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  woensdag, 29 oktober 2008

Apple May Boost Profit With 2009 Share Buyback, Bernstein Says

Oct. 29 (Bloomberg) -- Apple Inc., the maker of Macintosh computers and the iPhone, rose to the highest in two weeks in New York trading after Sanford C. Bernstein & Co. said a 'significant' share repurchase may boost earnings.

A depressed price-to-earnings ratio, low interest rates and a growing cash balance 'make a strong case for Apple to initiate a substantial share repurchase program,' analyst Toni Sacconaghi, based in New York, said in a note to clients today.

Sacconaghi estimates that a $20 billion stock buyback would boost earnings by 9 percent above his estimate of $5.50 a share next year. Apple hasn't repurchased stock in more than five years, said Sacconaghi, who is the top-ranked computer analyst according to Institutional Investor magazine. He rates Apple's shares 'outperform.'

The company, based in Cupertino, California, gained 5.5 percent to $105.42 at 12:12 p.m. on the Nasdaq Stock Market. Before today, the shares had slid 50 percent this year, more than the 38 percent drop for the Standard & Poor's 500 Information Technology Index.

A buyback 'would be more favorable to shareholders than the alternatives of either a major acquisition or a substantial dividend,' Sacconaghi wrote. 'We do not believe there are any large companies that shareholders would view to be complementary to Apple, given Apple's unparalleled innovativeness.'

$25 Billion

Chief Executive Officer Steve Jobs, speaking on Apple's earnings call for the first time in eight years last week, said the company had 'almost $25 billion safely in the bank and zero debt.' While declining to specify how that cash will be spent, Jobs said the funds offered 'stability' and provided Apple with investment opportunities. During the last economic downturn, Apple expanded its business by creating a retail store network, he said.

'This economic downturn may present some extraordinary opportunities to companies that have cash' Jobs said on Oct. 21 after Apple reported a 26 percent jump in fourth-quarter profit. 'We're very comfortable with our cash position in the bank and it's not burning a hole in our pocket.'

Apple has not paid a dividend since 1995 and the company has spent just $1 billion on acquisitions in its entire history, Jobs said. Apple was co-founded by Jobs in 1976. 6:29:30 PM    



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