Group 3

Adli Rafdi AnnasGerald Prayogo

M. Heickal PradinantaFarah Aulia Zulfa

Apple Inc.• Founded in April 1, 1977 in Cupertino, CA• Founders: Steve jobs, Ronald Wayne, and

Steve Wozniak• Current CEO: Tim Cook• Key people: Arthur D. Levinson (Chairman)• Number of locations: 437 Apple retail store in

15 countries• Number of employees: 98000 employees

Products• Macbook• iPad• iPod• iPhone• Apple TV• Apple Watch

Others:• Electric vehicles (iCar) and

Software.

Case #1

Apple's stock price is high, but do they pay dividends?

• “Apple does not currently pay dividends on its common stock. Apple paid dividends from June 15, 1987 to December 15, 1995.”

(Source : http://investor.apple.com/faq.cfm)

• Then what about apple’s net income and stock price?

If Apple does pay dividends If Apple does not pay dividends

Apple gives the dividends to the investors, to be re-invested.

Apple keeps the dividends money to themselves, to further finance them.

The dividends money is given within a certain period of time

When apple is wound up or sold, the proceeds go to the investors (terminal dividend)

Profitable if the investors can get better returns than Apple’s

Profitable if the investors can’t get better returns than Apple’s

• Current Apple’s return on equity : 42%• Apple’s investors get their profits by Apple’s huge appreciation of stock price

Date

Case #2

Apple’s Stock Buyback

• In 2008, Apple receive a big receive a big cash for $24.5 billion as of September and growing at the rate of $8 to $10 billion a year when the company’s stock is trading at a unusually low (for Apple) multiple of 15 times earnings. Then Apple decides to buyback it’s stock with estimation that a $20 billion buyback program would boost it about 9%. And if the $20 billion program were front-loaded — completed in the first fiscal quarter of 2009 — the company’s EPS could jump as much as 15% (or $0.75 a share).

• Why does Apple buyback it’s stock?

• A share repurchase reduces the number of shares outstanding (i.e. supply), it increases earnings per share and tends to elevate the market value of the remaining shares. When a company does repurchase shares, it will usually say something along the lines of, "We find no better investment than our own company."

Apple’s stock price

Conclusion & opinion• Despite not paying dividends, Apple can still

attract investors due to its high return

• Buying back its own stocks is an effective way to increase EPS