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19Mar/12Off

Apple and their dividends

I watch quite a bit of CNBC despite never having invested a dime in the markets. I found this news of Apple doing a stock buyback and offering a dividend curious.

People have been clamoring for a dividend from Apple for a while now, wanting Apple to return some of that near $100B cash stock pile to investors.  I'm no fan of Apple(to put it mildly), never really have been, but for some reason I always thought Apple should NOT offer a dividend nor do a stock buyback.

The reason? Just look at the trajectory of the stock, investors are getting rewarded by a large amount already, from about $225 two years ago to near $600 now. Keep the cash, sooner or later their whole iOS ecosystem will start to fizzle and they will go on a decline again,  when that is I don't know but the cash could be used to sustain them for quite some time to come. As long as the stock keeps going up at a reasonable amount year over year (I hardly think what has happened to their stock is reasonable but that's why I'm not an investor), with some room for corrections here and there, keep the cash.

Same goes for stock buybacks, these seem to be tools for companies that really don't have any other way to boost their stock price, a sort of last resort, they are all out of ideas. Apple doesn't seem to be near that situation.

Even with the dividend I saw people complaining this morning that it was too low.

Apple could do something crazy with their cash stockpile too - perhaps buy HP (market cap of $48B). Or Dell ($30B market cap), if for nothing else then for diversification.  Not that I'd be happy with an Apple acquisition of HP.. Apple wouldn't have to do anything with the companies just let them run like they are now. For some reason I thought both HP and Dell's market caps were much higher(I suppose they were, just a matter of time frame).

What I think Apple should do with their stock? is a massive split (10:1 ?). Something apparently they are considering. Not for any other reason than to allow the little guy to get in on the action easier, having a $600/share price is kind of excessive, not Berkshire Hathaway excessive ($122k/share) but still excessive.

With the Nasdaq hitting new 10+ year highs in recent days/weeks, I would be curious to see the charts of such indexes that have Apple in them, how they would look without the ~50 fold increase in Apple's stock over the past 10 years). I seem to recall seeing/hearing that Dow won't put Apple in their DJI index because it would skew the numbers too much due to how massive it is. One article here says that if Apple had been put in the DJI in 2009 instead of Cisco the Dow would be past 15,000 now.

CNBC reported that Steve Jobs was against dividends.

TechOps Guy: Nate

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  1. “sooner or later their whole iOS ecosystem will start to fizzle and they will go on a decline again”

    LOL – keep dreaming… Or rather, keep waiting. For a long time.


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