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Comment by nikcub | Hacker News Reader

The expectation of a larger dividend is what has been driving the share price up recently (which is why it will probably fall today).

I don't know where that expectation came from. First Apple had the problem of repatriating international funds, so this was never going to be a $30, $50 or $100 (some crazy estimate) dividend.

Second all precedent from similar companies issuing a first dividend (well not first for Apple, but first for the 'new' Apple) such as Microsoft and Cisco is 1-2%.

I don't think the buyback will be very effective, not against the bigger dividend expectation.

1.8% is about par. I am surprised they didn't split the stock. Question now is how far the stock will fall today before picking back up again later on as yield-focused funds buy into the new action.

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I don't think you can really point to any one single reason why Apple's stock has been driven up so far lately with any sort of confidence. The market is not always rational when it comes to individual stocks.

There's probably a good argument to made that it could be higher. Their P/E is somewhere around 16, compare to around 20 for Microsoft. Does anyone really think Microsoft is going to grow faster than Apple in the near future? I think the recent stock bump has basically been the market realizing that despite growing very fast, Apple's stock price still hasn't kept up with real revenue growth.

I'd say that + overall market moving upwards + the anticipation of a stock buyback and/or stock dividend.

I don't think we can attribute all this growth to any one thing.

For MSFT, they started dividends in Feb 2003, but then did a huge one time dividend in Nov 2004, $3.08 / share or about 11% of their stock price at the time. So there is precedent for tech companies issuing large dividends to get rid of cash stockpiles.

thats right, forgot about that special dividend. they also announced a huge buyback at that time as well.

here it is http://www.microsoft.com/presspass/press/2004/jul04/07-20boa...

I think their stock has been pretty flat since, and the dividend increases haven't done much to stimulate the price.

Edit: btw, is this you in the MF thread about it? :) http://ask.metafilter.com/11657/Why-Will-Dividend-Make-Micro...

Haha, yep, that's me. I even owned the stock at the time. And yes, the stock was flat for the next 3-4 years, at which point I sold it and it continues to be flat.

The dividend and buyback has been an attempt to mitigate the stock price flatness problem. It's a very serious issue for the company, especially at the employee level (what's the use of stock grants and options if they have no value beyond mere cash payments?

On the other hand, employee options are actually hurt by dividends since the option holder takes the price hit on their outstanding options, but does not receive the dividend value.

Market options are sometimes adjusted for exceptional dividends, but I don't know about employee options.

a huge one time dividend in Nov 2004, $3.08 / share or about 11% of their stock price at the time.

That's what I don't get about the excitement over this dividend. It's like 0.5% of the cost of a share.

It's actually trading +1.67% (pre-market).

which is up on Fridays close but down a few points on the highs reached in after-market over the weekend (~609).

get a better sense a bit after the markets open and then at the end of the day today.

this news should be a disappointment, but nothing about the hysteria around AAPL surprises anymore.

The day ended. Apple closed on +2.6% over $600 for the first time.

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