Since84
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To infinity and beyond!
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Post by Since84 on May 1, 2019 2:20:43 GMT -8
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Since84
Moderator
To infinity and beyond!
Posts: 3,933
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Post by Since84 on May 1, 2019 2:31:31 GMT -8
Continuing last nights discussion regarding the dividend...
For me, it's about the cash hoard and the stated objective of being cash neutral. Apple continues to throw off huge amounts of cash. I remain concerned by the size of the cash hoard. It tempts too many. Even management may succumb to the temptation of an acquisition.
I prefer to see the cash hoard reduced, if not eliminated. Preferably not through a one time special dividend. Continuing the increase to the regular dividend by 10 to 15% would help, though not solve the problem.
As to share repurchases, Apple may do better adopting a program of planned regular daily purchases.
It is a nice problem to have. 😊
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Post by dmiller on May 1, 2019 4:13:17 GMT -8
I suppose we could tell ourselves that we're "getting" roughly 4 years worth of dividend in the share price increase between yesterday and today.
And if we want to - completely under our control! - we can sell all our shares "today" to realize that. 4 years of dividend appreciation pocketed (minus eventual small inconveniences like taxes) in under 24 hours. Talk about acceleration!
Or something.
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Post by dmiller on May 1, 2019 4:19:15 GMT -8
Continuing last nights discussion regarding the dividend... For me, it's about the cash hoard and the stated objective of being cash neutral. Apple continues to throw off huge amounts of cash. I remain concerned by the size of the cash hoard. It tempts too many. Even management may succumb to the temptation of an acquisition. I prefer to see the cash hoard reduced, if not eliminated. Preferably not through a one time special dividend. Continuing the increase to the regular dividend by 10 to 15% would help, though not solve the problem. As to share repurchases, Apple may do better adopting a program of planned regular daily purchases. It is a nice problem to have. 😊 I'm still flummoxed by not increasing the dividend by a minimum of 10%. It's a very strange outlier and correct me if I'm wrong but we still haven't seen an explanation for it. Maybe their thinking in the immediate term is along the lines of, the buybacks "are" a better way to benefit long term investors rather than people who trade around the dividend. Greater share price increase and you can choose when to take the distribution (by selling shares instead of receiving dividends with the amount and timing beyond your control). But if that was the case, it certainly hasn't been the thinking all along; what may have changed the thinking "now" if that's the case; what's the expectation (changed?) about the annual increases going forward? We've been conditioned to expect 10-15% as the range, with an outlier being a point below or above that. Now we have an outlier that's way below that. Don't like outliers.
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Post by dmiller on May 1, 2019 4:26:23 GMT -8
All griping aside,
Going back to the adjustment in earnings (the "miss") at the start of the year,
NOBODY would have expected the share price to be $210+ today, and with price target goalposts very likely to be moved upwards today. Nobody.
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4aapl
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Post by 4aapl on May 1, 2019 6:17:12 GMT -8
I suppose we could tell ourselves that we're "getting" roughly 4 years worth of dividend in the share price increase between yesterday and today. And if we want to - completely under our control! - we can sell all our shares "today" to realize that. 4 years of dividend appreciation pocketed (minus eventual small inconveniences like taxes) in under 24 hours. Talk about acceleration! Or something. 8 days ago, on the 23rd, the stock closed at $207.48. Comparing to that, the stock is only up a couple bucks. But that's just the pesky day to day movements that don't (really) matter. In general the dividend is nice because it gives day to day spending money without having to sell the underlying stock. But I've been shielded from that mindset directly, borrowing a lot on margin at low rates (now increased up to 3%, but formerly lower than the dividend yield). While we spend less than the dividend, the disconnect makes me not care about it as much as some. Also in general I see AAPL moving around from way undervalued to possibly close to evenly valued. Valuation is in the eye of the beholder, but IMO I haven't seen AAPL overvalued in a long long time, and possibly never when compared to its peers. But the stock is still off the highs by 20 points. The 6 month chart is now nearly neutral (one day more to erase nov 1st), but it's off $10 from that Nov 1st price. With the 5% and 10% decrease in YOY revenue and EPS (though on EPS, the net 6 month change is + $.02 YOY) I don't expect to see AAPL pushing it's 5 year P/E ceiling much. But it would be nice to see AAPL in the $215-$222 range shortly, and then maybe push for a new ATH when excitement/expectations come, such as around WWDC. But part of that depends on the overall economy and market.
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Deleted
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Post by Deleted on May 1, 2019 6:42:51 GMT -8
I can't understand how you ended up with AAPL. They're the outlier par excellence.
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chinacat
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AAPL Long since 2006
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Post by chinacat on May 1, 2019 7:36:09 GMT -8
Perhaps we are all a bit jaded, likely due to the recent panic-fueled dip (crash?) in AAPL, but c'mon, it's up 14 points at the moment, so permit me to offer a
WHEEEEEE!!!
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4aapl
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Post by 4aapl on May 1, 2019 8:03:23 GMT -8
Volume is up! Today it hit the "average daily volume" at about an hour 45 into the trading day.
I imagine many other places were holding back until earnings, just like those of us here who were pessimistically optimistic (looking for good news, especially longer term, but open to the idea of a foot fault for the quarter).
While I don't see a lot of analysts getting all giddy as they would with a blowout quarter, I imagine that there are things going on behind the scenes, even if it is just having a bit more confidence behind their ratings, and so reiterating that to clients.
2.5 hours in and at a volume of 33M. 60M and holding this great upswing (214+) would be a good accomplishment for the day, especially after more of a reassuring than blowout quarter. But sometimes the market just needs a little reassurance that things really are doing ok.
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chinacat
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AAPL Long since 2006
Posts: 4,426
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Post by chinacat on May 1, 2019 9:18:14 GMT -8
While I don't see a lot of analysts getting all giddy as they would with a blowout quarter, I imagine that there are things going on behind the scenes, even if it is just having a bit more confidence behind their ratings, and so reiterating that to clients. I know that there are those here who will disagree, but I give a lot of credit to Tim Cook for this recovery. As painful as the reaction was to the "warning" that was issued earlier in the year, I believe that it had the desired effect of resetting expectations for the quarter, allowing what could have been a damaging "earnings surprise" to be kept in perspective. I think that the handling of his relationship with Trump has been similar. He never joined the "advisory board," but has maintained enough contact and interactions to avoid being vilified (in fact the "Tim Apple" event demonstrated that Trump sees beyond any personal issues he may have with Tim and maintains perspective on the importance of Apple to the economy). I shudder to imagine what interactions between Steve Jobs, who never suffered fools gladly, and the President might have possibly produced. BWDIK
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Post by nwjade on May 1, 2019 9:46:17 GMT -8
Is it possible what drove the 5% dividend increase decision had to do with the one time settlement fee owed Qualcomm?
While the settlement amount agreed to is undisclosed, Qualcomm claimed Apple owed 7B.
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Post by dreamRaj on May 1, 2019 10:21:23 GMT -8
Is it possible what drove the 5% dividend increase decision had to do with the one time settlement fee owed Qualcomm? While the settlement amount agreed to is undisclosed, Qualcomm claimed Apple owed 7B. Hmmm... Interesting point. So they must have reduced the div hike to partly compensate for the Qualcomm hit.
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Post by macster on May 1, 2019 10:57:10 GMT -8
@tim_cook Shareholders are wondering why the dividend increase was held back to 5 %. A reasonable explanation would go a long way in tempering investor relations
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Post by sponge on May 1, 2019 11:50:21 GMT -8
@tim_cook Shareholders are wondering why the dividend increase was held back to 5 %. A reasonable explanation would go a long way in tempering investor relations Because the executive board will generate bigger profits from selling the stock instead of waiting for 1.7% dividend
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Post by dreamRaj on May 1, 2019 12:04:04 GMT -8
Damn! What a fall in the last half hour!
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Post by dmiller on May 1, 2019 12:24:13 GMT -8
I can't understand how you ended up with AAPL. They're the outlier par excellence. I should have said: I don’t like negatively bad outliers 😁.
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Deleted
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Post by Deleted on May 2, 2019 7:28:14 GMT -8
I should have said: I don’t like negatively bad outliers 😁. I misinterpreted your comment dmiller, my apologies.
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Deleted
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Post by Deleted on May 2, 2019 7:52:30 GMT -8
Is it possible what drove the 5% dividend increase decision had to do with the one time settlement fee owed Qualcomm? While the settlement amount agreed to is undisclosed, Qualcomm claimed Apple owed 7B. Hmmm... Interesting point. So they must have reduced the div hike to partly compensate for the Qualcomm hit. I don't think this could be the reason. They were setting aside this money knowing it would eventually be paid and so wouldn't be a surprise to investors. So they didn't have to rummage for it. And the math just doesn't work. And extra 5 cents a share is only a few hundred million a quarter, and they bought back 24B in 1st calendar quarter and announced 75 for the next year. Even if they actually needed to grab 5B from somewhere, it would make way more sense to only announce a 70B buyback allocation to compensate or just purchase 19B instead of 24 in 1st quarter. I just can't see how QCOM has anything to do with it. It was a surprise though and also a surprise that no one asked why it was lower than normal. But then I guess no one asked why it was higher than normal last time. I was very surprised by the 16% increase last time and not really pleased with it. The 5% this time brings down the average to the 10% I think they said they were committed to some years ago. That's not an explanation, but just an observation. I'd love to know both why they raised it so much last time and so little this time. But if we could get an honest answer I don't think the reasoning would be anything very deep. I think both deviations were essentially some sort of whim. The buybacks are where the action is, and Apple strongly prefers them. The monkeying around with dividends without any apparent justification I think merely reinforces the point. That's why I can't help but wonder if they wanted to thumb their noses at WS and their dividend growth model valuation folks. Wanted to remind people that valuing them like AT&T makes no sense.
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4aapl
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Post by 4aapl on May 3, 2019 7:24:55 GMT -8
It was a surprise though and also a surprise that no one asked why it was lower than normal. But then I guess no one asked why it was higher than normal last time. I was very surprised by the 16% increase last time and not really pleased with it. The 5% this time brings down the average to the 10% I think they said they were committed to some years ago. That's not an explanation, but just an observation. I'd love to know both why they raised it so much last time and so little this time. Wasn't last year when they went on and on about planning on getting to net cash neutral? Talking about that for multiple quarters seemed to fit in well with having an above normal dividend increase, even though some were expecting an even higher increase due to that verbiage. No matter. This year's increase is decent, even if not outstanding. But a little color on this year's decision and the currently planned future range would have been nice.
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Deleted
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Post by Deleted on May 3, 2019 17:51:01 GMT -8
Wasn't last year when they went on and on about planning on getting to net cash neutral? Talking about that for multiple quarters seemed to fit in well with having an above normal dividend increase, even though some were expecting an even higher increase due to that verbiage. I see your point, but I hadn't thought of the extra 6% last year as linked to that. I think of it as a goal, the attainment of which anytime soon requires massive buybacks, which aligns with Apple's preference for buybacks over dividends.
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