The mania over Apple (
) shares and the company in general has reached a new low.
Lately, investors have been
focused in on a possible stock spilt
for the next reason to be hopeful on the company's prospects in
the near term.
Keep in mind that a stock split doesn't actually matter in
terms of a stock's value. Instead, it is pretty much just a
gimmick at this point, and pretty weak one at that since round
lot trading isn't really an issue anymore.
But like with most Apple trading, both in the past and in
current trading, fundamentals aren't exactly important.
Shares moved steadily higher
on the rumor of the possible split, and the story has dominated
headlines as well.
This is despite the fact that a stock split after a nearly 30%
crash in a few months is, to put it mildly, absurd. Don't
companies usually try to do splits at lofty prices instead of
waiting for a catastrophe as a weak attempt to juice prices?
While it is true that a possible hike in dividend payouts has
also been rumored, it is kind of depressing that this is what the
once-innovator has come to already. Instead of being an all-star
in the tech world, the company is now just a yield destination
for investors, no different really than
or any other important, but no longer worshiped, big tech company
I for one had been thinking about jumping into AAPL at these
depressed levels, but some of these recent events have made me
reconsider. The stock is still trading on rumors and conjecture,
but not even about the company's business anymore, or the
'Holy Grail' of iTV. Instead it is about meaningless things like
stock splits and how insane the cash pile will get before
something is done about it.
True, the company is hovering just above its 52-week lows and
it has an extremely low P/E, but can this make up for all of the
other issues swirling around the stock?
After all, AAPL currently has just a Zacks Rank of 3 or 'Hold'
and it is in the middle of the road in terms of Industry Rank, so
there is little to hang your hat on from that perspective. The
pile of cash is now approaching one-third of total market cap in
the company, but based on the latest shareholder meeting, there
just seems to be 'active talk' about doing something with it.
At what point will it be enough? $150 billion? $200
Apparently investors and even AAPL management are still having
trouble thinking clearly about the company and its long-term
outlook. I think I will be staying away until a more coherent
policy is developed regarding the firm's outlook both in terms of
products and dividends.
Still, I do believe that more dividends have to be coming
for AAPL, but I wonder what took so long in the first place.
Stock prices have been in severe bear territory for the
California-based giant and I for one believe a more robust
dividend policy would have crushed the bears in short order, but
what do you think?
What should Apple do to get out of its malaise and why has it
taken so long for the company's management to react?
Let us know in the comments below!
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