Apple: Staged an Unreal Financial "Show"

Steve Jobs came to the stage: "Can you imagine such a scenario?" and use his iPad to display beautiful financial forms and charts. He sat on the stage sofa and announced that Apple would split the stock (“small investors can now buy 70 shares of Apple, not just 10 shares.”). Then he announced that a large number of dividends will be distributed to shareholders ("we believe you can use this money better than we do."). Then, he explained the dramatic increase in share repurchasing ("We will use share depletion to better exercise control, thereby increasing our earnings per share.") Later, he proudly announced that such a major move could be through borrowing money. Realize without using taxable overseas cash reserves. ("Apple will once again set off a climax of bond trading.").

Following Apple's record-breaking last year, with its corporate bond sales reaching 17 billion U.S. dollars, this year Apple also plans to raise the equivalent of last year by issuing bonds. Luca Maestri, Apple’s Vice President and Head of Corporate Controls, stated on the Apple Financials conference call on Wednesday that Apple is expected to issue bonds in the United States and overseas markets and use the proceeds to buy back shares for the company’s shares. Interest injection. Apple said on Wednesday night that the company will increase the scale of its stock repurchases by US$30 billion and plan to return more than US$130 billion in capital return to shareholders by the end of 2015. Apple also increased its dividend by about 8%. Tim Cook, chief executive, said that Apple’s expansion of its buyback plan is because management does not believe the current stock price reflects the full value of the company.

How is everyone's reaction?

This depends on the respective views of stakeholders:

• Wall Street activists cheer, as long as they play the "sale" card, Apple's stock price rose more than 8%

• The polite support of long-term investors still expects that Apple’s financially smart approach will be conducive to the basic development of the company to some extent.

• Apple's first-line technology is a quiet one. They tweeted in Twitter: "WTB?" ("Where's beef?", American slang, meaning what medicine does this gourd?), and they begin to reconsider their career choice

So what's wrong with Cook's actions?

This is just a performance of a celebrity, and it has no meaningful impact on Apple's future development in the technical innovation big tent. Cook is just playing tricks, and now Apple's competitive prospects have stagnated or worse.

You can look at the current situation like this: none of Apple’s announced actions will affect Apple’s core business. Even if the stock price rises, it doesn't help, because Apple doesn't use stocks to make any major acquisitions. Therefore, the price increase is not trustworthy.

Companies Cannot Use Financial Stake to Buy Long-term Investors' Confidence

Yes, some investors and observers do believe that dividends increase, stock repurchases and stock splits are good news. However, when these strategies do not reflect the company's basic strengths and future development, analysts, portfolio managers and smart investors will not buy it. Financial actions aimed solely at boosting stock prices are viewed as management intrigues rather than sensible strategies.

The result of the event

Perhaps the best thing Apple long-term investors have heard so far is "This is not your father's Oldsmobile classic." Apple's new, Wall Street-certified appearance hides an underpowered innovation engine. Jobs's Apple company has pursued the "innovation is the first, last and most important" strategy. Cook's apple company has been converted into an alternative fuel: financial instruments. (How did you prove it? When hedge fund big Icahn came to the scene, Cook said they had a good meeting. Obviously, Jobs's reaction will be very different.)

However, is Apple's valuation not very low?

Yes, Apple's stock price is still very low. But this is a weak performance in the market. Despite the recent decline in biotech and high-tech stocks, the valuation of growth companies with good potential remains at a relatively high level. Apple’s lower valuation (54th out of 72 high-tech companies included in the S&P 500 index, which is based on forward price-to-earnings ratio) is indicative of its lower growth potential, and does not predict that it will happen soon. The price has soared.