Apple Stock May Not Climb, But Will Still Reward Investors
There was really only one good thing for Apple stock investors in yesterday's (Tuesday's) earnings report.
Apple Inc. (Nasdaq: AAPL) announced an unprecedented share buyback program and boosted its dividend in attempts to pacify edgy investors who have watched the company's stock tumble about 34% over the past six months.
The iPhone maker will return $100 billion of cash to shareholders by 2015, through an increased dividend and $60 billion share buyback program. Apple's quarterly dividend was sweetened 15% to $3.05 a share. The stock now carries a juicy 3% yield. The new dividend is payable on May 16 to shareholders of record May 13.
With an annual payment of some $11 billion, Apple becomes the biggest dividend payer in corporate America, taking the crown from Exxon Mobil Corp (NYSE: XOM).Read More...
Apple Stock is Up After Earnings – But Are Gains Here to Stay?
Apple stock was up 5% in after-hours trading Tuesday when its earnings report turned out to be better than expected - but, not great.
Everyone was bracing for the worst when Apple Inc. (Nasdaq: AAPL) released second-quarter earnings Tuesday after the close. The big question was just how bad things were going to be.
The answer turned out to be... not so awful. The iPhone maker surprised Wall Street with better than expected numbers, mostly because expectations were so low.
However, as expected, forward guidance was glum.Read More...
Apple Stock Rises Before Earnings, but No One's Expecting Good Numbers
Apple stock was up nearly 2% by noon today (Tuesday) - but this could be the end of gains for a while depending on what happens this afternoon.
Undeniably the most anticipated earnings report of the season is the Apple earnings report, due out after the close Tuesday. Expectations are for a downright dismal quarter.
Among the issues Apple Inc. (Nasdaq: AAPL) is expected to address include:
- iPhones: Apple generated some $22.7 billion from the sale of 35 million iPhones in the same quarter a year ago. Investors will want to hear how much competition from other smartphone markers, like Samsung, has chipped away at those numbers.
- iPads: Apple sold 11.8 million iPads that generated $6.6 billion in sales over the same period a year earlier. With the bevy of new and cheaper tablets now on the market, it is unlikely Apple has been able to maintain those robust sales.
- Gross Margins: Gross margins peaked at an astounding 47.4% during this quarter last year. Apple's warning last October that margins could drop as low as 38% was the catalyst behind the stock's steep plunge. In January, Apple said profits should come in around 37.5% to 38.5%. These numbers are crucial.
- Revenue and Profit: Last year, Apple earned $12.30 a share on revenue of $39.2 billion. Estimates are for $10.12 a share on revenue of $42.6 billion. Even the slightest miss could wallop shares.
- Guidance: Most importantly will be what the company says about future quarters. Analysts expect Apple to guide lower, at least for the next couple of quarters.
Of particular interest will be what Apple plans to do with its hefty $157 billion cash stash. A special or increased dividend and a bigger share buyback could provide a temporary boost to the stock. But any gains are likely to be short lived.
"People have to be patient. The next quarter will be disastrous and the quarter after that stock will only go in one direction and that is down," Trip Chowdhry, co-founder of Global Equities Research told CNBC.Read More...
Is Apple Stock a "Buy"?
While some analysts are screaming "Buy," there's some discouraging news to consider. For example, Apple supplier Cirrus Logic Inc. (Nasdaq: CRUS) reported an inventory glut of audio chips that signals Apple iPhone sales could fall drastically short of expectations.
Money Morning Chief Investment Strategist Keith Fitz-Gerald explains what's going on with Apple stock, whether or not investors should scoop up shares, and what to expect next from this iconic company.Read More...
Apple: Cash or Trash?
The market's North Star of growth is going to report earnings tomorrow. Good news or bad news isn't the real question.
The question is: With Apple off nearly 50% from its $705.07 a share high set last September, is the famed tech giant a "buy" again?
Here's my unequivocal answer...
An Apple Stock Dividend Hike Could Help Set Cash Hoards Free
If Apple Inc. (Nasdaq: AAPL) actually does what many now expect - raise the Apple stock dividend as much as 56% - it could help inspire a trend of givebacks by other cash-rich companies.
Looking at the company's cash hoard of $137 billion - which could reach $170 billion by year's end - a survey of analysts conducted by Bloomberg News this week concluded that an Apple stock dividend hike of $4.14 a share is a likely possibility.
That would raise the stock's yield from about 2.40% now to a much more attractive 3.6% -
higher than 84% of the other dividend-paying companies in the Standard & Poor's 500 Index.
An increase in the Apple stock dividend would almost certainly boost the stock price, which is down about 35% from its Sept. 19 high of $702.10.
"The accumulation of cash has become excessive," Brian White, an analyst at New York-based Topeka Capital Markets Inc., told Bloomberg. "It doesn't matter which bearish scenario you forecast, they're never going to need this much cash."Read More...
Dumping Apple Stock for Google: How Investors Could Get Burned
The trend has some wondering if investors are consciously moving their money from one tech giant to the other.Read More...
What Should Apple Do with its $137 Billion Stockpile of Cash?
Apple Inc.'s (Nasdaq: AAPL) been in the news a lot of late as its stock plunged. Meanwhile, the company sits on a cash pile of $137 billion.
When Apple stock was soaring, investors were happy. But since its stock value plunged some 35% since September, many investors have suggested Apple should share some of itsaccumulated wealth. Fund manager and investor David Einhorn went so far as to sue the company to try to force it to share more of its cash with shareholders.
Money Morning Chief Investment Strategist Keith Fitz-Gerald was asked on FOX Business what Apple (Nasdaq: AAPL) should do with its stockpile of money: Should the company pay dividends to shareholders, pursue major acquisitions or just keep its large cash position for future investments or other costs?
Check out what Fitz-Gerald and other panelists said on the FOX Business report in this accompanying video.Read More...
Apple iWatch, Google Glass First Shots in New Clash of Tech Giants
Coming less than a year after Google unveiled its Google Glass Web-connected eyeglasses, reports that an Apple "iWatch" is in the works emphatically confirm that the battle is now joined for dominance over the next wave of tech - wearable computing.
According to the reports, Apple Inc. (Nasdaq: AAPL) has 100 people working on an iWatch users would wear on their wrists, but that would have many of the same capabilities as an iPhone.Read More...
Why David Einhorn Needed to Sue Apple (Nasdaq: AAPL)
Outspoken fund manager David Einhorn feels so strongly about the need for Apple Inc. (Nasdaq: AAPL) to share more of its cash with its stockholders that he has sued the company.
Shareholders like Einhorn - whose Greenlight Capital fund owns between 1.3 million and 1.5 million shares of AAPL - think the Cupertino, CA-based company should use its monstrous cash pile of more than $137 billion to boost its return.
Einhorn's lawsuit came after his request last year that the tech giant create shares of preferred Apple stock that would exist solely to pay a dividend about twice what the common stock currently pays.
But Apple has included a proposal on its Feb. 27 shareholder ballot that would amend the company's corporate charter to eliminate its ability to create preferred stock. It also has combined that issue with two other unrelated issues in the same proposal.
Einhorn is suing Apple because he says Securities and Exchange Commission (SEC) rules prohibit such bundling, and because he wants to ensure the company will be able to create the type of preferred shares he has proposed.
To further hammer home his point, Einhorn wrote a letter to all Apple shareholders, which was released today, in which he explained his position and urged them to vote against Proposal 2 in the shareholder ballot.
"Proposal 2 is value destructive, impedes the Board's flexibility, and does not merit shareholder support," Einhorn wrote.Read More...
The Apple Sell-Off is Just Beginning
I've made the case several times that Apple Inc. (Nasdaq: AAPL) was over-cooked, most recently last fall when the company was flirting with $700 a share.
Each time I did I was taken to the woodshed by the legions of Apple fans who couldn't reconcile their passion with their profits.
iHere we go again...
Following earnings that "beat" and revenue that fell short, the company dropped $48 billion, or roughly 10%, in afterhours trading on Wednesday. And still more on Thursday in early trading.
I think this is just the beginning of a protracted sell-off. Two very simple reasons... Read More...
Why This Week's Apple Earnings Matter So Much More than Usual
Monster Apple earnings in the December quarter would do wonders for Apple stock - but don't count on that happening.
Apple Inc. (Nasdaq: AAPL) earnings for Q1 2013 are due out Wednesday after market close, and Wall Street estimates range from a 14% decline to a 12% gain. Apple's own guidance is for earnings of just $11.75 per share, while the consensus on Wall Street is for earnings of $13.41 per share.
Even if Apple earnings match Wall Street expectations, $13.41 per share would actually be a decline of more than 3% year-over-year, a far cry from the stunning 118% gain the company reported last year. The psychological impact of declining year-over-year profits for the first time in nine years could ding the stock.
An actual earnings miss - even by just a few pennies - would be more dangerous for Apple stock, meaning the likelihood that Apple stock will fall after earnings is higher than usual.
Here's how Apple got in this vulnerable position.Read More...
The China Smartphone Brand That's Beating Apple (Nasdaq: AAPL)
Most investors who pour money into smartphone makers look to dominant players like Apple Inc. (Nasdaq: AAPL) - but they're missing a bigger part of the market.
The global smartphone industry is changing dramatically, as China surpassed the United States in 2012 to become the world's largest smartphone market by volume. Smartphone shipments to China in the third-quarter of 2012 hit a record 60 million.
Apple has noticed this shift. In fact, Apple CEO Tim Cook recently told Chinese-run Xinhua News Agency that he believes China will become the company's biggest market in the future.
But for now, it's the domestic brands that have won.
"Chinese brands have taken more than half the Chinese smartphone market this year, and they will take much more," Sandy Shen, the head of consumer research at technology research company Gartner in Shanghai, told the Financial Times.Read More...
With Apple Stock at the iPhone's Mercy, Time to Play Defense
We hear one tidbit of bad news about Apple Inc. (Nasdaq: AAPL) cutting orders for iPhone 5 components and - boom! - Apple stock drops more than 6%.
The reason for the stark cause-and-effect on Apple stock is that the iPhone contributes about 53% of Apple's vast revenue. [In fact, were the iPhone a standalone company, it would rank 29th in the Fortune 500.]
This latest Apple bombshell broke late Sunday.
According to reports from Nikkei and The Wall Street Journal, Apple supposedly cut orders for several key iPhone 5 parts for the first quarter. The Cupertino, CA company's orders for iPhone 5 screens, in particular, were reportedly slashed in half.
That was immediately interpreted as a response to lower-than-anticipated iPhone 5 sales, which in turn raised alarms that Apple could be headed for more earnings disappointments, hence the selloff.
Apple followers have questioned the validity of the story. Some bloggers pointed out that the number of iPhone 5 screens that Nikkei said Apple ordered had to be false in that it was far beyond any realistic estimate of iPhone sales for the current quarter.
But whether there's anything to the report or not, its impact on Apple stock has been real.
In the immediate wake of the story, several analysts cut their ratings and price targets. In less than two trading days, AAPL has lost $30 billion of market capitalization - the equivalent of Lockheed Martin Corp.'s (NYSE: LMT) entire market cap.
Apple is now paying the price for having one of the most profitable consumer products in history.
iPhone Becomes Vulnerability for Apple Stock
On the way up, the iPhone made Apple the most valuable company on the planet.
But now that iPhone sales growth seems to be leveling off, the overdependence that such success created has become vulnerability, at least as far as Apple stock is concerned.Read More...
Apple is Really Four Fortune 500 Companies Rolled Into One (Nasdaq: AAPL)
Apple Inc. (Nasdaq: AAPL) is certainly no stranger to impressive numbers. But even if Apple were split into four separate companies, each would be impressive in its own right.
Apple's four major divisions - the iPhone, the iPad, the Mac, and the iTunes Store - rake in so much revenue each that they would rank individually in the top half of the Fortune 500.
The iPhone business, with fiscal year 2012 revenue of over $80 billion, would rank 29th in the Fortune 500, ahead of such tech titans as Microsoft Corp. (Nasdaq: MSFT), Amazon.com (Nasdaq: AMZN) and Google Inc. (Nasdaq: GOOG).
The $32 billion iPad business is no slouch either: It would rank 95th - bigger than Time Warner Corp. (NYSE: TWX).
It's hard to believe that all of AAPL had revenue of just $6.21 billion in 2003.Read More...