Apple’s latest quarterly financials are in but the jury is still out. Yes, Apple made wads of cash. Again. And the company sold a record number of iPhones and iPads.
Apple even beat estimates on earnings per share, and upped the dividend by 15-percent. Is that enough to satisfy the critics who say Apple is screwed? Will they continue to screw with us with screwy analysis?
By The Numbers
As is the case throughout Tim Cook’s leadership, Apple is working to find a middle ground that’s acceptable to the company’s needs but to make shareholders believe in the stock again.
Unfortunately, the latest numbers do little to assuage fears about Apple’s future, other than to say the company still swims in cash.
Apple sold more iPhones and many more iPads than the quarter a year ago (and slightly fewer Macs).
Quarterly profits actually went down to $9.5-billion from $11.6-billion a year ago. Uh oh. Revenue up, profits down. That means Apple is selling more, but making less on each sale.
Maybe the stock market should react positively to that news. After all, Wall Street seems to think Apple needs to be more like Samsung, and that’s exactly what Samsung does. Sell more, but make less.
Maybe Apple should just let their notoriously high margins drop to nearly zero, so the company can be more like Wall Street darling Amazon (Apple makes more profit each quarter than Amazon has made ever).
Candy For Shareholders
Shareholders might be happy about the adjustments to Apple’s Capital Return Program which declared a $3.05 per common share dividend, and a 15-percent hike in the quarterly candy to quell shareholder noise.
Apple thinks the stock is so depressed and such a bargain that it plans to buy more of itself but with someone else’s money, trading bonds for stock.
Can you hear that noise? It’s a low pitched grinding noise. Yes, that’s the sound of Steve Jobs rolling over in his grave.
Just between you and me, I hate the terminology Apple uses these days.
It’s decidedly Tim Cook and not Steve Jobs. ‘Capital Return Program?‘ Gimme a break. Apple’s capital doesn’t belong to shareholders, but it is an embarrassment of riches. Shareholders buy stock on the open market, sell on the open market, and if their timing is good and the price is right, make a handsome profit. If not, well, welcome to capitalism.
Apple doesn’t owe the shareholders anything. If the stock price rises, what does Apple gain? Nothing. If the stock drops, what does Apple gain? Complaints. So far, handing out buckets of money like it’s a holiday or birthday party hasn’t done much for the stock price, has it? Will borrowing money to buy stock help the stock?
I have an idea how Apple can manage the stock price and pass a few coins to shareholders. Let’s call it Kate’s Floating Dividend.
Tie the dividend to the stock’s price. For example, instead of issuing a $3 per share dividend, issue a $1 per share dividend when the stock price rises back to $500 a share. Then, add another $1 dividend when the stock reaches $600 a share. And, another $1 when AAPL touches $700 per share.
What if the stock drops below the aforementioned thresholds?
No dividend for you! That’s thinking different.