If you’re an Apple shareholder and have received dividends and healthy growth in Apple’s stock price in recent years, stop reading. You won’t like what I have to say about Apple’s buybacks or dividends.
What Apple is doing with stock buybacks and dividends may be legal and certainly traditional for a company with so much money on hand, and with such steady revenue and profits, but I think it all borders on criminal.
Apple shareholders do not deserve what they get with AAPL other than growth. Why not? They own the company, right? Legally, yes. Morally, no. The system is rigged. I’ve said it before, but even Ralph Nader agrees with me. Shareholders do not deserve dividends because they provide no value to the company.
Apple CEO Tim Cook claims the company thinks different and encourages college graduates to Think Different™ but what Apple does with its riches has little to do with anything except shareholder value, which could just as easily be translated into shareholder greed.
What’s the deal?
Stockholders gain control or influence over Apple, and reap some of the benefits of shareholder value increases (stock price) without providing anything of value to the company. AAPL stock buyers do not buy stock from Apple. Apple does not benefit in the transaction or from stock owners.
Any company looking for capital will seek investors. Those early investors give money to the company’s owners, ostensibly for the company’s growth, but once a company has reached a certain size and measure of success, stock purchases may not come from the company itself, therefore, do not help the company at all– other than shareholder value, which itself does not bring additional money to the company.
Except… when a company, and Apple is a good example, goes public and sells company stock to more investors on the open market. Those initial shares bring money to the company’s bank account, but once all or most of the available stock has been sold, it begins trading on the open market, and those trades do little to nothing to help the company’s bank account. Shareholder value– the stock price– perhaps.
Your purchase of AAPL may bring you dividends. Apple’s purchase of AAPL reduces the number of shares available for purchase on the stock market, and, ostensibly, that helps to prop up the stock’s price. Shareholder value again. But Apple doesn’t get anything when AAPL is purchased.
Buying back another $100-billion in stock may add to shareholder value but it does not add to Apple’s bank account. Instead, Apple becomes $100-billion dollars poorer.
With your $100 billion announcement, you are telling shareholders, your company’s owners, without a detailed explanation regarding other options, that this is the best you can do to advance their interests. This is short-term nonsense, except for its positive impact on executive compensation metrics.
Shareholder value is overrated– unless you own shares that are continually going up. Otherwise, buying Apple’s stock on the open market does little for Apple.
The concentration of corporate power in ever-fewer hands, with expanding immunities and privileges denied “real persons,” continues to rise on matters of gravity to the American people. Conservatives call these privileges “Statism,” or “crony capitalism,” that has enormous influence over government dispensations.
Apple’s actions regarding such massive buybacks only contribute to the wealth gap in the U.S. and elsewhere, and indicate the company’s executives have no ability to Think Different™.
That may help explain why iPhone, Mac, iPad sales have faltered and why Services is the company’s fastest growing segment. Apple is selling to its customer base and has little interest or shown little initiative in pursuing new products that attract new customers.