Getting real about Apple’s $100 billion stock buyback.
So I was hearing some where that Apple has a lot of money just burning a hole in it’s pocket. Seems there’s an arson named Carl Icahn trying to really ignite it by using twitter.
Apple has implemented a plan to spend $100 billion of it’s current estimate of $148.6 billion pocket money by 2015 to buyback it’s stock. Mr. Icahn has tweeting his joy. Others say Apple needs to grow to grow it’s stock price. Now wouldn’t that be the New Deal thing.
Apple has 80,300 full time equivalent employees of which 42,800 are “outside the retail division”. Yup, you guessed…what if Apple instead of buying their stock back distributed that $100 billion to its employees? Try $1,245,300.01 to each of them by 2015. That’s 80 thousand new millionaires. Now that’s some job creating.
But, according to Apple its reach is as great as 600,000 jobs. They have “created or supported” this number of jobs involving all 50 states. What if Apple took that $100 billion and distributed it to all of these workers? $166,666.67 to each position. What do you think that would do for Apple’s stock?
Carl has not been tweeting for such a fire. He currently owns 4.7 million shares of Apple. At the close of February 7, 2014 Apple’s stock was $519.68. It’s high was $700.20 on September 17, 2012 in after hours trading.
Carl’s fire is currently at $2,442,496,000. That’s $30,417.14 per Apple employee. But face it, Carl is looking for a much bigger fire. He saw $700.20 once and now owns 4.7 million shares. The potential looks like $3,290,940,000 of blazing heat. $40,983.06 per Apple employee. Carl get’s $848,444,000 more fire. A 35% increase if Apple were to succeed with it’s strategy.
Kind of a strange world we’re in here. A company can increase it’s worth without even lifting a finger (as in working) by using it’s own money to buy its self into greater wealth. How long can this work?
Of course, the only reason Apple has this money is because of those 80,300 employees or 600,000 employees tied to Apple. They sold their labor to Apple directly or indirectly which created the wealth. Some I’m certain even bought what they labored on further adding to Apple’s wealth. Funny kind of, that Apple pay’s it’s workers and then they return some of that money to Apple buy purchasing what they labored on.
And I ask you, what drove that $700.20/share price in September of 2012? Was it that Apple was buying it’s stock or was it that Apple was selling it’s products?
Hard to say, Apple announced the buyback in March of 2012. If the stocked peaked because people were getting in too capitalize on the buyback, then what does that say for our money making system? Is this sustainable? What kind of “market” is this anyway? Did the stock price rise because people were actually doing some kind of value analysis beyond the research of Apple is buying it’s stock (and giving a dividend*)? Can an economy grow this way such that it keeps up with the Jones, as in an ever increasing population of Jones?
You know, if Carl sold his stock on February 7th, at $399 each he could purchase 6,121,543 Iphones 5S. What are the chances of that happening verse 600,000 people having an additional $166,666.67 burning a hole in their pocket?
*UPDATE: To be complete, Mr Icahn is collecting $14,335,000 in dividend payments per quarter. $57,340,000 per year.