Apple Inc. (NASDAQ:AAPL) lost almost 25% of its market value in one year. Just as analysts and fund managers saw some signs of the stock pulling back to regain its glory, bad things started to happen. Right now, news coming out of China does not sound too good for the company.
Apple’s Recent Up-Move
Last Friday, a day after Samsung (NASDAQOTH: SSNLF.PK) held the launching event for its latest offering, Galaxy S IV, Apple gained 2.58% to close at $443.66.
Bill Mayer of Legg Mason said that he is going overweight on Apple. UBS’s Steve Milunovich reiterated his buy recommendation albeit with a cut on his target – down to $560 from $600 – on fears that news of a fall in iPhone orders may affect Apple’s numbers.
Much of what Bill Miller said was based on hopes that Apple Inc. (NASDAQ:AAPL) may finally do something about the large amount of cash it is holding, something that investors are not too happy about.
Despite three dividends of $2.65 paid per quarter since August 2012, Apple Inc. (NASDAQ:AAPL)’s cash pile keeps growing. Against $38 billion added in fiscal year 2011, it added $16 billion in the quarter ended December 2012 alone. As of the most recent quarter, Apple has $137.11 billion in cash and cash equivalents and short term and long term investments.
Almost a year ago Apple had announced a $45 billion distribution program through dividends and share buybacks. Even as late as February’s annual shareholder meeting, Tim Cook said that the company was still “seriously considering” returning cash to shareholders. Speculations abound that Apple may increase its dividend payout to anything between $3.75 and $5.00 per share. Brian White of Topeka Capital also believes that Apple Inc. (NASDAQ:AAPL) is in a “good position to deploy more cash”.
The rally could also have been fueled by speculations that Apple’s low-cost iPhone will be launched soon when Ming-Chi Kuo of KGI Securities revealed its specifications. Kuo, who has a proven track record of making correct predictions of Apple’s future plans, also said that an updated premium version of iPhone 5 was on its way.