THE APPLE INVESTOR: Apple Finally Puts Its Cash To Work

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Flickr – bredgur

AAPL Up On Cash Announcement 
Market is off in early trading after a nice run last week. Shares of AAPL are up nearly 1.5% on the dividend and stock buy back announcement (see below), but down from earlier highs. Investors will be looking for the new iPad adoption; iPhone penetration, especially in China and emerging markets; market share growth of the Mac business; the evolution of Apple TV; and platforms such as Siri, iAd, iBooks and Ping. Shares of Apple trade at 11.1x Enterprise Value / Trailing Twelve Months Free Cash Flow (including long-term marketable securities).Apple Begins Putting Its Cash To Work (Business Insider)
This morning Apple CEO Tim Cook held a conference call to announce the outcome of the company’s discussions concerning its cash balance. Cook announced that Apple will issue a dividend and a stock buy back. The dividend is $2.65 a quarter, or $10.60 a year. That’s a yield of 1.8% on a $600 stock price. The potential buyback is $10 billion, which is very modest on a $600 billion market capitalisation. Apple expects the dividend and buyback to cost about $45 billion over three years. Henry Blodget at Business Insider says that this is likely to be less than one-third of the new cash Apple will bring in over that period.

Why Didn’t Apple Publicly Crush Mike Daisey A Year Ago? (CNN Fortune)
If you haven’t heard about Mike Daisey and the This American Life retraction, you’ve been living under a rock. Why didn’t Apple blow the whistle on Daisey when he started his production a year ago?

  1. The company didn’t want to give him an even broader stage by engaging with him in a public debate
  2. Apple knew that the issues Daisey described were real

It turns out the Apple public relations staffers did talk to reporters, always off the record, about Mike Daisey, pointing out inaccuracies in his account and suggesting that it was extremely unlikely that one man could have seen as much as Daisey claimed he saw in one trip to China.

New iPad Features Eating Into Margins (iSuppli)
iSuppli followed up the iFixit tear down with one of its own, concluding that the Bill of Materials (BOM) cost for a new iPad, and more specifically the new features, are taking a bite out of Apple’s profits. While Apple kept the new iPad’s pricing the same across the board, costs have gone up. The major factors involved in the BOM increase include: LTE support, retina display, and larger battery. Those features more than offset the decrease in some components that are unchanged between the models. 

Apple Loses Motorola Patent Infringement Case (AppleInsider)
After reviewing an initial determination that exonerated Motorola from claims of infringement on certain Apple patents, the U.S. International Trade Commission on Friday handed down a “finding of no violation” that effectively brings an end to the nearly year-and-a-half long investigation. Apple has the option to dispute the decision in federal court, which is likely considering the iPhone maker is appealing a partially-won ITC ruling involving Taiwanese company HTC.

Apple’s Stock Run Is Freaking People Out (Business Insider)
Bank of America’s Chief Global Equity Strategist Michael Hartnett recently identified two risks to the market: China … and Apple. The stock has become freakishly large that it alone could pose a risk to the market. It should be noted that Apple cooled off a bit this week, and also that from a metrics point of view, the stock is famously un-bubblicious. Its PE ratio is basically right in line with the market, while its pace of growth is still remarkable. Still, the unease about this stock that goes straight up, commanding so much market cap-share and attention is obviously growing.

10 Public Companies Have Parts In The New iPad (Business Insider)
Here are other ways you can play Apple’s success:

  1. Samsung
  2. Texas Instruments
  3. Broadcom Corp.
  4. Fairchild Semiconductor International
  6. Toshiba
  7. Triquint Semiconductor
  8. Avago Technologies
  9. Skyworks Solutions
  10. OmniVision Technologies

Most of those companies are chip makers. Poor Intel.

iPhone The Highest Ranked Smartphone In Consumer Satisfaction (BGR)
For the 7th consecutive time, Apple has ranked highest among smartphone manufacturers in customer satisfaction, according to J.D. Power and Associates. Apple achieved a rating of 839 out of 1,000 possible points; the iPhone’s ease of use, features, physical design and battery life propelled the handset to the top spot. HTC, again, followed Apple with a score of 798, with Samsung (769) and Motorola (758) falling in the number 3 and 4 spots, respectively.

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