
Apple’s Stock Market Scam - antman
https://newrepublic.com/article/150382/apples-stock-market-scam
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maxcan
The author of this paper clearly doesn't understand the economics of stock
buybacks. They are simply a tax efficient means of returning cash to
shareholders, something Apple definitely has needed to do for a while.

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johnwheeler
Not to mention they make 60+ billion a year after tax. So, they're valued at
less than 20x earnings, which is actually low compared to the rest of the
FAANGs

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horsecaptin
Why isn't their P/E higher? Are all the institutional investors maxed out on
how much Apple they can buy?

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johnwheeler
Because they don't have flying cars of course :-P

In all seriousness though, 20 is not a low P/E. It's just that AMZN's 170 P/E
is very, very high. Facebook and Google are in their 20s I believe.

If AAPL were trading at 10x or 12x earnings, that would be low, but still not
insanely low.

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horsecaptin
Google's P/E is in the 50s, just like Microsoft. Facebook is 28. Pretty much
every successful tech stock is way more expensive than Apple.

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gregoriol
While Apple was built around products and a certain philosophy by Jobs, it
became a money machine with Cook.

In the old days, there were no dividends, no care about share price, only
products, quality and dreams. Nowadays, so few products/updates/new (compared
to size and money available for r&d), only problems, cash and investors.

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eldenbishop
Not terribly interesting from an Apple perspective but I did find this
illuminating.

"But as enforcement loosened, notably under the Reagan administration,
buybacks began to increase. Now, they are omnipresent. A Roosevelt Institute
study released on Tuesday found that corporations spent 60 percent of their
net profits on stock buybacks between 2015-2017."

Sixty percent of profits on AVERAGE from 2015-2017 (across all corporations?
US?).

Compound this with statistics (same article) that see no long term stock
benefit from these short-term injections and you have a broken system of
incentives with a generation of executives playing games with bonuses. It
reminds me of all these studies criticising code metrics like lines-of-code as
producing nothing useful except extra verbose code.

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perl4ever
Can you explain why a buyback of $X is worse than a dividend of $X? For the
company or for the world. (Apart from being taxed slightly differently, maybe)

Is the way investing is supposed to work that investors give people money and
they never give it back?

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geetfun
What I found interesting in Apple’s earnings is how little money they need to
pour into R&D and operating expenses. This leaves a huge retained earnings
which has resulted in them having so much cash left over. It’s super easy for
Cooke to indulge himself and enter new markets, but he’s an operations guy and
it’s nice to see he’s sticking to his core competency. I’d be a bit nervous to
see another CEO come along and try to be the next Steve Jobs (with a high
chance of failing at that) and burning through billions of dollars.

