“If Steve Jobs really wants to help his stockholders, there’s something much simpler he could unveil later this month instead,” Arends writes. “A dividend.”
“Apple Inc. is sitting on billions of dollars in stockholders’ money,” Arends writes. “The chief executive should stop the miser routine and hand it back to its rightful owners.”
“This is not all money Apple needs to run its business. Most of it is sitting in low-yielding investments like short-term corporate bonds. It’s earning next to nothing,” Arends writes. “And that’s bad news for investors. Many of them may not realize it, but it’s dragging down their returns. It’s costing them money.”
“Why is Apple hoarding its cash? A company spokesman explains: ‘We have maintained our cash and strong balance sheet to preserve the flexibility to make strategic investments and/or acquisitions.’ In short: In case they want to spend it,” Arends writes.
“Steve Jobs really doesn’t need an acquisitions warchest of around $30 billion, and it is alarming to think he wants one,” Arends writes. “He should start handing back this money to stockholders through dividends. Regular, quarterly dividends are better than a one-off special payout because they impose financial discipline on the management. But the core principle is the same in either case. The money belongs to stockholders: Give.”
Arends writes, “Indeed Jobs should go further. Apple should — gasp — start borrowing, and hand that money back, too.”
Full article here.
MacDailyNews Take: Call us crazy, but we trust the judgment of Steve Jobs, Tim Cook, and Peter Oppenheimer more than that of Brett Arends. In fact, we trust the judgment of just about anybody more than that of Brett Arends.
If you are investor in [Apple (AAPL)] stock, brace yourself for a dose of reality. The shares’ best days are surely behind them. – Brett Arends, July 22, 2009
Shares of Apple Inc. closed at $156.74 on July 22, 2009. They current trade for $208.86. Up 33.25%.
For a more, read Daniel Eran Dilger’s “Who’s paying Brett Arends to malign Apple?” article over on RoughlyDrafted here.
Funny how both Bill Gates and Steve Jobs have the same viewpoint on borrowing money. BTW how has borrowing money worked out over the past two years?
Anyone?
Stock Split would be nice!
I only have 30 shares but it’s better than nothing
I’ve been an Apple stockholder for several years, currently with thousands of shares at a single-digit cost basis. I’m happy with everything Jobs is doing, and specifically bought the stock because of Job’s vision and flow of relevant new ideas for digital devices. I have other stocks for dividends. Moreover, their cash on hand adds a direct value to the stock. If I want income from AAPL I could always sell some shares.
Obviously the simple logic that the shareholders if they aren’t happy with that increase of 33% and indeed a lot more for most or them over the years, they are perfectly at liberty to do a runner with their profits and invest in a company that does its business exactly as he outlines. I suspect that most are perfectly happy with the profits they are already making however. His attitude is that which decimated most of the UK industry over the years whereby paying profits to shareholders became the prime purpose of the company rather than investing in and producing new and innovative products that sustained growth and wealth well into the future. Beware such idiots because you can make very good profits right up to and beyond the point where your long term existance is lost.
Arends is a clueless, acewipe shill who clickwhores for a living. Dilger, while your typical off-the-shelf San Fran Hussein-ass-kissing-lib, does get his well deserved licks in on ArendShill™
Elementary Corporate Finance tells us that we DO receive this money in the form of capital gain in the stock price. If they were to hand it back to us that would simply be reflected in the drop in stock price. All this guy is really arguing for is that the money should be invested in a market portfolio so that the money itself earns returns that we can absorb (again, in the capital gain in stock price)–but that’s a matter of risk tolerance. The argument can be made quite justifiably that investing the money in low yield, low risk corporate bonds is the sound thing to do in a company that otherwise takes lots of risks. Keeping it as a war chest for future acquisitions seems a sensible thing to do, from my perspective.
As a long time AAPL investor I’d be happier if Apple were sitting on a cash reserve of 50 to 60 Billion for expansion and other strategic purposes. Taking out loads to fiance growth or to acquisitions is well dumb. Of course what is even more stupid is paying dividends when the price of a Stock growing as fast as AAPL has done over the past few years, and only an unqualified idiot would ever even hit that a company should borrow money to pay a dividend, that is the type of thinking that has but the US Auto industry into government ownership mode.
Brett Arends should focus his quest for dividend pay outs to Banking and Financial sector stocks where they are paying out hundreds of billions of dollars in bonuses to employees while the public that bailed their asses out, after their own bad management and poorly conceived get rich quick schemes, are getting corn-hole screwed by the companies that just 12 to 18 months ago were crying for public money to keep them afloat, these same financial companies are also giving it to their shareholders like a gay John Holmes after a bottle of Viagra and fifth Scotch. So the real question is who is paying Brett Arends to give some credibility to their fomenting scheme to try an manipulate Apple’s Share Price.
Where is the FTC and SEC in this matter?
Why aren’t they investigating Brett Arends already?
Had my friend taken advice and keep his 1000 shares before split and 18 dollars per share at that. No listened to others and did not view it as long term.
So, I tell him that 18,000 profit he made would be 400k now. His eyes says it all. That is better than the tripe this guy wants us to have.
I guess his friends are now richer than him because they have Apple stock. So, he writes articles to try to dent their wise choice.
Sad person!
🙁
Another brillant analyst who should really be working in the used car retail business.
@Macdoc… a stock split does nothing to change the value of a company. It may make the stock more affordable. However 2 shares of a split Apple stock are equal to a share right now.
Historically there is no evidence that a stock split increases the value of a company.
IMHO… Apple needs to demonstrate that it will strategically use cash-on-hand, or it should consider a dividend. I tend to agree with the MDN take, Jobs and Co. have thus far demonstrated strategic thinking with their liquidity.
Demon, Apple is sitting on 28 Billion right now and NO DEBT! That’s money that they are not touching for the business, its just collecting interest.
I think they are doing quite well, and of course more is better but don’t we all want more.
And Brett has his head up his ASS!!
I think Apple is sitting on $30B to help prevent a hostile takeover. But I’m sure that’s just silly.
“Most of it is sitting in low-yielding investments like short-term corporate bonds…”
Is Brett Arends suggesting that Apple should have invested in Madoff?
I have 1835 shares of Apple, and as a small shareholder I wouldn’t mind if Apple stuck about 10% of its cash, about $3B in a tech venture fund to buy or invest in startups.
So… Apple should distribute its cash reserve to the stockholders, then resort to borrowing money, which in turn would increase its operating expenses in terms of interest charges. And this makes sense why?
@ John
“And Brett has his head up his ASS!!”
That was my point exactly!
Well, Steve Jobs said id a long time ago: He’s not in this business because of the money, but to create technology.
So, a technology company not investing in new technology? THAT is what doesn’t make sense. That’s what happens when you put a speculator to write about how the technology business should be managed.
New technology requires -among other things- money. More cash in hand means more control and freedom over what’s created. What does this guy want? To give away the money to shareholders and to borrow money to create new stuff? And to have committees to create new technology? We all know where that leads. Steve Jobs himself knows it when he screwed up big time with the Apple III. Yes, Steve Jobs it not perfect, and yes, we acknowledge that.
Shareholders should know all this to invest in Apple. If they do, this guy doesn’t know what he’s talking about. And, if shareholders don’t know Apple, well, bummer. LEARN YOUR COMPANIES BEFORE YOU BUY!
Sorry, I have a technology company myself, and I wouldn’t like to be dictated what to do with the money but a speculator.
No real Apple investor ( repeat: INVESTOR) with long term resolve is unhappy with Apple’s development and course. The company’s unrivaled growth, that should continue for at least another 4-5 years and the stock’s appreciation, is more compensation, reward and compensation, than any dividend could possible yield.
Another writer trying to find anything to get attention, that doesn’t have a clue about the value of money in the bank that can bankroll a company’s total independence and provide unparalleled leverage to grow, advance R&D;and keep the assholes at bay.
Sorry to say more:
“Start borrowing”?!?!?!?!?!?!
Is this guy an idiot? Why borrow (and pay interests, and build liabilities, and end up with all the burden a loan carries with) when you have the money????
Why -for example- would you get into a mortgage, or a credit for machinery, when you have the cash to do it?
It’s just plain stupid!
Breeze beat me to it. Isn’t the return on Apples stellar growth reward enough? And that isn’t investors money, it’s consumers money. Unless I missed the part on the balance sheet were money used to buy the companies stock goes into Steve Jobs pockets? Anyone? Help me out.
Just act like Wallstreet – It’s not the companies/shareholders money, it’s OUR money! We run the company! Bonuses for US!!!
Watch out Apple…… Obama and company are coming for you horde of cash…….. The people need it so much more than you do…….
Greedy CRAPPLE and Steve Jobs not using the money for something good instead they keep it all to themselves and not giving back to the shareholders.
http://www.bing.com When it comes to decisions that matter, Bing & Decide
Redistribute writes, “Watch out Apple…… Obama and company are coming for you horde of cash…….. The people need it so much more than you do…….”
Well, he did say he wants to “spread the wealth” and Apple is … wealthy. But he’d have to contend with the Constitutional prohibition against “takings”.
Few seemed to complain when Microsoft built an even larger cash pile. I’ve long suspected Apple’s stash is intended not just to help tide it over in case of a major economic crisis but to continue funding product development no matter what’s happening around them.