Apple Core

[bill_sheehan]

It was only about seven months ago that a single share of Apple stock was trading at over $705. On paper, at least, the market capitalization of this computer / smartphone / tablet / music player company was greater than that of Exxon/Mobil. It was the wealthiest company in the world

Comments

[fairy69]

If they ever stopped producing macs, the world will definitely end as we know it (at least as I know it)!

[bill_sheehan]

You'll get my MacBook Air when you pry it from my cold, dead hands!

[gwendally]

Profitability is down, even if sales are up. That matters.

[bill_sheehan]

Certainly it matters. Apple's profitability was unsustainable. They've gone from insanely profitably to absurdly profitable.

[gwendally]

Also, what return on investment do you expect from building a gazillion dollar mothership in Cupertino? Because from my experience, facilities expenses are just pure overhead that reduce profits. Perhaps worth it to the employees to have apple orchards to roam through, but owners hear this and decided it's time to sell.

[bill_sheehan]

That edifice complex is one of the costly Steve Jobs mistakes to which I referred. The apple orchards and bicycle paths are the least of their expenses - the huge curved glass with NASA engineering tolerances are what's driving it up. Still, when you've got $144 billion sitting in the bank...

[peristaltor]

So what is Apple doing with all that money they're making? They think their best investment is to buy back Apple stock.

Too many companies are doing exactly this. Why is an untold tale. That tale does not bode well for us.

(Not knocking on Mac as I type on one, that's for sure. It's a general trend.)

[bill_sheehan]

I agree - it's troubling that there are no better uses for capital than simply sitting on it like a dragon on his hoard. Long-term unemployment appears to be systemic and intractable. The percentage of people who are thriving in this economy is shrinking. Households with net worths over half a million have been recovering nicely since the end of the Great Recession. For the remaining 93 percent of the populace, the recession hasn't ended.

I foresee a booming business in electrified fences and security systems...

[peristaltor]

Exactly right.

Of course, issued stock is a form of indenture, a promise to pay the bearer dividends. If the time is right for repurchase, then the time is over for the expansion stock offerings fund.

My real worry is that the media still have not cottoned on to the fact that this buy-back is largely presenting a booming stock market. With no other financial indicators on the horizon, the rosy hunky-dory narrative has yet to be challenged, let alone noticed by many.

So the move to electric fences goes unnoticed . . . until too late.