Will Apple split its stock?

Will Apple split its stock?

Summary: Apple keeps seeing strong growth of its iPod and Macintosh computer lines. And this week it will release Mac OS X Leopard, which unlike Microsoft's experience with Windows Vista early in the year, should be another winner for Apple. But will Cupertino do as it has done in the past and split its stock price?

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TOPICS: Banking, Apple, Hardware
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Will Apple split its stock?Apple keeps seeing strong growth of its iPod and Macintosh computer lines. And this week it will release Mac OS X Leopard, which unlike Microsoft's experience with Windows Vista early in the year, should be another winner for Apple. But will Cupertino do as it has done in the past and split its stock price?

Apple Q4 results announced on Monday were beyond the inflated expectations of analysts and in after-hours trading the stock price rose to a new high: $184.39, up from the Nasdaq closing record of $174.36. The company reported revenues of $6.22 billion, up from $4.84 billion in the year-ago quarter.

Apple sold more than 2 million Macs, a 34 percent growth over last year, although the growth rate for iPods was 17 percent. Still, gross margins are up almost 5 percent.

The company's stock price has climbed almost $100 this year. Usually, companies like to have the stock prices where ordinary investors can buy into the stock with an easy-to-calculate 100 shares.

A Forbes.com story earlier in the month quoted one analyst as saying Apple could do a 3-for1 split. That isn't impossible. That would put the price more in the affordable range.

The last two-for-one split of Apple stock was in February, 2005. During that year, the stock rose from 21.89 to as high as 81.99. That marked the rise of the iPod and the introduction of the Apple Music Store.

Before that, the previous stock split was in June, 2000.

In its Monday press release, Apple highlighted that international sales made up some 40 percent of the quarter’s revenue. But it neglected to point out that Apple Japan still is a sore spot. Only 72K Macs were shipped there in the quarter. A decade ago, the Japanese market was strong, selling more than 200K units per quarter (or so I remember).

I pinged a buddy of mine living in Tokyo and he had a few fun observations about the Mac in the Japanese market. This computer consultant declined attribution.

"The Apple Stores in Tokyo, Ginza and Shibuya, always have a disproportionate number of non-Japanese in the store. I don't believe they reflect the real retail market in Japan very well," he said. "The big-box electronics retailers do carry Macs, so the channels are there regardless."

However, he mentioned to the greater success selling Macs that Eiko Harada, the former general manager of Apple Japan, is having now that he's out of the company. He moved from selling Mac technology to running Japan's Golden Arches fast-food joints. Check out the new McPork and 4-pattie Mega Mac.

"The McGriddles are the a horrible 180-degree turn from what is probably the world's healthiest breakfast tradition — miso soup, broiled fish, vegetables and a small bowl of rice," he bemoaned.

However, he said that Harada's earlier sales problem may be due to Apple's tight grip on the development reins.

"I don't know what the financial arrangement is with the US McDonalds, but one big difference with Apple is that the Japanese fast-food operation is likely an independent company. This gives them freedom to create local product, something Apple absolutely does not do," he said.

Topics: Banking, Apple, Hardware

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6 comments
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  • Let's be honest

    Apple could declare a 6 for 1 split, bring the price back to the $30 range
    and start building it all over again.

    Make it "affordable" so more people will buy into AAPL, just like old Henry
    Ford did years ago - he discovered that people that owned Ford stock
    were more likely to buy a Ford.

    As for affordability, put $1,000 into AAPL either before or after and you
    still have the same investment - it's just a psychological factor.
    Ken_z
  • Apple may go Google

    Why split the stock? They have no debt and billions in the bank? For now, the high
    share price gives the stock a higher 'perceived' value over competitors.
    Len Rooney
  • I don't think so

    Apple historically has had a problem with wildly fluctuating stock. By keeping the price high, they weed out a lot of the fickle day traders and stabilize the stock. It's the Warren Buffet strategy (take a look at his stock price some time).
    frgough
    • Berkshire stock is so high because Mr. Buffet feels it's...

      ...important to know all of his stock holders personally. At $127,800/share that eliminates most individual investors.
      ye
  • AAPL Pie ...

    I say "Slice it again!" I'd be one happy camper. My son even more so in the future.
    I picked up 84 shares in his name for his college fund (for a bit under 8 grand)
    back in 1999. Initially the share price dropped quite a bit when the "tech bubble
    burst." However, with two splits those 84 shares became 336. I sold some shares
    recently (silly me ... but I'm an investor not a roll-the-dice speculator) to pay for
    his tuition, room, board and books. Were I more savvy, flush or willing to trust the
    Wall Street Wonk or two who predicted that AAPL would hit $185/share I would
    have tapped something else in his portfolio.

    Poor, poor me/him ... the remaining 125 shares show a current value of "only" 32.5
    grand. It's my hope that other funds will get him through his last three semesters
    and that I'll be able to hand him those 125 (250? 375?) shares as a graduation
    present in a year and a half.
    dshans@...
  • pvrovpjr 307 dbylm

    To fcnem, gyjrsktk16, fcnem.
    amakrekwe71-24378929635795552925818629588711