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Lordrobot (87.42)

Apple should split 10 to 1 and buy Intel for cash

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January 24, 2013 – Comments (3) | RELATED TICKERS: INTC , AAPL , MSFT

I can't read the minds of the Apple Board but I suspect they are stupid political appointees in need of the exits. Here we have a company that really knows how to stock pile cash but somehow managed to look like they are falling apart.

Part of the problem is perception. Fist why does Apple insist on haivng stock that is $500 a share? They have opened themselves up to the Hedge fund short sellers that love a nice big fat even number which looks expensive even if its not. Thats psychology. Instead this $500 share price acts like a Voodoo curse on Apple and the jungle drums are beating tonight. 

What should Apple do? They should call a 10 to 1 split and rid themselves of the $500 black monkey clamped to their backs. A cheaper stock is psychologically more appealing to smaller investors and large institutions as well. 

 

My second thought is that stockpiling $138 billion looks stupid and makes the company look mismanaged. So they need to buy something big. I have searched the landscapes and have decided that Apple should buy Intel. 

Intel is a $64 billion dollar company that is mismanaged. There present CEO needs to leave. He has missed virtaully every chip in the handheld world and has set up a plan to spend $13 billion on R&D just as he is heading out the door. This is extraordinary bad form. The only thing more destructive he could do is bring in a woman as the new CEO.

Apple could easily buy Intel and it would give Apple the secrecy that Jobs always craved. Plus it would really complicate things for Steve Ballmer though Gates could continue to short MSFT as he has for the last year. 

That's it; That's all I have to say: Apple should reverse split 10 to 1 and should buy Intel for cash. 

 

3 Comments – Post Your Own

#1) On January 25, 2013 at 10:37 AM, ikkyu2 (99.38) wrote:

You are making some hidden assumptions here.

#1 is that Apple's $138B cash pile is immediately available for their unrestricted use.  It is not.  Most of it - more than half - is overseas and if repatriated would be subject to a hefty US Federal tax levy, in excess of $20B, maybe $30B.   Paying $30B for the privilege of moving cash from one country to another would surely be considered a stupid move by the majority of investors, far stupider than the things you're criticizing AAPL's board for; they have to wait until the next repatriation-tax-holiday declared by Congress.

#2 is that INTC could be purchased for $64B.  I don't know where you're getting this figure.  INTC's market cap today is $104B and companies cannot be purchased for their market caps because not all shares would be tendered at current share price (if they would, the price would drop, that's how the market works.)  The usual premium to current price in tender offers is about 30%, though sometimes as high as 70%; that means AAPL would need $135-180B to tender for INTC at today's share price.

So they could do it - they could certainly access the debt they'd need - but that brings me to objection #3: would it really be a wise move?  The two corporate cultures could not be more different - you'd have to go a long way to find two people more different   than Steve Jobs, a hippie visionary, and Gordon Moore, a wonky engineer.  Who's in charge?  Do you put the hippies in charge of the chip engineers?  Or do you put the chip engineers in charge of inventing the next big thing in shiny consumer tech products?  

#4:  In the long run, share splits have minimal impact on share value.  Most people who buy stock in any quantity can count and multiply and understand that stock price is a notional figure. 

Still, thought-provoking post.  I appreciated it.

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#2) On January 25, 2013 at 6:46 PM, TeenStockPicker (76.35) wrote:

I have to say I had a good laugh after reading the title, interesting thought! 

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#3) On May 11, 2013 at 8:47 AM, Lordrobot (87.42) wrote:

Thanks appreciated the posts. I guess my chief concern over Apple is that the guys that run it are Steve Job's yes men. They don't seem to function apart from the Job's vision of an entirely proprietary model.

I don't think that is going to hold up. Amongst other thigs I am a hacker and I have boot loaded Mountain Lion into a purely intel based computer. Its not just me hacking away, its practically every major phone maker and pad maker on the globe and Apple has been engaged in the Apple apology tour so the managment is rattling. Apple at least should have ported its OS to PCs just to keep the pressure on but they keep hoping for the next big thing and that may never come. 

Cash may be king but its useless if its all stockpiled and Apple Bonds are just garbage. Whoever talked them in to that trash. Dumb. For my money Apple is dead. You can't just chast the legacy of Jobs into the grave. Apple is in trouble and they keep blundering. Its past is much brighter than its future. 

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