Apple stock price FUD Ping!
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Posted on 11/11/2009 2:49:00 PM PST by Blue Highway
“In the mid-late 90’s, Apple was dying until it got propped up by Bill Gates.”
Not true. Microsoft was caught red-handed stealing code from Quicktime. Part of the court’s punishment was for Microsoft to buy Apple stock.
It was a smart move by Apple to settle. Apple was cash starved at the time and MS was about to go through it's proctology exam from the Feds about being an illegal monopoly. Once that happened, Apple wasn't going to see a dime for a long time.
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OMG...well as a consumer I’m not as much concerned about his relationship with investors as I am consumers...and the bottom line is Apple products are generally the best on the market.
OH MY..., Lions and Tigers and Steve Jobs... Lions and Tigers and Steve Jobs... Lions and Tigers and Steve Jobs
That’s incorrect, and has been debunked on Apple threads multiple times.
Whiner. Jobs didn’t create a super-successful multi-hundred-billion-dollar company by indulging the author’s pet peeves.
Sometimes it hurts to find out that your notion of “fit” isn’t what “survival of the fittest” proves it is.
I’ve read quite a few things about Jobs being a jerk, but most people that are super successful tend to have unbalanced personalities.
Jobs was naive and felt like he was stabbed in the back when he was let go from the company he founded. He’s got a long memory and definitely holds a grudge. I recall when Michael Eisner was fighting to hang on as CEO of Disney that Jobs detested him. I also believe Eisner was in the process of destroying the company. Anyway, Jobs was very upset with Disney because they had a five picture deal and Eisner wouldn’t allow Toy Story 2 to count as one of the movies because it was a sequel. Eisner had also infuriated Jobs by creating poor quality cartoons featuring Buzz Lightyear and other Pixar characters. Jobs, being a perfectionist, threw a fit over the awful cartoons.
Anyway, on the morning Eisner was at a board meeting fighting for his political life at the company, Jobs announced that Pixar was breaking off negotiations with Disney to distribute Pixar cartoons. Eisner had already pretty much killed Disney animation by running off Jeff Katzenberg, who took over the animation department and was responsible for the Little Mermaid, Beauty and the Beast, Aladdin, and the Lion King (Home on the Range, anyone?) so losing Pixar pushed him over the cliff.
After Michael Dell said if he owned Apple he’d shut the company down, Jobs held a press conference to announce Apple was worth more than Dell.
All that said, Apple makes great products and most of it is because Jobs is a jerk that insists on excellence.
I just recently got out of the COBOL world - 4ish years ago. I was in it for 20ish years. Now I work with all these hot-shot young coders who know all these technologies, more TLA’s than you can shake a stick at, etc...and can’t code for nothing. Not all of them, but these OO hot-shots don’t seem to be able to re-use code all that well...
The Motley Fools are laughing and high fiving each other in private. Creating controversy and drawing attention to themselves yields increased traffic. Yaaaaawn!!!!!!!!!!!!!
Rich Greifner? Who the...
Consider the source...
I believe Jobs is or was the largest shareholder in Disney because of Pixar?
Jobs holds $4 billion in Disney stock, and with a little over six percent of outstanding shares, is the largest stockholder in the company. He has something like 138 million shares.
Let's look at the FUD claims being made against Jobs and Apple... all of which have been hashed out in previous articles used to depress the value of Apple stock:
1: Compensation being implied as being extraordinarily large or unusual:
"In early 2000, along with a fancy private jet intended for his personal use (total cost to shareholders: $88 million), the Apple board gave Jobs an options grant allowing him to purchase 40 million (split-adjusted) shares at $21.80 a piece."
- In addition to the jet, which was provided to facilitate the CEO's travel to Apple's far-flung offices and plants, ALL that the Apple board gave Jobs was a piece of paper that cost the company NOTHING as compensation for approximately 4 years of hard work bringing Apple from experiencing a losing quarter to profitability since he had been brought back as acting CEO. It was a piece of paper that guaranteed Jobs' the right to purchase, from the company, stock at $21.80 per share regardless of what the current market price might be. In other words, Jobs would be able to give Apple $870,000,000 for shares (more pieces of paper that essentially cost Apple NOTHING) that he MIGHT be able to turn around and sell on the open market for more. At no time would Apple lose money. At worst, stockholders might see their equity diluted by a 4%, which would have been offset by the fact that their share's value would have been increased by the infusion of 4% more capital.
- Selecting the low market price for the strike price of such stock options was common in companies at the time. The $21.80 was not an extraordinarily low strike price. The Board could have elected to give Jobs the options at any price they chose. The fact that they were "in the money" when issued was not at all unusual. In fact, Apple normally issued stock options to its employees at the lowest price of the stock in the week preceding the grant. Apple's compensation committee had presented the Jobs compensation award in August. It was voted on in the affirmative on August 29th when the price of the Stock was only $16.61 per share but because of vacations in the finance department, the paperwork was not completed until October 10th, after the close of Apple's fiscal year on the last Saturday in September. The by-laws of Apple required that such grants must be transferred in the same fiscal year as voted... thus nullifying Jobs award. Anderson, the Chief Financial Officer (CFO) of Apple, attempting to exercise the will of the board, negotiated with Jobs to issue the already voted options, but the price of Apple stock had climbed to over $22 per share. Instead of being able to use the lower strike price of $16.61, approved in August, they agreed to use the lowest price the stock had been since the start of the new fiscal year, $21.80.
- The so called "cover-up:" Yes, that happened. someone in Apple's legal department noticed the fact that the by-laws were still in conflict with the stock option grant. That someone then "created" a bogus conference call board meeting on October 14th, at which the grant was supposedly re-voted the already voted options, and created a set of bogus minutes for this non-event meeting, assuming the board would rubber stamp it. This was signed off on by Apple's Chief Legal Counsel. At the December 19th scheduled BOD meeting, these bogus minutes were noticed, invalidated, and a new vote ratifying the original vote and the new strike price was passed.
Apple did not try to "cover-up," but instead reported it directly to the SEC, along with its own internal investigation when it brought the stock options problem to them six years later. Apple also fired the Chief Legal Counsel for allowing it and not simply having the board actually make the stupid conference call meeting on October 14th.
- In the 13 years since returning to Apple, Steve Jobs has requested and received a salary of just $1 per year.
2: Too much cash reserves:
"Smart managers will keep a small amount of excess cash on hand to cushion against the impact of a possible business downturn or fund an opportunistic acquisition. But Apple can easily cover its R&D expenses and off-balance sheet purchase commitments with its free cash flow, and $23.5 billion is enough money to buy a competitor or two, the Washington Redskins, and a medium-sized Central American country.
"As partial owners of the company, Apple's shareholders have a proportional claim on that cash hoard. If Jobs does not have a legitimate operational need to maintain such a significant cash balance, he should follow the lead of tech titans like Intel (Nasdaq: INTC) or IBM (NYSE: IBM) and pay his shareholders a dividend, or mirror Cisco (Nasdaq: CSCO) and use some of Apple's copious free cash flow to repurchase shares."
- The amount of ready reserves a company keeps is a strategic decision to be made by the Board of Directors. In this instance, Apple has apparently spent approximately $6 billion on something in the past quarter since the previous quarter's cash reserves were approximately $28.5 billion and Apple has added at least $1 billion more in new profits.
- Attempting to get a greater than 1.7% return on large amounts of money in today's economy usually requires both risk and commitment of those funds for long periods, making them non-liquid. Apple's ability to "seize the moment" and strike at the right moment is enhanced by having a large, liquid war chest of funds.
- Re-purchasing outstanding stock requires offering more than the market price of the stock to make it worthwhile. I fail to see what positional or competitive advantage Apple would gain to do so. I also don't see any advantage to stockholders for Apple to buy back its own shares.
- Determining such policy is an entire Board function, and not solely at the whim of the CEO. If the stockholders are unhappy about Apple's choices of what to do with their cash holdings, they are free to bring the issue to the annual Stockholders meeting for a vote, vote the officers out and replace them with others that will issue dividends or buy back stock.
3: Job's Health.
"But Jobs' body is Apple's business. Apple's annual report sums it up best: "Much of the Company's future success depends on the continued availability and service of key personnel, including its CEO." This is surely a sensitive issue, but if Jobs is a material factor in Apple's future success then shareholders deserve to know his health status. By withholding this vital information, Jobs subjected his shareholders to significant risk."
- HIPAA
- Any CEO could die at any moment. The risk is inherent in the investment.
- Apple has demonstrated that during Jobs' recent absence that it could operate well without him.
All of the above has been hashed out before. The market has already accounted for all of it in the current stock price. Bringing it up again to rehash is merely a means of artificially suppressing the current stock for people who have already taken a short position. We've seen this repeatedly in the Apple financial press. That makes it FUD.
Here's a guy that thinks Apple should follow Cisco's lead, that's the way to make Apple more successful.
That's false. Apple got a $150 million in a patent and copyright lawsuit settlement from Microsoft. At the time they received it, Apple was operating in the black. Although they had experienced a single quarter where they posted a $67 million dollar loss, at the time Apple received the $150 million, they had a cash reserve of almost $2 billion, were reporting profits, and received other valuable concessions from Microsoft in the settlement. This is easily documented as I have frequently done to others who have posted the same myth.
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