In reality share buybacks are fine if the stock is under valued. When you do a buyback just to artificially stabilize or inflate the share price it's a sign of desperation, and more importantly, a waste of money.
How can I say that? Well clearly if Cook doesnt announce the buyback the #$%$ guidance and complete lack of anything new for at least two more quarters would have sent the stock plunging down probably to the 350 level if not further.
Now here is the key, if they really do have new products coming out in 2014 (which in and of itself smacks of desperation since that is an eternity in tech time) why is there even a need to support the price now? The new products will get released, revenue will start increasing again, EPS will climb and all will be well. So what does another drop in the share price now even matter? In fact, wouldnt it be smarter and more financially responsible to let the price drop then announce the buyback? Cheaper shares = more shares retired = more impact on the EPS and better value for shareholders.
The only explanation is he's desperate, the new products for 2014 are still more hope/theory than reality, and the buyback is an attempt to stave off the calls for his head.
Spot on. Cook has had his entire time as CEO to get new products developed. He hasn't. Now he is blowing smoke up our #$%$- to buy some time. His comment on the larger screen size was insane. Tech companies are supposed to innovate. They have not innovated. They may innovate later but they have not as of yet.
Only thing more sorry than that is the BOD who seem just as clueless. I bet they thought the CC would stem the demise of Apple. It hasn't. If, after looking at Samsungs results they don't see it, than there is little hope.
Gene Munster - Piper Jaffray: Tim, I just wanted to confirm, did you mention in your prepared remarks that – something about new product categories, or did I not hear you correctly?
Tim Cook - CEO: I did, Gene. I said that one of our areas for growth are potential new categories and we're very excited about this.
Gene Munster - Piper Jaffray: And that would presumably be kind of in the next year?
Tim Cook - CEO: Well, I didn't announce a specific timeframe, but…
Talk about hedging. "....one of our areas for growth are potential new categories...." and "Well, I didnt announce a specific timeframe, but..."
So what did he really say? Obviously new product lines are an area for growth...that is simply a truism. No timeline...so he cant be held accountable. I mean if this kind of gibberish isnt a sign of desperation I'm not sure what is. It seems clear he's hoping that in 12 months they have a new product, but also clearly they arent close enough to finalizing anything to even hold to a 12 month timeline.
So we get a massive buyback. The CEO's cry for help.
You know what Apple should do? Start the buyback on Monday morning, with 100k share purchases every hour on the hour. Based on the total projected $ buyback value, and an average share price in the range of 410-475, that'd keep the purchase wheel turning for the next 100+ trading days straight. How's THAT for a buyback?
I think you may be on the money with this. Next quarter is going to be a disaster most likely. The new products might just be refreshes of old products. Cook said a year ago they had amazing stuff coming out and all we got was 5S dud. So I dunno. Future not looking real bright at the moment.
boy where to begin... you are the biggest dummy here.
1) they stock is WAY undervalued which pretty much according to you is why they SHOULD do it.
2) when did anyone say they wouldn't have any products in 2014
if anything most of them are coming then... they said no definite products for 2 quarters.
EFF _ U
I know this will be a challenge for you, but is it better to buy shares back at 350 or 400? I mean ideally if the future of the company is bright why care what level the share price drops too? The sad thing is they already bought 5 billion dollars worth as the price plummetted from 700 to 400 and apparently didnt learn from it. Cheaper shares = more effective buyback regardless of anything else. Trying to halt the decline with buybacks is substituting financial trickery for results and is pretty stupid.
There are new products and then there are new product lines. Obviously they will have refreshed versions of their current products in 2014, that is like saying the sun will rise in the east, but hinting at new product lines that far away is just...desperate.
ROFL, I sense your fear and frustration so best of luck to you...and I get you will need it.
You giddy longs wanted div increase, special div and buy back Luckily you didn't get spec div cos that would have wrecked stock price for good. Now you have biggest div in history, a buy back spread out over 3 yrs and a stock which is now going to move like MSFT. Happy now? Told you guys to be careful what you wished for.
Sigh, too stupid to understand my point. Is it better to buy shares back at 350 or 400? Is the current buyback anything more than an attempt to overshadow the poor guidance and lack of new products in the next 5 months?
Think hard, I know it's a challenge. WIth the share price dropping and bad guidance the price certainly would have dropped except for the massive buyback announced and slight dividend increase. So if they waited to announce the buyback they would have been able to buy back even more shares which is the smarter thing to do if they are confident in the future.
So once again I dont have a problem with the increased buyback per se, but think they could easily have gotten a better price by waiting a month before the announcement.
No matter what the timing was stupid financially which is concerning because it clearly shows they are more concerned with the short term price of the stock than making a smart financial decision.
I disagree with the buyback, I would have preferred a heavy investment into mobile content and/or bandwidth. Living and dying with hardware is a tough road. They need to leverage their user base going forward. GL
Since you are a short I would guess the move you prefer would be the one that destroys the most value?
Makes sense. Bandwidth/spectrum is a third rail. Most that touch it die. Content. Blah. Do you know they story of why Sony became irrelevant? The punchline is content.