[iCol]

"Apple today announced that its Board of Directors has approved a two-for-one split of the company's common stock and a proportional increase in the number of Apple common shares authorized from 900 million to 1.8 billion. Each shareholder of record at the close of business on February 18, 2005 will receive one additional share for every outstanding share held on the record date, and trading will begin on a split-adjusted basis on February 28, 2005."

So, what does this mean exactly? There will be twice as many shares in Apple on the market, but when they split, does that halve the value of each new share?

Is this good news? Or indifferent news?!

Col

[davidflas]

This means that there will be twice as many shares, each of them at half of the current price. Its good for stock holders as long as the shares increase in value after the split, as Apple is hoping they will...

[ReggieX]

This is the second time it's happened, and can be good for future growth by trying to attract new investors with a lower priced stock. As long as the profits keep up, it's a good thing.

[ajprice]

This happened before a few years ago, does this mean they're quartered now?

[ManOfSteal]

I'll buy in now.

[MacGorilla]

Originally posted by ajprice:
This happened before a few years ago, does this mean they're quartered now?

Something like that. Wow, more stock for me

[Millennium]

Originally posted by ajprice:
This happened before a few years ago, does this mean they're quartered now?

Technically, yes. Any shareholder at the time of the split will have the same amount of money's worth of shares, but the value of each share will be halved and the number of shares doubled.

However, share value doesn't always go up after a stock split. The last time Apple split its stock, the price of shares plummeted, and they stayed that way for a long time.

It also, sad to say, gives a lot of ammunition to the Apple-is-doomed folks, who often trot out plummeting share prices year-over-year without mentioning that the stock split. This happened last time too, and it didn't exactly help Apple. Expect the likes of Paul Thurrott and John Dvorak to do exactly this, probably around December or January.

[RonnieoftheRose]

Originally posted by Millennium:


However, share value doesn't always go up after a stock split. The last time Apple split its stock, the price of shares plummeted, and they stayed that way for a long time.

Apple's product line was very different back then. There was also hope that Windows XP was going to cure the world and that OSX was a big risk. Apple were so niche most people hadn't heard of them. Now look at them. XP is still a piece of **** and OSX is the best OS ever. And all those companies going after the iPod and iTunes Music Store will keep falling over themselves, especially when Apple adopts subscriptions as an extra option and moves into video and movie downloads.

[Sarc]

anyone know, how would I buy stock from outside the US ?

[CRASH HARDDRIVE]

Originally posted by Millennium:
However, share value doesn't always go up after a stock split. The last time Apple split its stock, the price of shares plummeted, and they stayed that way for a long time.

Those of us in it for the long haul, just see that as more time to buy even more shares, and own that much more of Apple.

I'd light up a fat stogie, but I don't smoke.

[RonnieoftheRose]

Originally posted by Sarc:
anyone know, how would I buy stock from outside the US ?

Most stockbrokers allow you to buy on foreign markets. Exchange rates apply with each buy and sell. Check with your bank manager.

[E's Lil Theorem]

Go Apple . This is a good thing for investors in my opinion.

Originally posted by ReggieX:
This is the second time it's happened, ...

It'll be the second time in recent years, third overall: AAPL Splits:16-Jun-87 [2:1], 21-Jun-00 [2:1]

Linkage.

Originally posted by Millennium:
...
It also, sad to say, gives a lot of ammunition to the Apple-is-doomed folks, who often trot out plummeting share prices year-over-year without mentioning that the stock split. ....

That's odd because companies who do stock splits will go back at least three years (typically number of years looked at in any sort of analysis) and adjust all of their numbers. Perhaps it has more to do with what RonnieoftheRose mentioned than the stock splits themselves.

[Millennium]

Originally posted by E's Lil Theorem:
That's odd because companies who do stock splits will go back at least three years (typically number of years looked at in any sort of analysis) and adjust all of their numbers. Perhaps it has more to do with what RonnieoftheRose mentioned than the stock splits themselves.

I'm just saying what people used. I'll see if I can dig up the articles, but they were using charts with unadjusted numbers.

[RonnieoftheRose]

Apple has become more than just a computer company that sold to a niche market of scientists and designers. Like the cellphone manufacturers they have realized technology is best when it's fashionable. Apple is fast become a fashion brand unlike Dell and those Apple critics who will always be computer manufacturers and nothing more.

Apple has this deal with Motorola to put iTunes on cellphones. That's all good. What would be even better is Apple creating a version of iTunes (with the iPod interface) that can be downloaded to any phone that can connect to a computer. Limit the number of songs that can be played or make the player shuffle only and more people could be tempted to buy an iPod if they want more features.

I'd also love to see what the Cell could do in Macs. Since it's so scalable if Apple adopted Cell the whole range of Macs could be updated immediately. We'd no longer have people waiting for PowerBooks to have the same CPU as the Power Mac. The Cell could be used in its minimum spec factor in the iPod and grow from there across the range.

There is a chance, a strong chance if Apple pushes it, that the Wintel dominance will be broken in five to ten years. The stock split will allow people to be able to afford to jump in.

[RonnieoftheRose]

Originally posted by Millennium:
I'm just saying what people used. I'll see if I can dig up the articles, but they were using charts with unadjusted numbers.

Anyone who invests in the stock market should be aware of a company's history anyway. What Dvorak says shouldn't matter. If anyone does listen to people like him they shouldn't be buying shares in anything.

[finboy]

Originally posted by Millennium:
Technically, yes. Any shareholder at the time of the split will have the same amount of money's worth of shares, but the value of each share will be halved and the number of shares doubled.

However, share value doesn't always go up after a stock split. The last time Apple split its stock, the price of shares plummeted, and they stayed that way for a long time.

You're right, man. Splits don't necessarily do ANYTHING for the stock.

In fact, I'm working on a splits paper this afternoon. Quite a coincidence, eh?

[Millennium]

Originally posted by RonnieoftheRose:
Anyone who invests in the stock market should be aware of a company's history anyway. What Dvorak says shouldn't matter. If anyone does listen to people like him they shouldn't be buying shares in anything.

The problem is, investors aren't the only ones who read this stuff. Regular people read junk like this and (not knowing any better) decide that it must mean that Apple is dying. End result: fewer Macs get sold.

[MountainMac]

IBS™

(In Before da Split!)

[osiris]

Originally posted by finboy:
You're right, man. Splits don't necessarily do ANYTHING for the stock.

In fact, I'm working on a splits paper this afternoon. Quite a coincidence, eh?

If I may, won't the newly lowered price of AAPL attract buyers who would otherwise refuse/can't pay $80+ a share?

I recently read in the WSJ that stocks that have split usually increase in value only if the perception of increased value is afforded. AAPL is hot now, not because of numerical wizardry, but because people are buying their products at a phenominal rate. The value is there! I think that a newly affordable stock price, combined with tremendous demand, will skyrocket AAPL in the immediate aftermath of the split.

any comments?

[Big Mac]

Yes, the purpose of a split is to reduce the price of the share, thereby making it more attractive to investors. It is a bullish indicator that often means good things for the stock. That is not always true, however, as many have posted out concerning Apple's last stock split. The thing that killed AAPL after the previous split was, of course, the dot.com bubble bust. Even if Apple were in the exact same position it is now, there would have been no way to prevent that collapse since it was industry-wide. Although I believe this split will go better, that previous experience suggests it is wise to exercise investor caution.

[digiology2]

Originally posted by finboy:
You're right, man. Splits don't necessarily do ANYTHING for the stock.

Can you explain? Just curious. After the split do you not have twice as many shares than you would have had?

[dreilly1]

Originally posted by digiology2:
Can you explain? Just curious. After the split do you not have twice as many shares than you would have had?

It's like davidflas said in the beginning of the thread, you'll have twice as many shares but the value of those shares is cut in half. If you went to sleep on the 27th owning 100 shares that are worth $86.28 each, then by the time the market opens on the 28th you'll magically have 200 shares worth $43.14 each. Do the math -- you don't gain anything out of the split itself.

Splits are usually considered a good thing because just the fact that a split was judged to be necessary by the Board means that the stock price is higher than it was before, which is good if you own the stock!. And after the split, the stock may be more affordable to investors, which creates more demand for the stock and drives the price higher.
However, that phenomenon goes both ways: psychologically, if you wake up that Monday morning and have twice as many shares, you might be more inclined to sell part of your holdings to lock in the gains you've made in the stock, even if nothing else has really changed.

[digiology2]

ahh ok, I get it

[olePigeon]

Psychologically, I think this split is great and it'll squelch the "Apple's stock is too inflated" speech. Hopefully the stock will be low enough to allow more investors to trade with and the stock will go up again.

Microsoft's split their stocks who knows how many times.

Anyone know if it's possible to join a stock? Or are they just delisted if it gets too low?

[Big Mac]

By join a stock, I infer you mean to buy back shares to increase its value. Yes, stock buy backs are sometimes done; they are referred to as reverse splits. They usually bode ill for the company buying back the shares, since the strategy is usually viewed as a desperate move by companies with share prices so low that they risk being delisted. Most of the time stocks that have reverse split go down in the short to midterm, although there are exceptions.

Can anyone tell me why it is that investors are snapping up AAPL after the split announcement? The stock was up several dollars today. Don't those investors know that they won't be eligible for the split, meaning that they will own the same number of shares at a lower price post split? I don't know how to explain this phenomenon.

[RonnieoftheRose]

Originally posted by Big Mac:


Can anyone tell me why it is that investors are snapping up AAPL after the split announcement? The stock was up several dollars today. Don't those investors know that they won't be eligible for the split, meaning that they will own the same number of shares at a lower price post split? I don't know how to explain this phenomenon.

Anyone who buys before close of trading day on the 18th is eligible. People are buying before the split because it makes no difference and also because they expect growth will be good after the split. They might as well buy while they can. So if you bought two shares at $82 today, on Monday that share will become two shares worth $41 each, or whatever the value will be. It could be $45 a share on Monday so buying now would save and earn money.

[E's Lil Theorem]

Originally posted by olePigeon:
...
Microsoft's split their stocks who knows how many times.

..

Nine times.

MSFT Splits:21-Sep-87 [2:1], 16-Apr-90 [2:1], 27-Jun-91 [3:2], 15-Jun-92 [3:2], 23-May-94 [2:1], 09-Dec-96 [2:1], 23-Feb-98 [2:1], 29-Mar-99 [2:1], 18-Feb-03 [2:1]

Linkage

Berkshire Hathaway, on the other hand, has never split its stock and each (A stock) share is worth over $90,000.

[dreilly1]

Originally posted by Big Mac:
By join a stock, I infer you mean to buy back shares to increase its value. Yes, stock buy backs are sometimes done; they are referred to as reverse splits. They usually bode ill for the company buying back the shares, since the strategy is usually viewed as a desperate move by companies with share prices so low that they risk being delisted. Most of the time stocks that have reverse split go down in the short to midterm, although there are exceptions.
Can anyone tell me why it is that investors are snapping up AAPL after the split announcement? The stock was up several dollars today. Don't those investors know that they won't be eligible for the split, meaning that they will own the same number of shares at a lower price post split? I don't know how to explain this phenomenon.

The 18th is purely a bookkeeping date: anyone who buys the stock after the 18th but before the 25th implicitly buys the right to benefit from the split from whoever they bought the stock from.

It doesn't matter whether you bought the shares on Feb 25th, 2005, or Feb 25, 2001: when you wake up on the 28th, you'll have twice as many shares.

And stock buybacks and reverse splits are technically different. You described a reverse split, and they are generally bad for the reasons you stated. On the morning of a reverse split, you'll wake up with fewer shares, but they'll each be worth more, so you don't really lose anyhting. Just like with a regular split, the math works out the same.

But a stock buyback is when a company with extra cash on its hands goes out and buys its own shares on the open market. The shares that company buys back essentially disappear. This benefits stockholders in two ways: first, the added buyer in the market will increase the stock price. (more demand => price goes up.) But also, with fewer shares outstanding, you essentially own a bigger piece of the pie, and numbers like Earnings Per Share will go up because the number of shares decrease. It hurts shareholders because now the company has less cash on hand to do other things with (like, umm, make products to sell, which is kind of important.)

Whether or not stock buybacks are good depends on how much you trust the company board. They could be buying back the stock because they really think it is a good deal, and the company is worth more than the current stock price. In that case, it is a good investment of company funds. Or, they could just be doing it to drive up the stock price so they can dump their shares and options. That's bad...