The management of AAPL is clueless. Cash is a depreciating asset. There is ZERO need to hold 150 billion dollars. Buy back the stock, pay it out, or start buying companies you believe you can grow.
As far as expecting consumers to upgrade? You are reaching the point where outside of processing speed there is no driving reason as long as my phone still works.
This company could be worth $1500 per share or drop to $385. It really depends on managements business decisions. Step one... They should listen to Carl.
Touch ID will drive upgrades. And this is not about upgrades, it is about buying phones.
If by "upgrade," you mean replacing an otherwise functioning phone that is only a year or two old, then I do not expect people to do that. I am talking about when your phone is several years old. Maybe it is damaged, but it is definitely getting old in terms of its capabilities.
It's time to buy a new phone. What will you buy and should it be an iPhone?
In the case of the 5S, Touch ID, a 64-bit processor and a much improved camera are all pretty good reasons to buy a 5S. Two of those things, Touch ID and a 64-bit processor, are ONLY available with an iPhone 5S. That's a pretty good driver of sales versus Samsung and other who do not offer those hardware features.
At least, not until they get around to copying Apple again. Anyone want to take bets on how long it takes for Samsung to try to add a fingerprint scanner?
First of all, they are not holding "cash." We use that as a shorthand, but the $150 billion is actually, "cash and marketable securities." I'm sure they are generating a significant return on that $150 billion. It is not a bunch of hundred-dollar bills buried somewhere on the grounds of the corporate campus.
But that would be pretty cool. Talk about a treasure hunt. Not a bad idea.
Bury, say, a billion in cash, all hundreds, in some secret location and then offer clues and have people hunt for it.
Of course, people would end up killing each other over it, so maybe that's not such a good idea.
But I digress.
It's unlevered cash. Of course it's in securities.
And I'm sorry that you "disagree" but I'm not interested in investing in passbook savings. That's the net effect when you take shareholders money and lock it away. It does not serve any useful purpose. It's like owning gold.
If you have an ounce of gold and you take great care of it and talk sweetly to it it everyday in 100 years you will have an ounce of gold. It's non productive!!!
Take the same value today of the ounce of gold and buy into a productive business and in 100 years you will have many times the adjusted value of one ounce of gold.
Apparently none of the C level executives or the BOD has ever taken basic economics.
Oh really? What interest rate do you think it's getting? Investing in an equity is not investing in a passbook savings account!!!
If that's the plan then pay all of it out in a one time dividend and you can rush right down to your savings and loan and make a deposit.
Maybe the dumbest response I've seen, ever!!
It's amazing all these arm chair quarterbacks who think they're smarter than Apple Management. If you guys are so brilliant, what are you doing here? How come you arn't the CEO? or a CEO? If you have all the answers why don't you go work for Apple or someone.......
The fact is Mr. Cook, the C level executives and the BOD have spent the last 12 months with the shareholder money locked away while the PPS dropped 33%... That's not armchair anything, it's a fact.
The failure to take advantage of some of the lowest interest rates in history and to use our money to reduce the float boarders on criminal.
The truth is that Tim Cook is the wrong person to run Apple. He doesn't know what to do because he's just an operations guy masquerading as CEO. IMO, Jobs wanted Cook as his replacement simply because Cook lacks the vision to deviate from his (Jobs) plans after he's gone.
Cook is soooo uncomfortable and out of his element that he is, as others have pointed out, timid and very apologetic. Someone who is strong minded and sure of his abilities and vision would not cater to Icahn or anyone else. That is the truth.
Bottom line: Apple needs to get rid of Cook before it starts to stagnate. It must not follow Microsoft's lead by taking a decade to finally jettison him. A true visionary CEO will do wonders with Apple's cash.
BTW I'm long the April Calls because I think a China Mobile deal is imminent and I think the fingerprint sensors will be a MAJOR hit. But after that, I will probably bail if Cook is still at the helm.
Cook is not uncomfortable or timid or apologetic, he is low-key. His personality is not Steve Jobs' and it certainly is not Steve Balmer's. But that's fine. He is the CEO, not a performer. That is why he actually has the other executives do the product introductions for the products they are responsible for. Cook acts as the MC by starting and ending the event and introducing the others.
Let him run the company. That is his job. As for his demeanor, don't mistake it for being, as you said, timid or uncomfortable. He is not. If anything, he has ice-water running through his veins. The guy is unflappable?
Did you see him testify before Congress? His performance actually made the stock price go up.
Finally, you say Touch ID will be a major hit and a China Mobile deal is imminent, and I agree with you, but don't you think Tim Cook played a big role in those things?
You said, "A true visionary CEO will do wonders with Apple's cash." Well, Cook used Apple's cash to buy Authentec which led to Touch ID in the 5S (and I am guessing in other products to come) which you say will be a major hit.
So is that not an example of visionary using Apple's cash to do wonders?
Vision to add usable fingerprint scanning + money to buy a company with key technology = a product that will be a major hit.
Sounds like a good formula to me.
It's frustrating to think about the success or failure based on the next phone when we produce $40 per share in earnings and have 150 billion in cash.
They need somebody to pry open the safe!!!
I am upgrading, and for good reason. I have an iPhone 4 and the bluetooth is dead, I have no SIRI. Can't wait. There are many with iPhone 4's that have held off but won't be able to hold off much longer. Think of the car analogy. 2008-2011 new car sales were bad as people defered. Now they are having a stellar year- you can't put it off forever.
-They *are* buying back the stock. Perhaps not as much as you'd like, but 60 billion dollars is nothing to sneeze at, and I suspect they'll announce an extended buyback again next year.
-They *are* buying companies. Heck, they bought 2 or 3 in the last month. Apple is amazing at buying small companies and seamlessly engraining the Apple identity and DNA into the purchased company, making the convergence harmonious. They don't need to acquire a huge company just for the sake of spending money. Apple simply doesn't do this.
-People *will* upgrade. The 5S is an amazing phone and the reviews have been stellar. It's time for the 4S purchasers to upgrade and they will. And the phone they upgrade to will be the iPhone 5S.
You seem like a believer... I'm not. I'm long, but there are problems.
The biggest being the 60 billion buy back over the year. The company is producing $40 per share in pure earnings. That's 37 billion a year... If they bought back 60 billion per year adjusting for 10% revenue growth they would still have 100 billion on hand in 5 years. That's STUPID!!!
They need to buy back 120 billion NOW. And they could take on debt of another 100 billion and buy that back too and have plenty of cash left to buy almost any size company they want.
And they need to have done it all yesterday before the 10 year goes any higher.