Apple acquires a $16 billion stake in... Apple!
Tim Cook and Co. obviously weren't kidding, and are actually kicking into an even higher gear – instead of the scheduled repurchase of 10 million shares, Apple went ahead and bought back... 36 million shares.
Philip Elmer-Dewitt with Fortune has put this into perspective – at an average price of $444.44 per share, the company spent $16 billion buying itself a stake in... itself. With that kind of money Apple could have snapped a company like Nokia and still have some money left over.
This means one thing only: Apple really means business. It's aslo apparently more than comfortable in its shoes despite the downturn its stock is experiencing, with CFO Peter Oppenheimer commenting back in April:
1. PapaSmurf (limited) (Posts: 8300; Member since: 14 May 2012)
36 million shares. Holy s--t that's a lot. Apple is doing some bold moves as of late.
24. PAPINYC (Posts: 2282; Member since: 30 Jul 2011)
Yeah but, too bad it's too little too late as Apple is slowly dying thanks to Samsung.
Personally, I think Apple should try using an aftermarket charger on .... itself - instead of buying itself!
26. MobileCaseReview (Posts: 241; Member since: 10 Feb 2012)
Why is it too late? They have increased profit margins through the year. Business 101 says, that's not a company folding by any means.
27. jdoee100 (Posts: 305; Member since: 04 Jun 2013)
Their profit margins are shrinking. And, with cheaper version of iphones coming out, it's going to shrink even further.
33. MobileCaseReview (Posts: 241; Member since: 10 Feb 2012)
Everyone's profit margins are shrinking including Samsung. But speaking on 2013 annual fiscal reports, according to WSJ, Apple has seen an increase in profit revenue throughout the year. But the fact is, most major companies are losing profits. Even Samsung missed their expectations by nearly 10%. That doesn't mean they're "dying". Also, explain to me how they're profit margins are going to shrink further? I would like to know your take on that.
13. raunak (Posts: 504; Member since: 12 Oct 2011)
Thank you, Sherlock. We had no idea how to multiply.
3. _Bone_ (Posts: 2126; Member since: 29 Oct 2012)
Told y'all that Apple manipulated the stock. I said around $380 to buy, cause it'll soon be back on the rise (within a few weeks well over $500). Samsung is doing the same with the low numbers.
10. PapaSmurf (limited) (Posts: 8300; Member since: 14 May 2012)
Apple is a business. They're going to do anything that will help them in the long run. I'm really surprised they bought back 36 million shares because $16 billion dollars seems like a definite fortune to the average person but small change to Apple. Good move on their part.
4. Googler (Posts: 813; Member since: 10 Jun 2013)
Warren Buffet told Jobs to do this and was ignored. Could have went a long way to helping their current stock standings if he would have listened.
Well done, Tim.
5. rawbow (Posts: 427; Member since: 30 Mar 2012)
well aren't they selfish :P spending on themselves jk...would someone good in shares care to explain the logic behind this move ....ty
7. HeWhoDoesNothing (Posts: 157; Member since: 15 Jul 2013)
I can't believe I asked this question without reading yours lol. I'm wondering the same.
6. HeWhoDoesNothing (Posts: 157; Member since: 15 Jul 2013)
I know nothing of how stock works. What does this mean for Apple?
15. grahaman27 (Posts: 347; Member since: 05 Apr 2013)
It means apple believes in itself, and they want everyone to believe in them too. and the "We continue to generate cash in excess of our needs to operate the business, " part means they want you to think they are doing better than ever.
17. zennacko (Posts: 236; Member since: 16 Jun 2013)
Well, buying back your own company from others means you have more control of it when the good times come. That said, if they bought their shares back for $444.44 each, in a batch of 16 million, when this years iDevices come around the shelves the shares will (probably) get a 50%+ rise, and if Apple decides to burn (part of) them down on the stock market again, profit!
However, buying a lot of shares from your own company has some setbacks, as a matter of fact the shares are now down to $438 (because the shareholders get suspicious and decide to sell theirs as fast as they can. thus lowering the company's value) but that's no major concern, by August they should rise to $600~700 mark.
18. rantao333 (Posts: 233; Member since: 21 May 2013)
A & B each has 50% share,and the each of their share value is $500. now they start a business and earn $1000. instead of share the profit among them, A decided to keep it for a while.
after a while, share price drop to $400, A offer B to purchased his 50% share @ value of $400. and B accepted. So A take out $400 from the profit and gave it to B. now the profit left 600.
In the end, A has the 100% of share while still keeping $600 of profit in his hand. B has 0% share and $400.
8. nobelset (Posts: 269; Member since: 17 Oct 2012)
It would be funny as hell if they went broke in a few months. Tim Cook would be the Jesus of share holders then...
11. darkvadervip (Posts: 313; Member since: 08 Dec 2010)
No dummies that means there buying while there stock is at an all time low because something big is coming that's going to increase stock value. I swear people don't know anything about the stock market. Just like Samsung sold more but they lost more which can hurt your stock value in later quarters.
23. Pdubb (Posts: 239; Member since: 08 Aug 2011)
You do know that Apple is a long way from an "all time low" in stock price. This plain and simple a way for Apple to increase their stock position. They are showing confidence in the company.
12. raunak (Posts: 504; Member since: 12 Oct 2011)
"With that kind of money Apple could have snapped a company like Nokia and still have some money left over."
WTF Chris P.? The problem was always the fact that Nokia does not want to be sold, not that there was no one to buy them.
16. Chris.P (Posts: 273; Member since: 27 Jun 2013)
I am aware of that, raunak, and I wasn't trying to imply different. It was for the sake of perspective ;)
25. PAPINYC (Posts: 2282; Member since: 30 Jul 2011)
In that case, you could have used Microsoft as the example and your "perspective" would have been much more effective??!!
30. muhsen (Posts: 259; Member since: 07 Jun 2012)
do u know that by ur statement u r like saying that because nokia's Market capital is 15.17 billion dollars (shares multiplied by the price of shares) , apple can grab it for 16 billion dollars and still have some money ????http://www.google.com/finance?
so since when is the price of company equal to its market capital ???? i don't want to be aggressive or offensive, but tell this to someone with some basic economics or business background, he would just laugh out pretty much loud, the price of a company involves a lot more than that and market capital has nothing to do with its price....a company like nokia if its going to be sold will be priced by no less than 40 billion dollars (the patents portfolio is big enough to drive the price higher)
so this comparison is pretty awkward ,pointless, points to ur ignorance about business models and seems to be for sake of some company Vs company comments.
next time , if u want to show some comparisons, make sure to cover all the basic info and basics of these comparisons, otherwise just stick to the info in the source.
32. muhsen (Posts: 259; Member since: 07 Jun 2012)
u maybe mixed up between buying some shares in a company and buying a whole company as with ur context u r implying they r the same...while actually they r not
36. Chris.P (Posts: 273; Member since: 27 Jun 2013)
muhsen, I am not mixing anything up :)... you talk about the context a lot, don't disregard it then?
20. Napalm_3nema (Posts: 932; Member since: 14 Jun 2013)
The fact is, they are a publicly traded company, therefore they can be bought, whether the Board and CEO want it, or not. A good enough offer would have to be heard, and if rejected, a company could just start buying from shareholders until they acquired a controlling interest.
28. Googler (Posts: 813; Member since: 10 Jun 2013)
Who maintains the controlling stock? If Nokia has the biggest percentage, or more than 50%, your point is true but won't happen unless Nokia wants to be sold. I honestly don't know how much of their own stock they own but they'd had have been insane to not cover that base properly.
31. muhsen (Posts: 259; Member since: 07 Jun 2012)
what's awkward that is the author implied that the market capital of a company is equal to the price of the company ...."With that kind of money(16 billion dollars) Apple could have snapped a company like Nokia and still have some money left over." as nokia's current capital is 15.17 billion dollars ......doesn't make sense at all...there's pretty big difference between buying some shares in a company and buying a whole company, but within the author's context its the same !!
14. Tazer2365 (Posts: 44; Member since: 28 Jul 2012)
And people say Apple is doomed or want to see them go bankrupt. Don't see that happening any sooner.
29. -box- (Posts: 3795; Member since: 04 Jan 2012)
I wouldn't mind seeing apple, gm, Coca-Cola, and mcdonald's all fail, or at least be brought down a few more pegs. Too much of an "either/or" mindset, there needs to be more widely available popular choices.
37. cam-whore (Posts: 164; Member since: 21 Feb 2013)
they actually are, it seems the other side of the story was investors was more than happy to sell those stocks back to apple and get rid of the great downturn their investments are going. There are always two sides of the story, it just seems that whoever wrote this was a good storyteller...
21. synot (Posts: 164; Member since: 14 Sep 2012)
They are just trying to fool the public which is very gullible and vulnerable.People will fall for anything that looks real because of greed .
Apple is just capitalising on peoples weaknesses to make more money in their vulnerability
which is just plain gambling.
34. Dingy_cellar_dweller (Posts: 185; Member since: 16 Mar 2013)
What this buy back means is that Apples share price would of being even lower, if Apple didn't support its share price by instigating a share buy back program.
35. idontknownything (Posts: 3; Member since: 27 Mar 2013)
I am not much into business related stuff as it is not my field but isnt the idea behind all this buy back is to buy apple shares at lower price now and then sale them again after releasing new iphones/ipad when their share price bounce back.. making huge profit out of it??