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Apple Announces 2 for 1 Stock Split

Zonk posted more than 9 years ago | from the double-for-nothing dept.

Businesses 73

neosar82 writes "Yahoo has a story about Apple's stock split. Apple Computer Inc. whose shares have almost quadrupled in value over the last year on the success of its iPod music player, on Friday said it set a 2-for-1 stock split, and its shares rose almost 4 percent. Under the share split, Apple shareholders of record at the close of business on Feb. 18 will receive one additional share for every outstanding share held. Apple said trading will begin on a split-adjusted basis on Feb. 28."

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73 comments

Shoulda coulda woulda (2, Insightful)

aventius (814491) | more than 9 years ago | (#11647816)

For over a year I've been thinking of how I should buy stock in Apple... A year ago it was going up and I thought they had a good short-term future prospect but I never got around to buying stock. Guess thats what happens when you're a poor college student. Dammit!

Re:Shoulda coulda woulda (3, Funny)

Randy Wang (700248) | more than 9 years ago | (#11647965)

See, Apple still remains true to it's values: You always could have done better with them, no matter how well you've done already. :)

With hardware, they'll upgrade before you have have time to put your card back in your wallet.

With software, it's often the same - unfortunately, those sellouts at Cupertino at making upgrades cheaper, or free (a la FCP-HD).

I must say, this is a very refreshing move. Let's see how long it takes them to get to $80 again :)

Re:Shoulda coulda woulda (1)

aventius (814491) | more than 9 years ago | (#11648020)

Maybe I should finally go buy stock instead of complaining.... anybody want to loan me some money that I won't pay back?

Re:Shoulda coulda woulda (5, Funny)

Randy Wang (700248) | more than 9 years ago | (#11648083)

Sure - do you accept the Elbonian Eyecrud?

I, personally, would be buying some o' that fruity goodness right now... were it not for the fact that I'm broke. Worse yet, I'm broke in Australian Dollars.

Yet another piece of Apple I'm destined to drool over, but never own...

Re:Shoulda coulda woulda (0)

Anonymous Coward | more than 9 years ago | (#11648384)

Tsk. Apple's market share has hit 55% lately, they've become one of the biggest growing businesses in home computing, they're coming out with new successful products continuously... I only wish I'd bought when they were down around $14 a couple of years ago.

Re:Shoulda coulda woulda (1)

rebeka thomas (673264) | more than 9 years ago | (#11649239)

Apple's market share has hit 55% lately, they've become one of the biggest growing businesses in home computing

Where'd you get the crack you're on?

Re:Shoulda coulda woulda (4, Insightful)

Suburbanpride (755823) | more than 9 years ago | (#11649067)

I bought a powerbook and an ipod with apple's "cram and jam" program for college in the fall of '03. After one week of using it, I was convinced that I should buy some apple stock. I was amazed at how beautiful and powerful OS X was, and how easy to use the iPod was. I thouhgt that if Apple kept up the marketing, they could takeover the mp3 player market and make a dent in the laptop market I tired to convince my parents to give me some money to invest, but they thouhgt that they were already spending enough on my tution, plus my laptop. I think apple stock was in the high teens at that time. If i had gotten to put the grand I wanted to into apple, I would have enough money to buy myslef a dual g5. next time I have an inkling about a company with an awesome product, I'm jumping on it.

Re:Shoulda coulda woulda (0, Troll)

jericho4.0 (565125) | more than 9 years ago | (#11656348)

If you invest every time you get that feeling about a product, you can't go wrong. Screw technical analysis, day trading, etc. Buy comapnies that make stuff you think is cool.

Re:Shoulda coulda woulda (1)

jcr (53032) | more than 9 years ago | (#11649913)

Heh. I'm kicking myself for not taking all my available cash out of the bank last summer and buying a pile of $45 November AAPL calls. Those options were cheap back then.

-jcr

Re:Shoulda coulda woulda (0)

Anonymous Coward | more than 9 years ago | (#11651487)

And you'll be kicking yourself in a year time (or even earlier) for not doing it NOW

Stock Split does not... (2, Informative)

skweegee (755245) | more than 9 years ago | (#11647933)

generate wealth. It just allows people to buy shares at a lower price. Stock splits are overhyped.

Re:Stock Split does not... (3, Interesting)

aventius (814491) | more than 9 years ago | (#11647993)

No shit dumbass. But stock splits occur after the stock has gone up and is expected to go higher. Stock splits are just an indication of a healthy investment.

Re:Stock Split does not... (1)

skweegee (755245) | more than 9 years ago | (#11648743)

Mods must be on crack. I state a simple fact that should be known and someone calls me a dumbass and he gets modded up.

Talk to anyone with some knowledge on investment, finance, or accounting they'll tell you the same. If you think you're going to make money off of a split go ahead keep thinking that, but you're wrong. Your gain won't be a result of the split that's for sure.

Re:Stock Split does not... (1)

aventius (814491) | more than 9 years ago | (#11650009)

I wasn't disagreeing with what you said, I called you a dumbass because you stated the obvious. Do you think that Slashdotters aren't capable of basic mathematics?

Re:Stock Split does not... (1)

skweegee (755245) | more than 9 years ago | (#11651537)

Unfortunately from my experience this is not the obvious. Most people are disillusioned into thinking it's giving them more wealth.

Re:Stock Split does not... (1)

drmarcj (807884) | more than 9 years ago | (#11648787)

I disagree. You can also split your stock in order to *give people the impression* your stock is going to somehow increase in value. Warren Buffett's Berkshire Hathaway has never split its stock, which is all you need to know about stock splits, AFAIC.

Re:Stock Split does not... (5, Interesting)

SteeldrivingJon (842919) | more than 9 years ago | (#11648943)

Warren Buffett's Berkshire Hathaway has never split its stock, which is all you need to know about stock splits, AFAIC

True, but the price of Berkshire Hathaway stock is currently $91,000 per share.

While nice for the stockholders, I'd expect that to limit liquidity somewhat, because there just aren't as many people with funds to buy stock at $91,000/share. Today only 290 shares traded. 3 month average volume is 393 shares. (It'd probably be harder to make an option-based incentive program work with so few shares outstanding. And you can pretty much forget about non-executive employees having stock in the company.)

Like it or not, many (probably most) investors are not perfectly rational creatures. They'll buy a stock, after a split, because the share price drops into a range that they find attractive or accessible.

If someone would like to invest in Apple right now, they might not have $8,000 available to buy 100 shares. On February 28, they'll be able to buy 100 shares for $4000 or so, which perhaps they can afford.

Now, if you're Homo Economicus ( a runtlike feral creature recently discovered in fossils on an island in Southeast Asia) you understand that halving the price doesn't necessarily make Apple any better of a buy. It's not like a half-price sale.

But most people aren't that rational. They invest like it is a half-price sale. Never mind that you're getting half as much of Apple when you buy a share.

Splitting a stock helps companies take advantage of this kind of behavior. At a given price, there will be people who want to buy, but can't. Halve the price with a split, and those people will buy, unless the fundamentals are atrocious. If the company was good enough to buy, pre-split, but cost too much, they'll buy post-split, which helps drive the price up again.

There's a big psychological factor. It's also part of why companies occasionally do a reverse split, to raise the price of their stock. If a stock is down around $5 or less, like Sun's, it just looks like a loser, fading into inconsequence.

Re:Stock Split does not... (1)

brucehoult (148138) | more than 9 years ago | (#11649330)

If someone would like to invest in Apple right now, they might not have $8,000 available to buy 100 shares. On February 28, they'll be able to buy 100 shares for $4000 or so, which perhaps they can afford.

It would seem to be a heck of a lot less paperwork to just make the minimum tradeable parcel be 50 shares instead of 100. Then they wouldn't have to send out new certificates to everyone.

Actually, I've got no idea why it's so high in the USA in the first place. Here in New Zealand most companies keep their shares in the range from $10 - $10 and have a minimum trade size of 100, so you need no more than $1000 to invest (and our dollar is worth less than a US$ anyway).

Re:Stock Split does not... (1)

bill_mcgonigle (4333) | more than 9 years ago | (#11661575)

I'd expect that to limit liquidity somewhat, because there just aren't as many people with funds to buy stock at $91,000/share.

That's why they issue Series B [yahoo.com] shares, which have considerable volume.

That's all I've been able to afford so far. It's a nice hedge against trendiness in the market, yet typically yields better than a bond fund.

Re:Stock Split does not... (1)

SteeldrivingJon (842919) | more than 9 years ago | (#11662356)

That's why they issue Series B [yahoo.com] shares, which have considerable volume.

Considerable, compared to the other Hathaway stock, but still only 19,000 shares or so. That's orders of magnitude smaller than most stocks.

Also, at over $3,000 per share, it's still too pricey for most investors, who'd rather not risk so much of their money on a single stock.

Re:Stock Split does not... (1)

bill_mcgonigle (4333) | more than 9 years ago | (#11663751)

Also, at over $3,000 per share, it's still too pricey for most investors, who'd rather not risk so much of their money on a single stock.

Exactly right, and this is on purpose. Here's Buffet's take on it:
To the extent possible, we would like each Berkshire shareholder to record a gain or loss in market value during his period of ownership that is proportional to the gain or loss in per-share intrinsic value recorded by the company during that holding period. For this to come about, the relationship between the intrinsic value and the market price of a Berkshire share would need to remain constant, and by our preferences at 1-to-1. As that implies, we would rather see Berkshire's stock price at a fair level than a high level. Obviously, Charlie and I can't control Berkshire's price. But by our policies and communications, we can encourage informed, rational behavior by owners that, in turn, will tend to produce a stock price that is also rational. Our it's-as-bad-to-be-overvalued-as-to-be-undervalued approach may disappoint some shareholders. We believe, however, that it affords Berkshire the best prospect of attracting long-term investors who seek to profit from the progress of the company rather than from the investment mistakes of their partners.
I believe the intent is to explicitly take emotion out of the equation in order to achieve market gains through the value of the underlying holdings as opposed to a "what-the-market-will-bear-today" price. Sure, they could split 100-1 but that would work against what they're trying to achieve as an exchange-traded financial instrument. To put it bluntly, if you're not interested in being the owner of a slow-moving $3000 stock, they're not interested in you as a customer. It's certainly not for everybody, but there's nothing wrong with having different options for different styles of investors.

Coming full circle, Apple is interested in the emotional investor who will somehow see the lower price as a bargain. Due to the herd mentality this investor will probably actually do well and continue to do so until the bubble bursts, when or if that ever happens. I know I got burnt riding stock bubbles a few years back, counting on momentum to carry me forward. After that experience I started to listen to ornery old investors like Buffett.

Re:Stock Split does not... (1)

travisbecker (104621) | more than 9 years ago | (#11672772)

It's also part of why companies occasionally do a reverse split

The other reason to do a reverse split is that the Nasdaq and NYSE both have minimum price requirements to be listed on their exchanges. If a company's price per share drops below a threshold value for a certain amount of time (something like under $1.00 for a week or more) then it can be delisted (the actual process is much more complicated than this). From there, the company goes into the murky world of Over-the-Counter (OTC), Bulletin Board, and Pink Sheet trading (not sure what the difference between those 3 is).

From what I've seen, reverse splits often just postpone the inevitable. IIRC, Webvan did a reverse split before croaking. There have been exceptions, I'm sure.

Travis

Re:Stock Split does not... (1)

aventius (814491) | more than 9 years ago | (#11650038)

Stocks are split to allow the middle class continue to invest in the company. What middle class investor do you know that invests in Berkshire? Do you have Berkshire stock? I highly doubt it. Sure some companies misuse the purpose of splitting stock as a PR con job to hide the fact that they are the next Enron but you can't blame the act of splitting stock for lame business practices from even lamer companies. If IBM never split its stock, it would be worth $293488998923949.62**** a share but then who could afford to invest to Big Blue?

**** Warning... This value might be made up

Re:Stock Split does not... (1)

BigusDickus (160858) | more than 9 years ago | (#11650058)

That Warren Buffet may be right on some things but it doesn't mean he is right on everything.

Stock splits are actually an anachronism going back to the 60's when stocks were traded as either even lots (multiples of 100 shares) or odd lots (anything else). Even lots had the advantage of lower commisions. Companies would split their stock in order to bring the price of an even lot down to an affordable level thereby boosting demand. Individuals made up the bulk of trading back then.

Take BH, for example. Not many people will shell out $90,000 to one share. But a people lot would be willing to put down, say, $90 a share. Increased demand would then boost the share price.

I think he refuses to split the stock to keep the riff-raff out of the shareholder meetings.

Re:Stock Split does not... (1)

daver969 (576275) | more than 9 years ago | (#11672086)

...and is expected to go higher.

Before you start going around calling people dumbasses, do you remember what happened the last time AAPL split?

Re:Stock Split does not... (0)

Anonymous Coward | more than 9 years ago | (#11648110)

And when that stock hits 80 again, I make a shitton of money. Overhyped? Not for companies with nothing but growth.

You fail it.

Re:Stock Split does not... (2, Interesting)

alex_guy_CA (748887) | more than 9 years ago | (#11648140)

sorry losers, the first guy is correct. If you look at a history of stock splits, they have nothing to do with anything but hype. Sometimes they are harbingers of good fortune, and sometimes just corporate spin and PR.

Re:Stock Split does not... (0)

Anonymous Coward | more than 9 years ago | (#11648227)

Losers? Uh huh, that's the way to get back at someone in an arguement.

You still fail it. Sometimes a rousing good anal fucking is a harbinger of good fortune, and sometimes just shit.

Seriously. It can be good or bad. In Apple's case, it's probably good.

Not even that (3, Insightful)

Uber Banker (655221) | more than 9 years ago | (#11648127)

Share splits:

Before share split: 50,000 shares own a company. Compant has $1m earnings, makes $20/share earnings

Stock splits 2:1 but company fundamentals stay the same (simplisitc, but no reason splits affect the earnings of a company).
,br> Company still earns $1m. But not t has 100,000 shares that makes it $10/share. If shares are values on a fundamental basis it makes no difference. If shares are viewed on a tachnical basis (see technincal analysis [wikipedia.org], the opposite of 'fundamental analysis') it also makes no difference as price charts auto-adjust splits.

The reason share prices may react positively to share splits is because it increases lqiuidity in shares (lower prices making them more accessible to small-time retail mom-and-pop investors who may just buy 1 or 2 shares, though this is less so in an era of mutual fund saving), or as ait signals to investors that management are tuned into them - just a communication/signalling mechanism. It may also trigger second-thing-n guessing of other investors betting against each other's reactions, but this is market-situation rather than company speculation.

Share splits are the result of good news and really not good news in themselves.

When Apple splits... (4, Funny)

mrighi (855168) | more than 9 years ago | (#11648304)

...let's hope they don't find a worm inside.

Or even worse, half a worm.

(I know, I know, corny old joke... but I just couldn't resist!)

I'm a stupid fucking dumbass, should've bought!!!! (4, Funny)

ElGanzoLoco (642888) | more than 9 years ago | (#11648683)


About 2-3 years ago I almost convinced myself that I should buy Apple stock. At that time, each share cost about 16 bucks...

I didn't buy any, thinking that I was maybe being a victim of St. Steve Job's reality distortion field (I'm as big an Apple fan as you can get) and that maybe the stock would plunge. After all, we were stuck with that damn G4. (And it kinda feels strange to buy stock when you're still in high school.)

Then iTunes Music store came out of nowhere. The stock litteraly exploded. Still didn't buy, thinking "economics 101: buying when high (the price, not me ;) is plain stupid". Then the stock exploded again with the iMac G5's introduction. Still didn't buy, for the exact same reason.

Now the stock is at 81 dollars, that's a 65 $ increase per share, damnit. And yaknowhat? I still won't buy, cause I really don't see how it would rise again?! Maybe if Apple announces OS X for PC (see "Fortune" article). Maybe if they sell half a billion mac minis. Maybe if someone finds out that the iPod shuffle solves cancer, AIDS and world hunger. Maybe.

Anyways, it sort of confirms what I always thought about stock markets: those fucking "analysts" are on crack all the time. I mean, that Apple stock was vastly underrated three years ago. Now it's completely overrated, Apple is in good shape and all, but it's simply not that worth! There's no way in hell Apple is worth 72,9 BILLION dollars (900 million shares @ 81 dollars. I know, I'm vastly oversimplifying, but still...)

Re:I'm a stupid fucking dumbass, should've bought! (0, Insightful)

Anonymous Coward | more than 9 years ago | (#11648989)

The main reason the stock is this high is RDF. Fanboys don't just buy Apple products, they buy Apple Stock too. I mean, the iMac G5 and Mac Mini are certainly OK machines, but they don't fundementally change Apple's outlook in any way. (Best case is their 10 year long marketshare collapse actually stops.)

Re:I'm a stupid fucking dumbass, should've bought! (1)

aventius (814491) | more than 9 years ago | (#11650354)

I'm no Apple-only fanboy (I use Windows, Linux, & Macs) but I'm really tired of the marketshare complaint. Porsche has very little marketshare too but no one says Porsche's outlook is poor because GM and Honda sell a gazillion cars a year.

Re:I'm a stupid fucking dumbass, should've bought! (0)

Anonymous Coward | more than 9 years ago | (#11652520)

Bad analogy because Porsche is financially linked to the huge VW group.

Re:I'm a stupid fucking dumbass, should've bought! (2, Informative)

ravenspear (756059) | more than 9 years ago | (#11649122)

There's no way in hell Apple is worth 72,9 BILLION dollars (900 million shares @ 81 dollars

You're right, they aren't. They are only worth half that. Apple's market cap is currently at 33.18 Billion (408 million shares at ~$81).

Splitting your stock doesn't affect your market cap. When the stock splits the price per share will be halved. So they will still be worth 33.18B (816 million shares at ~$40.50).

Re:I'm a stupid fucking dumbass, should've bought! (1)

ElGanzoLoco (642888) | more than 9 years ago | (#11650873)

No, no, there already are 900 million Apple shares on the market right now. After the split, there will be 1,8 billion shares.

Apple Announcement [apple.com]:

CUPERTINO, California--February 11, 2005--Apple® announced today that its Board of Directors has approved a two-for-one split of the Company's common stock and a proportional increase in the number of Apple common shares authorized from 900 million to 1.8 billion.

(IANASME: I Am Not A Stock Market Expert)

Re:I'm a stupid fucking dumbass, should've bought! (1)

ravenspear (756059) | more than 9 years ago | (#11651388)

OK, whatever. I was going by what a stock report site said. Their market cap is still ~33B and it still won't change after the split. The parent poster seemed to think that splitting stock caused market cap to double.

Re:I'm a stupid fucking dumbass, should've bought! (2, Informative)

BigusDickus (160858) | more than 9 years ago | (#11653337)

You are confusing "authorized shares" with "outstanding shares". I'll explain the difference.

In the corporation charter, there is a statement that the the company is authorized to issue x number of shares. The company is allowed to sell to the market any number of shares up to that number. Essentially, it is a license for the company to print its own money. The currency in this case is shares. And just like any currency, if you print too much the value of each share will go down. That's why shareholders have to approve any increase in authorized shares.

"Outstanding shares" are the subset of "authorized shares" that have already been sold to investors. Usually companies never issue anything close to the number of shares they are allowed to. (Red flag if they do.)

Market Cap = Outstanding Shares x Share Price

The way to think of stock is that it's like a currency with the price as the exchange rate.

Re:I'm a stupid fucking dumbass, should've bought! (0)

Anonymous Coward | more than 9 years ago | (#11649244)

heh heh heh I picked up a handful of shares for pocket change before the previous stock split in 2000. My only regret is that I didn't buy more, of course, I was only a college student at the time....

Re:I'm a stupid fucking dumbass, should've bought! (0)

Anonymous Coward | more than 9 years ago | (#11649814)

Heh. I bought 400 shares in Nov 2000 for $19 1/8 .. this was just after the bubble popped.. Apple was $50-60 per share during the bubble [actually $100-$120 because apple did a split in mid-2000, I'm adjusting for the split].

Watched it float around $20 for a long time.. then it started going to $25.. $30..$35.. decided "that's about what apple is worth, I'm glad Wall Street finally realized how good a company it is".... and I sold it all. Used the proceeds to buy a 17" powerbook (business expense!) and invested the rest in IEV (Europe S&P 350 ETF).

Thought I was pretty smart, for about 2 days.

I could be sitting on $32,000 right now. :-( The powerbook is nice though. :-) IEV is unchanged. :-|.

I still think apple is worth about $40/shr though ($20 after the split), but I'm going to be kicking myself until it comes back down. IF it comes back down. You never know.

Yeah I know, don't complain... but I rarely ever sell stock. I'm a buy-and-holder. This is more proof that if you believe in a company, and you don't have a better place to put the money, STAY PUT.

Re:I'm a stupid fucking dumbass, should've bought! (2, Interesting)

BigusDickus (160858) | more than 9 years ago | (#11650156)

Anyways, it sort of confirms what I always thought about stock markets: those fucking "analysts" are on crack all the time.

I started playing the market decades ago. I realized early on that analysts are good at picking stocks after the stock moves. Do you own research. My tip for you: Buy companies that have no debt.

Two years ago, at AAPL's low of $14.25, here's why it was screaming buy:

1) Cash per share at around $11. That means you get the rest of company for $3 a share.
2) No debt (see above).
3) Not selling a commodity product.
4) Not dependant on other people's technology. Unlike HP, Gateway, etc.
5) Better brand loyalty than any other product except for cigarettes.
6) Been down so long, everything looked like up.

All the analysts, at the time, had hold (i.e.sell it when you can) or sell (i.e. dump this sucker now!) ratings on the stock.

Re:I'm a stupid fucking dumbass, should've bought! (1)

Gorbag (176668) | more than 9 years ago | (#11667006)

4) Not dependant on other people's technology. Unlike HP, Gateway, etc.
Well, no. They have lots of dependancies on other people's technology, which is why they sat so long at 500Mhz waiting for Motorola to get off their can. They are as dependent as anyone on suppliers. For instance, on IBM, for CPUs, the various disk drive makers for disk drives (particular of a size appropriate to the iPod), memory makers, etc. No company is an island.

Re:I'm a stupid fucking dumbass, should've bought! (1)

SmittyTheBold (14066) | more than 9 years ago | (#11650595)

I'm irritated that I bought at $23/share then sold a couple weeks ago at $73/share. Yeah, 200% profit, but I could have made it to 250% profit! Or more!

And yes, I'm entirely serious about this. The thing is, being me, it was only 20 shares. Still, an extra grand I didn't know I'd have a few years ago...best investment I've ever made. Well, best one I've made and cashed out already. The others are yet to be seen.

Re:I'm a stupid fucking dumbass, should've bought! (2, Insightful)

BigusDickus (160858) | more than 9 years ago | (#11653382)

Take some advice from an old timer:

Be happy with the profits you made and don't cry over profits you missed.

Re:I'm a stupid fucking dumbass, should've bought! (1)

SmittyTheBold (14066) | more than 9 years ago | (#11653656)

That's the way I'm looking at it - after all, it's money I didn't have before. I made money instead of lost, so there's not really anything to complain about.

Re:I'm a stupid fucking dumbass, should've bought! (1)

BigusDickus (160858) | more than 9 years ago | (#11654196)

Don't take it the wrong way. I could cry me a river over profits I've missed out on.

One example: Back in 1983 or 1984, I bought Hitachi (HIT) at 28. After about year, the stock was floating in the 50's. I sold at 54. Not bad, almost a two-bagger. Two weeks later it was at 70. It finally topped out at 120.

It's easy to know when to buy. The hard part is to know when to sell.

Re:I'm a stupid fucking dumbass, should've bought! (1)

SmittyTheBold (14066) | more than 9 years ago | (#11654288)

I really want to know who the people are that are buying high, in order to afford us the opportunity to sell high. For as smart as a lot of people in the market are, there sure seem to be quite a few dumb ones too.

Re:I'm a stupid fucking dumbass, should've bought! (1)

BigusDickus (160858) | more than 9 years ago | (#11655157)

Fund managers listen to analysts.

Remember the "Greater Fool Theory": You can always find someone stupider that you are to will buy something from you.

Eventually you hit the end of the chain. There is nobody stupider than you.

Re:I'm a stupid fucking dumbass, should've bought! (1)

big_a (112626) | more than 9 years ago | (#11669047)

Well, let's take Apple stock for example. Pick any time-frame over the last year and Apple stock would have been at a 52 week high. Today it's at $83, a new 52 week high. Yesterday it was at $81, also a new 52 week high.

Everyone is kicking themselves for not buying at 16, 20, 24, etc... But, if you bought at $60 you still would have made gains. So, who's the bigger dummy: The person who didn't but at all, or the person who bought at $60?

You don't buy a stock because "it's cheap". You buy it because you believe in the company, and you think that it's value will increase in the future.

Re:I'm a stupid fucking dumbass, should've bought! (3, Insightful)

constantnormal (512494) | more than 9 years ago | (#11651861)

*ANY* company's stock is not simply a measure of "what it's worth" -- it also includes expectations of what it might become. In the case of Apple's current stratospheric valuation, one might look at the current market share enjoyed by Apple in the personal computer world (around 3%), and wonder what if they were able to do there what they have done in the personal music player marketplace?

Let's suppose that J. Q. Publicus *is* approaching a tipping point with regard to frustration about virus/worm/adware crap. If that 3% market share were to grow to, let's say, just for purposes of illustration, 9%, then the earnings contribution by Mac sales will AT LEAST triple, due to manufacturing efficiencies, no additional development expenses, yada yada yada. Suddenly today's pricing of the stock doesn't look so extreme anymore.

That is a simple rationale. Others are based on the theory that the world market for digital music will grow A LOT -- and since Apple *owns* that market, their revenues will grow with it.

One is (or should be) always looking for instances of where the "efficient market" is out of step with reality. Many times, one is wrong. But the essence of investment theory is to search out, using various metrics (technical "analysis", Ben Graham's work on valuation, astrology, whatever works), these instances of where the efficient market isn't, evaluate the risk, take a position, and wait for reality to catch up.

Those who invest via the "driving throught the rear view mirror" approach are destined to run off the road and crash. To properly invest, one has to look ahead (as well as behind and side-to-side), and not drive faster than conditions dictate (i.e., if you leverage yourself to the hilt and can't react quickly enough to the potholes in the road...), and be cognizant that the road ahead (that would be the future) is almost always enshrouded in fog.

As to whether Apple is priced fairly today, it depends upon exactly what future unfolds for it.

BTW... I *did* buy back then (a bit later, actually), based upon valuations and the huge pile of cash Apple was sitting on. I'm still holding it, waiting to see where it will peak. I look for it to sell off a bit sometime this year, and if there are signs that the Mini Mac is selling strongly into the Windows domain, I'll probably buy some more. However, it could just as well turn out that Apple drops the ball and is unable to satisfy demand, or that the hoped-for demand never materializes.

If you can't identify market inefficiencies, or foretell the future with some degree of accuracy, stick to index funds.

Re:I'm a stupid fucking dumbass, should've bought! (1)

scottdunn (829552) | more than 9 years ago | (#11653944)

I think the stock will jump big time when we see the first episode of The Simpsons or perhaps a Pixar movie available on iTunes. It could be a great thing for people with Mac Mini's connected to their television. They've already got music videos on demand for free. It beats Netflix or Tivo. With Netflix I have to wait a few days before my DVD arrives in the mai where as with iTunes I'd wait about 30 minutes for my 230MB episode of Sex and the City. With Tivo I'd have to wait until Sex and the City was broadcast. (Hopefully I was paying my monthly Tivo bill so it would be easy to program the recorder.)

bought apple stock after OSX (5, Insightful)

ndunn (171784) | more than 9 years ago | (#11649050)

That was about 3+ years ago, at one of Apple's low points. The stock has about quintipled ($10/80). OSX was so clearly in the right direction, albeit broken that it was indicitive of good things (iPod,Mini, Xserve clusters, etc.) of things to come.

There formula for success is the same as google's. Build an efficient user-experience over a solid backend.

Re:bought apple stock after OSX (0)

Anonymous Coward | more than 9 years ago | (#11650569)

Me too
I Gave a bunch of money to a full service stock broker in 2000.
I bought all the stuff they said to buy, Intel , Pfizer , mutual funds etc. I lost money. I also bought a bunch of aapl stock on the day they dropped 50 + %

http://finance.yahoo.com/q/bc?s=AAPL&t=5y

I was banking on OS X. Who knew the ipod would come along?
But you know what? Im still banking on OS X. and Im holding this stock for the long haul. The ipod gets people to OS X one way or another. Ya sales of the ipod will drop but I think sales of
macs will grow the OS has more room to grow than the ipod. Ill put my money on it.

Re:bought apple stock after OSX (1)

Mildew Man (718763) | more than 9 years ago | (#11651306)

Yup. I too saw the OSX handwriting on the wall. I knew the analysts were wrong, having used Macs for 16 years, I know this company inside and out. I could tell that Steve and OSX and the iMacs were the right direction (especially after the mid 90's). I finally bought some stock when it was at $13 and was ridiculed by several people. I told a couple people they should get on the bandwagon while the gettin' was cheap and they laughed.

Look who's laughing now!

Have the stock but (1, Interesting)

Anonymous Coward | more than 9 years ago | (#11649954)

unless Apple starts to pay dividends, the split means very little to me. Give me my cut and I'll be a quite happy after the split.

beleaguered (3, Interesting)

chia_monkey (593501) | more than 9 years ago | (#11650039)

Damn beleaguered company...

'Nuff said.
OK, maybe it's not. Let us all try to remember the number of times that adjective was used to describe the company. I don't think I can count that high. And yet...yet there are STILL nay-sayers...

I want to sell! (0)

Anonymous Coward | more than 9 years ago | (#11650458)

I bought 45 shares at about $17 or so. But I closed the investment account and got myself a shiny stock certificate. Now I want to sell some of that off (enough, say, to get double my original investment, and hold on to the rest). How do I do it without getting all my profits eaten away?

Re:I want to sell! (0)

Anonymous Coward | more than 9 years ago | (#11650469)

I bought 45 shares at about $17 or so.


Oh, and I forgot to mention... "Nyah, nyah!"

this is not about the analysts... (2, Interesting)

Anonymous Coward | more than 9 years ago | (#11651407)

Just as the Mac Mini is enabling many consumers to finally get a taste of Apple excellence, a lower stock price will enable smaller investors to get on board.

It is the board of directors that okays the stock split and I would guess that they wouldn't want a repeat of what happened after the split in 2000 where it plummeted in value. Rather, it is likely that the board believes that there is real room for growth. For me this is a more reliable indictor than, as one poster put it, a bunch of "crack smoking" analysts.

I think Apple has the potential to provide real value to the consumer market. Not only with iPod, which is great, but with powerful, standards based, secure, trouble free machines. It is FreeBSD and a lot of clever and innovative engineering that has put them in this position.

Apple stock split and Mr. Dell (2, Interesting)

acmejohn (858809) | more than 9 years ago | (#11651781)

Bought shares during Amelio's reign, when word got out that NeXT's OS was being considered as a replacement for Copland, and got used to Wall Street geniuses ignoring Apple. Believed that someday Apple's particular business values (innovation over commoditization) would pay off. Felt like a fool sometimes. Held on anyway, especially when Michael Dell said that Apple should close its doors, sell the assets, and return the money to its shareholders (bought more shares). Always bought and loved the products. Now? There's a place for everybody, Mr. Dell, including you.

A Random Walk (3, Informative)

grolaw (670747) | more than 9 years ago | (#11655765)

Stock splits are exactly that - a quick way to issue double that class of stock.

If Apple is trading at pretty close to the top of their market ( aside from Tiger and the new Apple Portable Campstove a/k/a a G-5 laptop and whatever the Mini turns out to be) and there doesn't seem to be any Insanely Great stuff in the pipeline. . .then this is not the time to buy.

Buying at or around the split is buying "high" - however, if the Mini really does make significant inroads into the Wintel world or becomes a home entertainment center - then the split allows more shares to trade and trade volume could increase....and, share price might go up.

If you want to wager - well, the market odds are not as bad as a casino... most of the time (e.g. ENRON).

Stick with a well-diversified portfolio and enjoy the fact that the Bond market will beat Bush into line sooner or later over the deficits.

I bought! (1)

methano (519830) | more than 9 years ago | (#11660443)

About 15 years ago, Apple stock was trading around $45 dollars and then a few things happened and it dropped to $35. I bought 100 shares, cause I thought it might go up again. I'll soon have 400 shares. There were a lot of better places to put my money, but I put it where my heart was. After 15 years, it's been an OK stock to have. It's been fun to ride and, overall, right now I'm getting about a 11% annual return.

Re:I bought! (1)

Scudsucker (17617) | more than 9 years ago | (#11662112)

That must have hurt in '97. Which is of course when I wish I had bought it, when it was going for $13 a share, a few splits ago. :)

Apple Release! (0)

Anonymous Coward | more than 9 years ago | (#11665193)

Presenting, the new Stock Mini!

My kid is smarter than me? (0)

Anonymous Coward | more than 9 years ago | (#11669473)

So I got my kid a share of AAPL for her birthday just becuause via oneshare.com. The price was $32. Now her "one share" will be two.

Compare this to my stock portfolio which had apple stock from back in the day when I was in the market (hint: dot bomb). Got out of stock trading and liquidated my AAPL shares (along with whatever was left).

Does this mean my one year old is more financially savvy than me? Hmmm....

Apple stock is helping me pay for a new home (1, Interesting)

Anonymous Coward | more than 9 years ago | (#11670328)

I've been an Apple fanatic most of my life. When I finally started earning my own money (about 1995), the first stock I bought was Apple. Ever since then I've been watching the stock and the company like a hawk. I was able to determine after a while when its peaks and valleys would be. I ended up buying a ton of shares at really low values and my average per share price is about $14 a share. There was a time when they hit a low of $12 and I was telling everyone I know to buy Apple stock. I just wish I bought a lot more.

Funny thing is that this music stuff took me completly by surprise. I felt that Apple's stock should be rising 2 years ago because finally at that point they had the best hardware and software they've ever had. Then the iPod came out and BAM! Now, I have no clue how Apple stock is going to move. I ended up selling some shares at $27, $30, $40, $50, and $70, wondering at each time whether that would be its new peak. I don't feel bad, as I have a lot more stock that I will be holding on to.

I've managed to make enough of a profit on these shares that it will significantly help me pay for a new apartment! I feel as if my loyalty to Apple as a customer and as an investor has paid off. It was only my devotion to keeping up to speed on everything Apple that I attribute to this success. It just goes to show you that someone with the incentive to become well versed in a company can be as successful than professionals. They are looking at almost the same information that is available to the rest of us. We just don't have the time to do the research normally.

Anyway, I'm rambling. Just wanted to let you know that Apple fans may not only be rewarded with the best computers on earth, but also with cold hard cash too! Thanks Steve!

Sigh (1)

xjerky (128399) | more than 9 years ago | (#11709063)

I never bought any Apple stock, but I did buy $2000 worth of CSCO stock for $74/share one month before the bubble burst. Double sigh.

And that was my brief foray into the stock market....
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