If it was a mistake, to me it was not actually buying the shares at an “opportunistic” time, it was Cook telling the Wall Street Journal that he did. I think every shareholder and customer would love to hear Cook speak more to the media, but perhaps about new products rather then financial engineering. Just a guess.
As for the stock price the news was, as they say, “cheered on Wall Street”. Apple rallied Friday after news hit the wires late Thursday...and by wires I mean everyone’s Twitter stream. The most valuable company in the world closed up nicely, but then again so did the market. I don’t care in case you hadn’t figured that out already.
For the record, everyone has been concerned with iPhone sales for the past 12-18 months and I find that utterly ridiculous. While still a key metric and driver of revenue, when my 63-year old mother bought one, I put two and two together and figured that a saturation point was nearing and growth would at least slow.
Does China offer a great opportunity? Of course, introducing a gateway drug to a large population can certainly boost sales and revenue for your entire product line and the more “Applelonians” in the data base, the better for Apple long term.
But here’s a news flash, Apple is only going significantly higher, and by that I mean over $700 if it can come up with new products and/or services that add $50 billion a year in revenue over time, or about 10% of the current market cap. Such is the curse of the mega cap though I think Apple’s P/E may expand to, gasp, 12 or 13 on forward earnings if they can show they can produce great products without Steve Jobs. For what it’s worth, it appears that there is some in the pipeline.
While I look forward to an iWatch as a customer, as a shareholder I’m more interested in marrying the fingerprint technology with mobile payment. During the past few weeks as more and more retailers confessed their systems had been comprised, did anyone have the following thought “I’m concerned about Apple having my credit information”? I suspect not.
Health monitoring is also interesting as anyone can attest who has visited a doctor in the last 3-5 years. Doctors like Apple products, but don’t tell anyone. If your doctor can monitor your blood glucose levels, blood pressure and other health metrics from a device worn by you that shares the information with their office, maybe 60-minute waiting room nightmares become less frequent. I realize that’s not as sexy as a “smart thermostat”, but i know some people that might find that useful.
Back to the Wolf of Wall Street, excuse me, Tim Cook.
Not everyone agreed with Cook playing day trader. Folks smarter than me complained that weak volume during the company’s buying spree will almost certainly send the stock back down to $500 or lower....Oh, the horror.
Others complained that they only have $20 billion of the approved buyback remaining, what should happen if the stock falls again? Maybe they buy back more?
Some wondered why is Cook playing stock market? If I had intimate details of a company and it dropped 8%, i might “play it” too.
People asked how could he not know that the market would react that way after earnings? He’s a CEO, not a stock broker, but I’m just spit balling here and for the record, the earnings were quite good, it was the guidance that “spooked investors”.
The complaints continued. Buybacks are just financial engineering to goose EPS, nothing more. If supply decreases and demand increases via a new product doesn’t the stock price rise exponentially more? They also saved almost $200 million in dividend payments this quarter by buying back $40 billion in stock so far, maybe that’s more cash for the rest of us? I didn’t go to Harvard and study finance so maybe I’m way off base. Then again I don’t keep a million dollars in a checking account and then decide a year after getting no interest on that money that “the risk is not worth the reward”. But i digress.
Should Cook have pulled the trigger BEFORE the earnings? Should he wait until it hits the 52-wk low? Perhaps there should be a proxy vote on when exactly the company should buy back the shares? This buyback was approved last year and was/is well known, why the hassle over ACTUALLY BUYING BACK THE SHARES.
I have to admit, I don’t get it. Certainly time will tell if the timing of iBuyback was unfortunate and if it was, Cook will likely be the most prominent member of the Auburn booster club in a few years, but for now why not give him the benefit of the doubt. In eight months we’ll know if it was wise or not.