Author Topic: AAPL - Apple Inc.  (Read 1612170 times)

DCG

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Re: AAPL - Apple Inc.
« Reply #570 on: November 08, 2012, 09:38:20 AM »
Article on Barrons today - just for you RIMM Never Sleeps (how much cash is RIMM returning to shareholders, by the way?):

Apple's Dividend Set to Surge

Apple stock has quietly sagged to valuation levels more commonly associated with slower-growth companies like Microsoft (MSFT). That's an opportunity for investors, but not ones who are looking for quick price gains. Rather, Apple (ticker: AAPL) should appeal to those who wish to turn savings into healthy and rising income.

This past summer, cash-rich Apple joined the ranks of companies that pay quarterly dividends to stockholders. Its first payment of $2.65 a share, made on Aug. 16, worked out to annualized yields of just under 1.7% when calculated by the share price at the time. But as share prices fall, yields rise. Apple stock is down 12% since that first dividend payment. The $2.65 payment set to go out on Nov. 15 makes for an annualized yield of 1.9%.

That's not an especially impressive number -- yet. The 10-year Treasury note yields 1.6% and the broad Standard & Poor's 500 stock index, 2%. The key for income investors, however, is that Apple's payment is likely to rise relatively quickly. Those who buy shares today could see their dividends double within three years.

There are three reasons. First, with bond yields at historic lows, investors are chasing after stock dividends, lifting valuations for companies that traditionally pay them, like utilities, consumer staples makers and real-estate investment trusts. That has made other companies keen to meet investor demand for dividends.

The number of S&P 500 companies that pay dividends recently hit 403, the highest since 1999. Analysts reckon third-quarter dividend payments for the S&P 500 rose 20% from a year earlier even though earnings didn't grow.

Dividend demand will be a major investment trend for years to come as baby boomers look to generate more investment income for retirement and find bond yields too stingy, according to Savita Subramanian, the top stock strategist at Bank of America Merrill Lynch. S&P 500 companies look capable of paying more; their current dividends cost about 30% of earnings, versus a historical average of more than 50%.

Apple, however, started paying dividends at a much lower rate than other big tech firms -- 20% of projected earnings, versus 32% for Microsoft and 29% for Cisco (CSCO). It's common for new dividend-payers to start small, but Apple is likely to make its payments more competitive in coming years. Cisco, for example, has more than doubled its quarterly payments since it began making them last year. That's the second reason Apple's payments are likely to rise quickly.

The third reason is that, although Apple's growth is slowing, it's not yet slow. Wall Street expects its earnings to jump 15% in its current fiscal year, which runs through September 2013. That's more than twice as fast as Microsoft or Cisco. Apple already sits on cash and investments worth $128 per share, or about 23% of its stock price (although much of that is held overseas for tax purposes, meaning it won't be paid as dividends for now). Judging by Wall Street forecasts, it should reel in another $175 per share in free cash over the next three years.

Apple stock isn't without risk. Part of the reason for its recent decline is that iPhone supplies are running low due to production problems. In the short term, that could cause Apple to miss earnings forecasts, which in turn could drag its stock price lower. And of course, Apple has plenty of competition for smartphones and tablet computers.

That aside, Apple's slide gives stock buyers a way to get a 4% yield on their initial investment without delving into low-quality companies. Simply buy Apple stock yielding 1.9%, and wait.


rimm_never_sleeps

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Re: AAPL - Apple Inc.
« Reply #571 on: November 08, 2012, 09:41:29 AM »
i agree 100% that competition is a huge problem for apple right now. as for berkshire, if current apple ceo had a glorious 60 year record of capital allocation that current Berkshire ceo has had, I would not be concerned at all about that $120b+. I can assure you that balance sheet is going to be an increasing area of focus now that apple is reverting to the mean as a business.
« Last Edit: November 08, 2012, 09:44:15 AM by rimm_never_sleeps »

DCG

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Re: AAPL - Apple Inc.
« Reply #572 on: November 08, 2012, 09:46:36 AM »
i agree 100% that competition is a huge problem for apple right now.

I didn't say that I thought competition is a huge problem. I said it's part of the reason the stock has declined recently, as analysts think that. There's always going to be competition.

Part of the decline is also due to people looking to lock in profits for taxes. Beside from you, I've yet to hear from 1 other person who thinks their dividend amount is the reason the stock has declined. The stock had a huge run. Stocks don't go straight up.

Uccmal

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Re: AAPL - Apple Inc.
« Reply #573 on: November 08, 2012, 09:47:54 AM »
Valueinv,

Take another 50 B off the market cap - brings it to about 350 B ex. cash, and Apple would make a fine GARP play.  I wouldn't buy it, but that's more due to my style.

If I were you, I wouldn't buy it at any price. This company is waaaay outside your circle of competence.

oh, and its in yours.  Edited.
« Last Edit: November 08, 2012, 10:08:45 AM by Uccmal »
GARP tending toward value

rimm_never_sleeps

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Re: AAPL - Apple Inc.
« Reply #574 on: November 08, 2012, 09:48:47 AM »
I never said their "dividend amount" was the reason for the decline. please if you plan to quote me do it correctly and precisely.

valueInv

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Re: AAPL - Apple Inc.
« Reply #575 on: November 08, 2012, 10:03:28 AM »
Valueinv,

Take another 50 B off the market cap - brings it to about 350 B ex. cash, and Apple would make a fine GARP play.  I wouldn't buy it, but that's more due to my style.

If I were you, I wouldn't buy it at any price. This company is waaaay outside your circle of competence.

oh, and its in yours.  You have to be the stupidest person to ever post on this board, bar none.

Considering that I have been in the tech industry and Silicon Valley for almost 15 years, I would think it is.  ;)

Thanks for the complement.  ;D ;D ;D
« Last Edit: November 08, 2012, 10:07:18 AM by valueInv »

Uccmal

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Re: AAPL - Apple Inc.
« Reply #576 on: November 08, 2012, 10:21:44 AM »
Sorry Valueinv, part of my comment wasn't appropriate or accurate. 

However, I do think you over rate your competence in tech. and silicon valley.  Its too diffcult to assess with any degree of anything other than vague estimates.  Things change with stunning rapidness.  To claim competence is dangerous.
GARP tending toward value

valueInv

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Re: AAPL - Apple Inc.
« Reply #577 on: November 08, 2012, 10:54:57 AM »
Sorry Valueinv, part of my comment wasn't appropriate or accurate. 

However, I do think you over rate your competence in tech. and silicon valley.  Its too diffcult to assess with any degree of anything other than vague estimates.  Things change with stunning rapidness.  To claim competence is dangerous.

I'll respond to your post in full when I have more time. In the meantime, take note:

http://www.blackenterprise.com/technology/apple-rumors-ipad-mini-2/

Coverage of iPad Mini 2 has already begun - a full year in advance.

Palantir

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Re: AAPL - Apple Inc.
« Reply #578 on: November 08, 2012, 11:08:05 AM »
Uhm, let's get back to discussing what really drives Apple's value - its product lineup rather than its dividends blah blah that no one cares about.


I heard Walter Isaacson signed a one year "keep quiet" agreement, has he commented on anything yet regarding new products?
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PlanMaestro

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Re: AAPL - Apple Inc.
« Reply #579 on: November 08, 2012, 12:34:32 PM »
What is going on here? I heard about their own microprocessor and their datacenter investments but this is crazy.