Wednesday, 27 February 2013 10:52

Regarding A Potential Stock Split & Cash Dividend For Apple Featured

Split-AppleRumors are floating around the social media circles regarding a potential stock split for Apple. A split from such a high prices only has one distinct advantage that I can think of. It gives those with smaller retail accounts the opportunity to to buy more shares. This is purely psychological, for 3 shares at $400 is the same value as one share at $1200. Only when shares break relatively high price levels, ex. $100k as in Berkshire Hathaway, does splitting make more economic sense in accessing the retail market, for those shares are likely out of the reach of the hoi polloi, even on a singular basis.

Stock splits don't effect PE directly (earnings are divvied up among more shares, but are done so proportionately), although indirectly the price per share may increase from the psychological effect, causing a slight and very temporary uptick in demand.

Only short term thinking traders really want Apple to return cash, reference Apple, Big Hedge Fund Stars & The Sell Side/Vaudeville Act To Burn Your Hard Earned Money As A Punchline That's Just Not Funny. Apple needs to put that cash horde to work aggressively, and quite quickly to build up its expertise and assets in the cloud, where it's sorely behind and in danger of never catching up. Apple also needs to significantly beef up its hardware and software in the portable device field. All three of these aspirations will hit margins, and Apple is seriously behind in all three aspects as well. For more on this, reference In Case The Mainstream Media Didn't Get The Memo, I Crush The Apple Reality Distortion Field On CNBC.

Giving cash to shareholders when you should be investing it yourself is an awful idea for the long term prominence of this company, whose days already appear to be quite numbered as a leading tech titan.

Now, to be honest, all tech titan's days are numbered, at least as a tech titan. Apple is currently and sorely outclassed in the tech features and capability race at the same time it has lost its iconic leader and competition has more than quintupled.

Last modified on Wednesday, 27 February 2013 11:13

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