Monday, August 01, 2011

Is Apple Computer Hosting a Tea Party Over There?

by Dick Mac

Apple Computer has been lauded lately not for their technology, for which they should always be lauded; but, because the have accumulated more cash on hand than the United States government. Now people, even liberals, are saying that the US government should run more like Apple.

The accumulation of personal wealth is a lifelong challenge, and the accumulation of corporate wealth is the sign of good things to come for a company's executives, management, staff, and shareholders.

I am baffled by America's penchant for confusing corporate wealth and function with government wealth and function. Since the late-1970s, there has been a teeny-tiny movement of people, with a big voice in the media, saying that our government should run more like a business. This has never been a good idea, of course, and will never be a good, because any government attempting to run like a business will either be a perfect fascist state (which America is not), or a dismal failure (which America might be).

There is a difference between a business and a government; and those who want the American government to run like Apple should realize that, philosophically, it already is attempting that using tea party philosophy: keep everything for the guys at the top and let the rest of us fend for ourselves.

When the rich guys drove the economy into the ground (then blamed the poor guys), I decided I was just as capable of losing my money in the stock market as the professionals. I didn't get a government bail-out, so I took some funds and opened a brokerage account.

I figured the stocks of major corporations weren't going to go down much further and only a knuckle-head would lose money buying GE at seven, PG at 45, or BAC and F at three. After all, Ford (F) did not declare bankruptcy and did not ask for welfare, so it was likely a safe bet under $3. I also gotten other companies. It hasn't make me rich, but I've managed to eek out some growth and maintain some decent holdings.

Not all companies pay dividends, but after enough years of success and a solid cash flow, shareholders are generally rewarded with quarterly paychecks. If a company pays $2.00 a year in dividends, you receive .50 per share per quarter. So, if you own a thousand shares of stock, you will get five-hundred bucks per quarter. I only buy companies that pay (or paid and plan to pay again) dividends. I want earnings. This is (or was) a capitalist economy and that's how the stock market works. You take my money and make some money and share the profits when the books are balanced.

Some companies had to suspend dividends during the Republican Depression of 2008, some only cut them, and some dividends are beginning to grow again. Banks that received bailouts are not allowed to increase dividends without permission, since the people who were receiving the big dividends from the banks were also the people who destroyed the banks and asked for (and received) welfare.

When a company, especially a technology or pharmaceutical company, is starting out, you can buy their stock cheap and it pays no dividend. You are taking a risk by supporting a start-up and the expectation is that if/when it hits, you will be rewarded with two forms of income: higher value of your shares and dividend income.

Apple (AAPL) was only $100 at the time of the Republican Depression of 2008, which was a good price, and I thought about getting some of that; but, then I learned that Apple does not pay a dividend to its shareholders. It used to pay a three-cent quarterly dividend, but that stopped in 1995. So, I passed.

I believe that a company as wealthy and successful and established as Apple should be paying its shareholders their due, in the form of dividends.

Apple, however, earns big money and keeps it all. They pay big salaries to the guys at the top, some of the people in the middle, wages to those at the bottom, and nothing to the shareholders.

Apple, like a smart business, uses some of it's money on R&D, but also disperses none of its remaining money to the shareholders.

This is how the tea party wants America to operate: send whatever funds we've got to the guys at the top and they will make certain that everything is handled. We've had three decades of this operation, and it's a dismal failure.

We are not a company, we are a government and we need to run like a government, not like Apple.

Now, if Apple wants to set a good example, it would change its ways to be more like the America that was once successful and less like a Tea Party.

There are about a billion shares of Apple stock in the market.

Apple has about seventy-six billion dollars in cash.

Keep half of the cash as a prudent reserve and to protect operating costs.

Apple now has about $38,000,000,000 in cash.

Let's say they keep about half of that for research and development.

Apple now has about twenty billion in cash.

If Apple started giving shareholders a very modest twenty-five cent quarterly dividend, it would have twenty years of future dividends on-hand today. This payout is so modest it is only about .005% return at today's share prices. This is insultingly low, but it would be a start.

Apple gives nothing. Apple wants to keep all that money for the guys at the top. Just like the tea party wants to do with our government.

Apple has great technology, but I don't want my government run like Apple any more than it already is!

When it is announced that Apple has more money than God, I will compare them with The Vatican. Until then, please enjoy a cup of tea.

See Google Finance for some fundamental information about Apple's stock.

No comments: