winmo smartphones, but it was nothing like what happened when the iphones came around. Windows tablets existed before the ipad, but it was never anything like what happened with the first ipads hit the market.

And all of those markets did well as a result, and let's not lie to ourselves because they're not slashdot's favorite company.

Re:Dumbest idea, ever

[Penguinisto]

Umm, wait a sec:

1) Apple has paid dividends before [nasdaq.com] - even when Jobs was quite alive.

2) You're looking at the wrong time scale. OSX and the iPod came out in 2001. MacBook Air The iPhone was launched in 2007, and the MacBook Air in 2008. The iPad showed up in 2010. On that kind of scale, Apple could wait until 2015 and it would still keep to its innovation calendar just fine.