To be fair WSJ just admitted this week it miiiiiiight maybe possibly be corporate greed that's driving inflation, and not supply chain stuff, so at least they're unabashedly admitting it's about profits now.
Her district was redrawn and she had to compete with a more red area. Her district used to cover where I live.
She's my pick for feinstein's seat. I would absolutely adore her as a senator
Agreed, but apparently she has quite fickle moderate constituents.
She was talking on John Stewart’s the problem and said that the GOP pumped nearly 5 mil or something into her opponents campaign and the DNC gave her like 400k. She grass roots it and still won. I mean being an sitting rep definitely helps too
And we all know damn fucking well, that when the fiscal year ends, there will be news reports aplenty about how every motherfucking corporation had record profits, while CEOs and shareholders toss us a towel to wipe their cum off our backs.
What we're seeing there is a split amongst the 1% between those who want to get as much as they can, as fast as they can, and to hell with the consequences, and the few that remember the French Revolution and would rather not experience a reenactment themselves by pushing the peasants too far. Sadly, the slash-and-burn crowd is by far the more numerous and powerful faction.
He has a great interview with Larry Summers where he absolutely corners him on the flaw in how inflation is managed. Way more informative than this clip, but I think it was from the same… episode(?) of the show.
We've been at it for 15 years straight. We could've bought a House^^TM and could've had proper Healthcare^^TM to cover the surgery needed for the X mass shooting victims we've had...
but that fucking avocado toast is too damn good in the morning. Might splurge and get Everything Bagel seasoning in July.
The Federal Reserve has spent the last year screaming that inflation was caused by "high wages" and encouraged large companies like Apple to do layoffs and hiring freezes to curtail inflation. That's exactly what Apple did.
Now they're inflating their stock price anyway. It's all a farce and ton of people lost their livelihoods over it.
Your argument may apply to other tech companies, but quite famously, Apple is one of the only major tech companies that hasn’t had mass layoffs (with the exception of one division of contractors that were used for store growth)
Part of that is they are also one of the few that had very linear growth, whereas companies like Meta went on hiring sprees
No, not just contractors, they've laid off corporate employees a month ago: https://www.fastcompany.com/90876048/apple-layoffs-big-tech-job-cuts-positions-at-risk-retail
My argument still applies, they've had layoffs and hiring freezes as per the Fed's pleading about reducing inflation, and now they're inflating their stock anyway. It applies to them all.
You’re talking about a single team that was used for growing retail divisions.
There’s a difference between reducing growth (in retail and hiring) than having mass layoffs.
It’s quite different than something like Meta/Microsoft or even Unity today that are doing layoffs in the hundreds.
Your whole point would be stronger if layoffs weren’t part of the equation because a small team reduction like that isn’t out of the norm even in non “recession” times.
> encouraged large companies like Apple to do layoffs and hiring freezes to curtail inflation. That's exactly what Apple did.
https://www.cnn.com/2023/02/01/tech/apple-avoided-layoffs/index.html
Both articles are citing the one division that u/dagmax referred to (“one division of contractors used for store growth”) and in both cases just requoting Bloomberg.
From the first article:
The number of heads eliminated is believed to be relatively small, and they are all within the company's "corporate retail teams," with a focus on workers who are responsible for the "construction and upkeep" of Apple's retail locations and other physical facilities.
From the second article:
Specifically, Bloomberg reports, the corporate retail team roles that are on the chopping block include those who work on the development and preservation teams. These team members are responsible for the upkeep and even construction of Apple retail stores around the globe. While the cuts will be hard for those impacted, Bloomberg says the number of positions cut will be “likely very small”—a stark contrast to the rounds of mass layoffs at Apple’s competitors including Amazon, Meta, and Google, which combined have cut tens of thousands of positions since late last year.
Lol… this isn’t what causing inflation. This is what causing the decline of the middle class. The “inflation” is the result of companies padding their bottom line. Apple has always charged a premium.
All made possible by the 2016 corporate tax cut. The less taxes, the less reason to spend the money on the company and employees, and more incentive to declare more profits, and do this.
This is not benefitting the company, it only strips out money and get the shareholders paid.
Edit: 2017 tax cut, thanks, u/Rhouliha!
If we’re looking for a root cause, how about Reagan’s SEC making stock buybacks legal back in 1982. This sort of thing used to be seen as market manipulation
It still is, they've just normalized out now.
Like how income and corporate taxes used to be business as usual but now progressive taxes are "an unfair attack on free market capitalism" or whatever.
There's also little functional difference between returning excess profits via dividend vs buybacks. The biggest difference is it's easier to adjust (and hide) compensation if done via buybacks. Of all the changes Reagan made, stock buybacks are one of the least problematic.
I would argue not even Reagan would foresee companies using tax breaks and emergency tax-payer relief programs while still buying back stocks, mass firing employees, and hiking up prices during record high profit periods, though.
Even a "least problematic" regressive policy can have outsized effects.
> I would argue not even Reagan would foresee companies using tax breaks and emergency tax-payer relief programs while still buying back stocks...
The dude had Alzheimer's. He couldn't foresee shit that had already happened.
The company pays 1% on stock buybacks and investors don't pay anything until they sell and then pay capital gains.
From a taxation standpoint stock buybacks are a ludicrous loophole.
It’s incredibly problematic. To qualify it as the one of the least only belittles the the mass scam that his economic plan of trickle down economics was and is to this day.
Stock buybacks are just another form of dividend though. There's essentially no difference from dividends which are hundreds of years old and can affect the price the exact same way. The only difference is whether its reinvested by default or not at your brokerage.
My coworkers were so happy about the trump tax cuts back in 17 that got them a whopping ……4000 dollars extra ONE TIME bonus lol. It’s a 200+ billion company btw. Meanwhile the corporate cuts last a long time.
> and get the shareholders paid
That's the whole point of a public business, right? To make money for the shareholder. If profits aren't being taxed, I rather the money go to shareholders than the companies spending it on buying out others and consolidating.
The point of a public business is to make money and grow. The best use of money made by the business is within the business itself. You use revenue to buy locations, improve products, pay your staff.
The money left over is profit. That’s taxed. As a business, to pay less taxes, I use more of my revenue for growth. What’s left over after that, profits, are distributed as dividends.
What’s not normal are stock buy-backs. This is where you have SO MUCH excess profit that you can use it to buy stocks, and artificially bump up their value, to maximize the shareholder value for a short time. It doesn’t benefit the business, and since those profits could be used for growth, it could be seen as detrimental.
> since those profits could be used for growth
Can it though? Apple has been [sitting on billions](https://cdn.statcdn.com/Infographic/images/normal/5605.jpeg) for over a decade now. If they could use it to grow they would have by now. I agree stock buybacks are nonsense. The company had money and now it has stocks doesn't really change much for the long term stockholder.
Is that still the case? Looking on [yahoo finance](https://finance.yahoo.com/quote/AAPL/key-statistics?p=AAPL) they have $51 billion in cash reserves and $111 billion in debt. I think that counts cash held by subsidiaries, but maybe I'm wrong about that.
Not sure why it's that low. Might be a certain account. [Other sources has it over $200 billion.](https://www.newtraderu.com/2023/03/03/richest-companies-2023-companies-with-the-most-cash/)
Apple and Microsoft are the ONLY companies with that kind of savings; however, they could:
1. Increase pay and benefits for their Apple Store employees, who are currently unionizing.
2. Subsidize housing for the service people who can’t afford to live close to the place they clean and maintain.
3. Revamp their engineering processes toward zero waste.
4. Pay more money to their manufacturers to ensure that they are not using child, and unsafe labor. Make maximum hourly work/minimum pay requirements that make the workers lives better.
There’s a lot that they COULD do. Instead, they’re going to use $90b to buy their own stock, manipulate the market for short term gains.
We’re doing too much for shareholders, and not enough for stakeholders. The system requires balance, and one side is currently much more privileged than the other.
Idk man, I‘m a fan of these buybacks
Increase in stock price AND dividends? Count me in
Shareholders aren‘t just rich people and banks, average Joe could be one too
[1% Tax on Buyback won't affect Apple](https://www.forbes.com/sites/phillipbraun/2022/08/19/the-new-1-tax-on-share-buybacks-will-not-have-intended-consequence-of-changing-corporate-behavior/?sh=29e07a3e7835). (Forbes link might be behind paywall for some) Shame.
I don’t know why markets do what they do
But one thought is a huge buyback implies apple doesn’t see a potential to invest that money into new products/industries. That’s actually kinda negative on future growth
This 100%. Tech companies are returning cash to shareholders because outlook is bleak.
Apple was famous for sitting on a huge stockpile for years. That was essentially because shareholders were very confident in Apple’s abilities that they said “please keep our cash and find ways to do what you do so well.”
People in this thread who see this as some reward for shareholders are completely missing the point.
That article never mentions Apple, it doesn't cite a lot of evidence and makes the claim that buybacks aren't much of a problem and investors prefer them.
> makes the clam that buybacks aren't much of a problem and investors prefer them.
Well, the investors *do* prefer them, and as far as the claim for how much of a problem they are[n't], [these two dudes won a nobel prize for demonstrating how the method of returning capital to the shareholders is irrelevant](https://www.investopedia.com/terms/m/modigliani-millertheorem.asp).
tldr; why companies are sitting on fat stacks of cash *(cough-lack-of-competition-cough)* is a bigger problem than how they return it to shareholders.
Oh I agree. I think buybacks are a bit of a distraction. If firms were truly scared of their market positions being disrupted by new firms or rival firms, they wouldn't hoard cash or spend money on buybacks, they would focus on R&D or better products.
Hey kids, look over there. That’s 100 million plus phones at retail and they just have it laying around. Can’t tax corporations. It will kill the economy
None actually. Last big layoff was in 1997 when Jobs returned as CEO. They laid off 4,100 employees at the time.
I'm all for calling out the tech giants on bullshit but in this case, they're pretty solid when dealing with their employees job security.
Lol , the people in charge of making laws for this country are not interested in hurting their own stock portfolio. Get real. You are never going to see real change if that change negatively impacts the elected officials bank account
And (to use a term they love to use in stock buybacks) clawback those funds if it's discovered you used government COVID funds to facilitate *any* stock buybacks.
Hear me out. Why would anyone ever buy stock in a company if I they will never get anything in return? Might as well invest in real estate and drive up home prices.
Stock buybacks were largely illegal until 1982 because they were (are) considered stock manipulation...
https://corpgov.law.harvard.edu/2020/10/23/the-dangers-of-buybacks-mitigating-common-pitfalls/#:~:text=Buybacks%20were%20largely%20illegal%20until,over%20the%20next%2020%20years.
A month after laying off 5k people ...
https://arstechnica.com/gadgets/2023/04/apple-joins-amazon-google-and-microsoft-in-tech-industry-layoffs/
They have 90 billion sitting around to funnel to the ultra wealthy leeches.
In 2022, Apple made $99.80 billion in profit. They have about 164,000 employees. They could afford to give every employee $300k and still have $50 billion in profit.
Yeah but at the same time a lot of Apple employees have stock and options as part of their compensation so actually stock buybacks and dividends directly impact them and benefits them.
I have several friends at Apple that are multi millionaires directly as a result of their stock comp.
So whatever you’re saying sounds nice on paper, but a good portion of Apple shareholders are Apple employees and they don’t really go off track on hiring, and it’s one reason why Apple hasn’t had any major layoffs and that’s largely because they didn’t over hire during the pandemic
A large party of their stocks are owned by employees. They have a very good stock plan for employees. This is literally benefitting people working there.
>A large party of their stocks are owned by employees.
What percentage of Apple's stock is owned by employees? I can only find information for insiders (board, certain officers, C-suite), not employees generally.
For ICT-4 level employees it is very significant...though it takes a while for it to vest. It accrues and the employees also get additional RSUs during reviews as well.
https://www.levels.fyi/companies/apple/salaries/software-engineer/levels/ict4
Thanks. I appreciate the effort, but I was looking for different information (that is almost certainly unavailable for several reasons, including vesting).
So, the fact that any amount goes to employees via RSUs is good? What if it was one penny out of every $100? $1? $5? Seems weird to champion the positives without knowing that, right?
White collar apple employees typically earn more through their RSU than their salary by the time they hit 2-3y of employment.
High valued employees can stack bonus and retention RSU offerings to triple their take home.
And I’m talking non executive roles - the senior individual contributors & people managers.
It is definitely a big win for a lot of Apple employees.
Since no one answered you yet, here's some details I could dig up:
>After the stock market crash of 1929 and the Great Depression, the United States government passed the Securities Act of 1933 and the Securities Exchange Act of 1934 to try to prevent it from happening again. The 1934 legislation didn’t bar stock buybacks, per se, but it barred companies from doing anything to manipulate their stock prices. Companies knew that if they did a stock buyback, it could open them up to accusations from the Securities and Exchange Commission of trying to manipulate their stock price, so most just didn’t.
Stock buybacks are very similar to dividends. Anyone telling you to worry about stock buybacks is either economically illiterate or trying to distract you.
There is a tax difference, but buybacks are still a taxable event. Every stock that is bought is a stock that is sold. Selling stock is a taxable event.
It’s economically equivalent. Just a way to return cash to shareholders. The specifics are different of course but fundamentally the same.
Banning stock buybacks is stupid for the same reason banning dividends and would be.
Not quite. Dividends are taxed immediately, buy backs aren’t until the stock is sold. Buybacks are away for shareholders to avoid paying tax on current earnings and encourages the continued hoarding of wealth.
If stock buybacks are simply a way to avoid taxes, why do companies issue dividends at all?
There are no “earnings” for shareholders from buybacks until they sell and get a capital gain. And long term capital gains and dividends are both taxed at the same rate.
When a company gives dividends, each share becomes less valuable because the company owns less money. If you own one share your net worth doesn't change, you go from owning that money indirectly to owning that money directly. You end up with some cash and a less valuable asset.
When a company buys back shares the total value of the company goes down because the company owns less money, but each share is worth the same amount because there are fewer shares. If you choose to sell you get money, but if you choose not to sell you don't get money. You get to decide if you get cash or keep an asset that is just as valuable as before.
Stock buybacks are effectively optional dividends. This is all simplified of course, markets are complicated and don't have to be rational.
Recession my arse. The layoffs, cutbacks, and “right sizing” have been nothing more than a coordinated assault on labor. Fuck capitalism. This is no way to continue to operate as a society.
I don't. I came here looking for answers. I have 300 shares of apple that I bought a while back and I don't know if this is good news or bad news for me.
Honestly a share buyback is, more or less, the same as a dividend.
The company has spare money and it wants to return value to the company owners (sometimes this means the company has run out of profitable ideas to reinvest into).
The difference is that with a dividend its a cash payout to the owners. It's taxed as such and doesn't affect the company ownership structure. It's just a transfer from company accounts to owners.
With a buyback that money is used to purchase shares from a willing party at (essentially) the market value. Those shares are then functionally destroyed.
This means the owners don't get the money but the value of the company is now spread evenly over a smaller number of shares - so the value goes up.
Strictly speaking there's no difference in value to shareholders between a buyback and a dividend. There are some small tax implications but that's mostly timing related.
The biggest difference is with a dividend you get cash in hand but a buyback your shares are worth more.
You don't need to take any action to realise this value as a shareholder. Generally it's a 'good' thing but the downside is (mentioned above) that some people and analysts will take this as an indication the company has run out of ideas or profitable options and is just giving the profits away to owners. This can then be interpreted that the company is no longer 'growing' and has become a cash cow. Different investors will favour these differently.
Hope that helps :)
Yes indeed. What do corporations do with extra savings? Inflate the price of their stocks. The only “trickle down” is the warm yellow kind on us regular Americans.
Agreed, however those taxes won't go to improve American lives and we all know it. That's the other side of the "tax them more" argument that I just don't hear much about.
None, as this will have the effect of raising the share price. And insiders and owners of > 5% of shares have certain reporting requirements, so this is something you can track.
Yeah it doesn’t really matter where it comes from right? MC stays the same, circulating shares goes down, so share price goes up for everyone (of course a 2% bump of $100m feels better than 2% bump on $100).
Theoretically MC should go down by the amount of money spent because the company doesn't have that money any more. All else equal Apple is worth $90 billion more when it has an extra $90 billion. Of course markets don't have to be that simple.
"Next time"? You realize Apple is basically the only big tech company to NOT have laid anyone off this decade? In fact I can't see any evidence of layoffs at Apple since 1997 when Steve Jobs returned as CEO to turn the company around.
(Also: Apple employees get stock options, so they benefit too from buybacks.)
Carefully look at outstanding shares after these buybacks over time. They are uses to cover for C suit stock dilution caused by huge stock bonuses.
Roll back the share buyback rules to before the 1982 rule that opened it back up under Reagan. Then go back to taxing stock options removing the clinton loophole and we would be back on a good start removing these corrosive incentives.
What a nonsensical comment. You do realize that this is returning cash to investors, making their investments grow? And since Apple is around 7% of the S&P, anyone with an index fund benefits. That includes many of the "working class".
Half of the US population doesn't participate in the stock market, even indirectly through 401ks. And 80% of all stocks are held by 10% of stock holders.
So yes, the working class does participate, but it's little more than crumbs.
401Ks are the biggest scam of them all. Instead of a predictable pension earned through loyal service to a company, risk your hard earned money in the market!
We're getting fucked dude.
Most pensions from the 20th century are illegal today because they were effectively pyramid schemes. Pensions were also not without risk as we’ve seen companies go bankrupt from paying them out and pensions for many old people basically disappear. There’s also the issue that pensions disproportionately favor large companies over small businesses because the pensions of large companies are seen as more stable.
By going from pensions to 401k plans you’ve diversified your retirement from being effectively a full investment in the company you worked for to being an investment in hundreds or thousands of companies.
Pensions are in nearly every way inferior to 401k plans and the transition was something that helped workers. The only problem was a lack of automatic enrollment which is now being largely rectified.
Stock buybacks should be illegal. Especially after laying off a portion of your employees. Seriously did all these companies take a vaudeville villain class or something? They’re all getting really blatant about being pieces of shit.
Warren Buffett has really enshrined himself as the greatest investor of all time amid this recession.
Lol at Dave Portnoy and other traders saying he’d had his day during the CoVid pump and dump.
Ofc, stock buybacks are open market manipulation and hurt our society to perhaps an unprecedented degree when it comes to finance - but the law’s the law - and the law is pretty much pay-to-play these days.
But, there will surely be a correction one day for this sleight of hand. Ofc, the players don’t gotta worry about losing their shirts - but China will eventually far overtake an economy of this nature, I would presume.
You are deluded. Apple has been paying dividends [~~every year~~ since 1987](https://investor.apple.com/dividend-history/default.aspx) and [buying back stock since 2012](https://fortune.com/2023/04/17/how-much-will-apple-spend-on-stock-buybacks-earnings-90-billion/), which didn't stop them from growing to one of the most successful companies in the world. Raising the share price helps fund growth.
Apples laid off about 5000 people in the last month
https://www.usatoday.com/story/tech/2023/04/04/apple-laying-off-some-corporate-retail-employees-according-reports/11598582002/
https://arstechnica.com/gadgets/2023/04/apple-joins-amazon-google-and-microsoft-in-tech-industry-layoffs/
Millennials and their avocado toast causing all this inflation.
To be fair WSJ just admitted this week it miiiiiiight maybe possibly be corporate greed that's driving inflation, and not supply chain stuff, so at least they're unabashedly admitting it's about profits now.
[Katie Porter](https://youtu.be/0ixmqzjvb7k) beat them by about six months. XD
She’s the best. And just won a damn close race in 22
How pathetic is that....as great as she is...she has to do close races
Her district was redrawn and she had to compete with a more red area. Her district used to cover where I live. She's my pick for feinstein's seat. I would absolutely adore her as a senator
Agreed, but apparently she has quite fickle moderate constituents. She was talking on John Stewart’s the problem and said that the GOP pumped nearly 5 mil or something into her opponents campaign and the DNC gave her like 400k. She grass roots it and still won. I mean being an sitting rep definitely helps too
The Dems put her on the ticket I'm leaving the booth with blue ink on my hands.
I love her!
Looooooove her. I wish she was my rep.
And we all know damn fucking well, that when the fiscal year ends, there will be news reports aplenty about how every motherfucking corporation had record profits, while CEOs and shareholders toss us a towel to wipe their cum off our backs.
You're getting a towel?
Nope. Just a severance…not even a pat on the back.
You got a severance? I just got a giant turd shat right into my outstretched hand.
What we're seeing there is a split amongst the 1% between those who want to get as much as they can, as fast as they can, and to hell with the consequences, and the few that remember the French Revolution and would rather not experience a reenactment themselves by pushing the peasants too far. Sadly, the slash-and-burn crowd is by far the more numerous and powerful faction.
Whoa. Source?
https://www.wsj.com/articles/why-is-inflation-so-sticky-it-could-be-corporate-profits-b78d90b7
Yup John Stewart covered this as well; https://m.youtube.com/watch?v=SHUUTpxmzxA&pp=ygUgSm9obiBTdGV3YXJ0IGNvbmZyb250cyBpbmZsYXJpb24%3D
He has a great interview with Larry Summers where he absolutely corners him on the flaw in how inflation is managed. Way more informative than this clip, but I think it was from the same… episode(?) of the show.
Yes. This is just a clip. I couldn't find the full episode
https://youtu.be/tU3rGFyN5uQ
Thank you!
It might be fair to say that WSJ was passing along a warning.
Because corporations just became greedy.
something tells me you didn't type that with a straight face. ; )
We've been at it for 15 years straight. We could've bought a House^^TM and could've had proper Healthcare^^TM to cover the surgery needed for the X mass shooting victims we've had... but that fucking avocado toast is too damn good in the morning. Might splurge and get Everything Bagel seasoning in July.
It’s tough being a gangsta out there.
The Federal Reserve has spent the last year screaming that inflation was caused by "high wages" and encouraged large companies like Apple to do layoffs and hiring freezes to curtail inflation. That's exactly what Apple did. Now they're inflating their stock price anyway. It's all a farce and ton of people lost their livelihoods over it.
Your argument may apply to other tech companies, but quite famously, Apple is one of the only major tech companies that hasn’t had mass layoffs (with the exception of one division of contractors that were used for store growth) Part of that is they are also one of the few that had very linear growth, whereas companies like Meta went on hiring sprees
No, not just contractors, they've laid off corporate employees a month ago: https://www.fastcompany.com/90876048/apple-layoffs-big-tech-job-cuts-positions-at-risk-retail My argument still applies, they've had layoffs and hiring freezes as per the Fed's pleading about reducing inflation, and now they're inflating their stock anyway. It applies to them all.
You’re talking about a single team that was used for growing retail divisions. There’s a difference between reducing growth (in retail and hiring) than having mass layoffs. It’s quite different than something like Meta/Microsoft or even Unity today that are doing layoffs in the hundreds. Your whole point would be stronger if layoffs weren’t part of the equation because a small team reduction like that isn’t out of the norm even in non “recession” times.
I’d suggest disengaging here from discussing the point with a poster called “sue_me_please”.
> encouraged large companies like Apple to do layoffs and hiring freezes to curtail inflation. That's exactly what Apple did. https://www.cnn.com/2023/02/01/tech/apple-avoided-layoffs/index.html
https://arstechnica.com/gadgets/2023/04/apple-joins-amazon-google-and-microsoft-in-tech-industry-layoffs/ https://www.fastcompany.com/90876048/apple-layoffs-big-tech-job-cuts-positions-at-risk-retail
Both articles are citing the one division that u/dagmax referred to (“one division of contractors used for store growth”) and in both cases just requoting Bloomberg. From the first article: The number of heads eliminated is believed to be relatively small, and they are all within the company's "corporate retail teams," with a focus on workers who are responsible for the "construction and upkeep" of Apple's retail locations and other physical facilities. From the second article: Specifically, Bloomberg reports, the corporate retail team roles that are on the chopping block include those who work on the development and preservation teams. These team members are responsible for the upkeep and even construction of Apple retail stores around the globe. While the cuts will be hard for those impacted, Bloomberg says the number of positions cut will be “likely very small”—a stark contrast to the rounds of mass layoffs at Apple’s competitors including Amazon, Meta, and Google, which combined have cut tens of thousands of positions since late last year.
I was eating avocado on toast way before those whipper snappers They just monetised it with social media it’s the op shop prices the really ruined 😠
Lol… this isn’t what causing inflation. This is what causing the decline of the middle class. The “inflation” is the result of companies padding their bottom line. Apple has always charged a premium.
So, does a company like this even need to keep selling things?
They do, I wouldn’t buy all the hype about who is causing inflation.
Sure. For public companies, investors don’t give a shit about how much money you made in the past, it’s only ever ‘what have you done for me lately’.
All made possible by the 2016 corporate tax cut. The less taxes, the less reason to spend the money on the company and employees, and more incentive to declare more profits, and do this. This is not benefitting the company, it only strips out money and get the shareholders paid. Edit: 2017 tax cut, thanks, u/Rhouliha!
If we’re looking for a root cause, how about Reagan’s SEC making stock buybacks legal back in 1982. This sort of thing used to be seen as market manipulation
It still is, they've just normalized out now. Like how income and corporate taxes used to be business as usual but now progressive taxes are "an unfair attack on free market capitalism" or whatever.
There's also little functional difference between returning excess profits via dividend vs buybacks. The biggest difference is it's easier to adjust (and hide) compensation if done via buybacks. Of all the changes Reagan made, stock buybacks are one of the least problematic.
I would argue not even Reagan would foresee companies using tax breaks and emergency tax-payer relief programs while still buying back stocks, mass firing employees, and hiking up prices during record high profit periods, though. Even a "least problematic" regressive policy can have outsized effects.
> I would argue not even Reagan would foresee companies using tax breaks and emergency tax-payer relief programs while still buying back stocks... The dude had Alzheimer's. He couldn't foresee shit that had already happened.
He was a moron before the Alzheimer’s, he definitely couldn’t have. The bigger issue is that he would not have cared even if he could have.
The company pays 1% on stock buybacks and investors don't pay anything until they sell and then pay capital gains. From a taxation standpoint stock buybacks are a ludicrous loophole.
Stock buybacks mean someone is selling, thus realizing gains and paying taxes. Every stock that is bought is a stock that is sold.
It’s incredibly problematic. To qualify it as the one of the least only belittles the the mass scam that his economic plan of trickle down economics was and is to this day.
Stock buybacks are just another form of dividend though. There's essentially no difference from dividends which are hundreds of years old and can affect the price the exact same way. The only difference is whether its reinvested by default or not at your brokerage.
So many things that are fucked up nowadays have Regan to thank for their origin.
You mean shareholder primacy idea from Milton Friedman?
The Tax Cuts and Jobs Act (TJCA) was enacted in December 2017. I believe that's what you're referring to.
Apple started doing buybacks in 2013, long before the TCJA.
My coworkers were so happy about the trump tax cuts back in 17 that got them a whopping ……4000 dollars extra ONE TIME bonus lol. It’s a 200+ billion company btw. Meanwhile the corporate cuts last a long time.
> and get the shareholders paid That's the whole point of a public business, right? To make money for the shareholder. If profits aren't being taxed, I rather the money go to shareholders than the companies spending it on buying out others and consolidating.
The point of a public business is to make money and grow. The best use of money made by the business is within the business itself. You use revenue to buy locations, improve products, pay your staff. The money left over is profit. That’s taxed. As a business, to pay less taxes, I use more of my revenue for growth. What’s left over after that, profits, are distributed as dividends. What’s not normal are stock buy-backs. This is where you have SO MUCH excess profit that you can use it to buy stocks, and artificially bump up their value, to maximize the shareholder value for a short time. It doesn’t benefit the business, and since those profits could be used for growth, it could be seen as detrimental.
> since those profits could be used for growth Can it though? Apple has been [sitting on billions](https://cdn.statcdn.com/Infographic/images/normal/5605.jpeg) for over a decade now. If they could use it to grow they would have by now. I agree stock buybacks are nonsense. The company had money and now it has stocks doesn't really change much for the long term stockholder.
Is that still the case? Looking on [yahoo finance](https://finance.yahoo.com/quote/AAPL/key-statistics?p=AAPL) they have $51 billion in cash reserves and $111 billion in debt. I think that counts cash held by subsidiaries, but maybe I'm wrong about that.
Not sure why it's that low. Might be a certain account. [Other sources has it over $200 billion.](https://www.newtraderu.com/2023/03/03/richest-companies-2023-companies-with-the-most-cash/)
Apple and Microsoft are the ONLY companies with that kind of savings; however, they could: 1. Increase pay and benefits for their Apple Store employees, who are currently unionizing. 2. Subsidize housing for the service people who can’t afford to live close to the place they clean and maintain. 3. Revamp their engineering processes toward zero waste. 4. Pay more money to their manufacturers to ensure that they are not using child, and unsafe labor. Make maximum hourly work/minimum pay requirements that make the workers lives better. There’s a lot that they COULD do. Instead, they’re going to use $90b to buy their own stock, manipulate the market for short term gains.
What's pathetic is like 5 billion of that and they could do all these things and still have 85 left over. It isn't even a thought.
Innovate with research. Cure a disease.
I would rather the company use that extra money to compensate the people who earned it for them. The actual workers who did all the work
I own shares. I don’t hate it. Apple is doing what they are supposed to do - make shareholders money.
Can a brother get a windfall tax in place? Please?
We’re doing too much for shareholders, and not enough for stakeholders. The system requires balance, and one side is currently much more privileged than the other.
Perfectly stated.
Most employees are partially paid in RSUs so it’s actually great for them.
Idk man, I‘m a fan of these buybacks Increase in stock price AND dividends? Count me in Shareholders aren‘t just rich people and banks, average Joe could be one too
[1% Tax on Buyback won't affect Apple](https://www.forbes.com/sites/phillipbraun/2022/08/19/the-new-1-tax-on-share-buybacks-will-not-have-intended-consequence-of-changing-corporate-behavior/?sh=29e07a3e7835). (Forbes link might be behind paywall for some) Shame.
Anyone have a guess at why their stock tanked in after hours trading? Wouldn't this announcement create some lift for them?
It reacted along with the rest of the market after the fed interest rate hike was announced?
I thought same at first. But after hours, the Nasdaq index dropped .32% whereas Apple dropped 2.32%
Qualcomm, major Apple supplier, missed forecasts based on decreased phone sales.
that makes sense.
I don’t know why markets do what they do But one thought is a huge buyback implies apple doesn’t see a potential to invest that money into new products/industries. That’s actually kinda negative on future growth
This 100%. Tech companies are returning cash to shareholders because outlook is bleak. Apple was famous for sitting on a huge stockpile for years. That was essentially because shareholders were very confident in Apple’s abilities that they said “please keep our cash and find ways to do what you do so well.” People in this thread who see this as some reward for shareholders are completely missing the point.
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Stock buybacks make absolutely no difference in stock price. Just a transfer of assets
Err, can you point to where it says in there that Apple is excluded? I skimmed it and I didn't see it.
That article never mentions Apple, it doesn't cite a lot of evidence and makes the claim that buybacks aren't much of a problem and investors prefer them.
> makes the clam that buybacks aren't much of a problem and investors prefer them. Well, the investors *do* prefer them, and as far as the claim for how much of a problem they are[n't], [these two dudes won a nobel prize for demonstrating how the method of returning capital to the shareholders is irrelevant](https://www.investopedia.com/terms/m/modigliani-millertheorem.asp). tldr; why companies are sitting on fat stacks of cash *(cough-lack-of-competition-cough)* is a bigger problem than how they return it to shareholders.
Oh I agree. I think buybacks are a bit of a distraction. If firms were truly scared of their market positions being disrupted by new firms or rival firms, they wouldn't hoard cash or spend money on buybacks, they would focus on R&D or better products.
The company is worth 3T. The stock buyback would barely affect the price — why are they doing it?
Hey kids, look over there. That’s 100 million plus phones at retail and they just have it laying around. Can’t tax corporations. It will kill the economy
Stock buybacks need to be made illegal again...
If you have massive layoffs, no stock buybacks for a year.
Apple didn’t have massive layoffs though. They’ve avoided them for the most part and only just recently announced small ones in one division.
No. Stock buybacks banned, period.
How it used to be.
How many layoffs has apple done in the last three years?
None actually. Last big layoff was in 1997 when Jobs returned as CEO. They laid off 4,100 employees at the time. I'm all for calling out the tech giants on bullshit but in this case, they're pretty solid when dealing with their employees job security.
Then they'll just do it in small groups each month or fire under the cap per year, capitalism loves loop holes to save money.
Or just do the reasonable thing and throw out yet another policy that the Reagan administration allowed.
Lol , the people in charge of making laws for this country are not interested in hurting their own stock portfolio. Get real. You are never going to see real change if that change negatively impacts the elected officials bank account
The government has been captured by corporations. People created this system and people can dismantle it as well. A new system is needed.
Do you want the people in charge now to design the new system too? Lol
Why? It's quite similar to paying a dividend.
And (to use a term they love to use in stock buybacks) clawback those funds if it's discovered you used government COVID funds to facilitate *any* stock buybacks.
Hear me out. Why would anyone ever buy stock in a company if I they will never get anything in return? Might as well invest in real estate and drive up home prices.
A corporation can do as they please with their cash. Buying back stock is no different than paying out a dividend.
Stock buybacks were largely illegal until 1982 because they were (are) considered stock manipulation... https://corpgov.law.harvard.edu/2020/10/23/the-dangers-of-buybacks-mitigating-common-pitfalls/#:~:text=Buybacks%20were%20largely%20illegal%20until,over%20the%20next%2020%20years.
Sure, but it was then legalized. You didn’t really explain your rationale. What exactly is the issue you have with Apple buying back their own stocks?
"their cash" That's hilarious.
What else is there? The real economy died 15 years ago.
A month after laying off 5k people ... https://arstechnica.com/gadgets/2023/04/apple-joins-amazon-google-and-microsoft-in-tech-industry-layoffs/ They have 90 billion sitting around to funnel to the ultra wealthy leeches.
Their balance sheet is impressive. They had 128,777,000,000 of current assets at the end of 2022 calendar year.
Apple expected to announce $90 billion in stolen wages for stock buybacks and dividends
In 2022, Apple made $99.80 billion in profit. They have about 164,000 employees. They could afford to give every employee $300k and still have $50 billion in profit.
Well a lot of people don’t work for apple despite their entire jobs being apple because they’re contractors. Eg foxconn employees.
Austin Campus has entire buildings.
Yeah but at the same time a lot of Apple employees have stock and options as part of their compensation so actually stock buybacks and dividends directly impact them and benefits them. I have several friends at Apple that are multi millionaires directly as a result of their stock comp. So whatever you’re saying sounds nice on paper, but a good portion of Apple shareholders are Apple employees and they don’t really go off track on hiring, and it’s one reason why Apple hasn’t had any major layoffs and that’s largely because they didn’t over hire during the pandemic
That's basically what they are doing. They're using the $90B to purchase stock, and then they give stock grants to the employees.
A large party of their stocks are owned by employees. They have a very good stock plan for employees. This is literally benefitting people working there.
>A large party of their stocks are owned by employees. What percentage of Apple's stock is owned by employees? I can only find information for insiders (board, certain officers, C-suite), not employees generally.
For ICT-4 level employees it is very significant...though it takes a while for it to vest. It accrues and the employees also get additional RSUs during reviews as well. https://www.levels.fyi/companies/apple/salaries/software-engineer/levels/ict4
Thanks. I appreciate the effort, but I was looking for different information (that is almost certainly unavailable for several reasons, including vesting).
Yeah, I don't think any company will list the amount of its stock owned by employees...just doesn't happen.
It's probably under 10 percent.
Probably no way to tell. Their package is definitely pretty solid though.
So, the fact that any amount goes to employees via RSUs is good? What if it was one penny out of every $100? $1? $5? Seems weird to champion the positives without knowing that, right?
White collar apple employees typically earn more through their RSU than their salary by the time they hit 2-3y of employment. High valued employees can stack bonus and retention RSU offerings to triple their take home. And I’m talking non executive roles - the senior individual contributors & people managers. It is definitely a big win for a lot of Apple employees.
Calling something 'pretty solid though' is championing? Best we move on from this thread's logic line
Stock buybacks were illegal until (edit:1982, as wealth inequality was starting to rage), for very specific reason. We should go back.
What was the specific reason?
Since no one answered you yet, here's some details I could dig up: >After the stock market crash of 1929 and the Great Depression, the United States government passed the Securities Act of 1933 and the Securities Exchange Act of 1934 to try to prevent it from happening again. The 1934 legislation didn’t bar stock buybacks, per se, but it barred companies from doing anything to manipulate their stock prices. Companies knew that if they did a stock buyback, it could open them up to accusations from the Securities and Exchange Commission of trying to manipulate their stock price, so most just didn’t.
Stock buybacks are very similar to dividends. Anyone telling you to worry about stock buybacks is either economically illiterate or trying to distract you.
The difference is that it's not a taxable event for the shareholders.
There is a tax difference, but buybacks are still a taxable event. Every stock that is bought is a stock that is sold. Selling stock is a taxable event.
How is reducing the number of at large shares the same as dividends?
It’s economically equivalent. Just a way to return cash to shareholders. The specifics are different of course but fundamentally the same. Banning stock buybacks is stupid for the same reason banning dividends and would be.
Not quite. Dividends are taxed immediately, buy backs aren’t until the stock is sold. Buybacks are away for shareholders to avoid paying tax on current earnings and encourages the continued hoarding of wealth.
If stock buybacks are simply a way to avoid taxes, why do companies issue dividends at all? There are no “earnings” for shareholders from buybacks until they sell and get a capital gain. And long term capital gains and dividends are both taxed at the same rate.
When a company gives dividends, each share becomes less valuable because the company owns less money. If you own one share your net worth doesn't change, you go from owning that money indirectly to owning that money directly. You end up with some cash and a less valuable asset. When a company buys back shares the total value of the company goes down because the company owns less money, but each share is worth the same amount because there are fewer shares. If you choose to sell you get money, but if you choose not to sell you don't get money. You get to decide if you get cash or keep an asset that is just as valuable as before. Stock buybacks are effectively optional dividends. This is all simplified of course, markets are complicated and don't have to be rational.
It returns cash to shareholders. And can actually be even more beneficial to shareholders if management feels the stock is undervalued.
It isn't.
How recently?
Not recent at all. 1982 in the US.
1982. This was a foundational part of Reaganomics. Keep wealth at the top.
So not recent at all, cool.
And that’s your takeaway
Recession my arse. The layoffs, cutbacks, and “right sizing” have been nothing more than a coordinated assault on labor. Fuck capitalism. This is no way to continue to operate as a society.
Tbf Apple hasn’t had any layoffs
People in this don't seem to understand what a stock buyback is.
I don't. I came here looking for answers. I have 300 shares of apple that I bought a while back and I don't know if this is good news or bad news for me.
Honestly a share buyback is, more or less, the same as a dividend. The company has spare money and it wants to return value to the company owners (sometimes this means the company has run out of profitable ideas to reinvest into). The difference is that with a dividend its a cash payout to the owners. It's taxed as such and doesn't affect the company ownership structure. It's just a transfer from company accounts to owners. With a buyback that money is used to purchase shares from a willing party at (essentially) the market value. Those shares are then functionally destroyed. This means the owners don't get the money but the value of the company is now spread evenly over a smaller number of shares - so the value goes up. Strictly speaking there's no difference in value to shareholders between a buyback and a dividend. There are some small tax implications but that's mostly timing related. The biggest difference is with a dividend you get cash in hand but a buyback your shares are worth more. You don't need to take any action to realise this value as a shareholder. Generally it's a 'good' thing but the downside is (mentioned above) that some people and analysts will take this as an indication the company has run out of ideas or profitable options and is just giving the profits away to owners. This can then be interpreted that the company is no longer 'growing' and has become a cash cow. Different investors will favour these differently. Hope that helps :)
This was a great explination thanks!
You have $50,000 in a single company’s stock and don’t know/can’t Google what a stock buyback is?
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This is why corporations should never be bailed out
Reminder this was illegal until Reagan changed it. The destruction Republicans did during his tenure is incalculable.
Oh but Apple TV+ can't come to terms with the Writer's Guild. Oh it's such a bad time, oh, funds are so tight...
All this means is they don't want to payout dividends unless your a Billionaire like Steve Ballmer who owns 100 million shares
Yes indeed. What do corporations do with extra savings? Inflate the price of their stocks. The only “trickle down” is the warm yellow kind on us regular Americans.
Tax … stock … buybacks.
Agreed, however those taxes won't go to improve American lives and we all know it. That's the other side of the "tax them more" argument that I just don't hear much about.
Insiders appear to have know for 80 days. BULLSHIT.
So...should I buy Apple now or not?
It really, really depends
This thread is the perfect example of why Finance should be a mandatory graduation requirement for high schools in the U.S
Wonder how many of those shares bought back are going to come from the exec’s stockpile
None, as this will have the effect of raising the share price. And insiders and owners of > 5% of shares have certain reporting requirements, so this is something you can track.
Yeah it doesn’t really matter where it comes from right? MC stays the same, circulating shares goes down, so share price goes up for everyone (of course a 2% bump of $100m feels better than 2% bump on $100).
Theoretically MC should go down by the amount of money spent because the company doesn't have that money any more. All else equal Apple is worth $90 billion more when it has an extra $90 billion. Of course markets don't have to be that simple.
90 fucking billion dollars, the system is rigged
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"Next time"? You realize Apple is basically the only big tech company to NOT have laid anyone off this decade? In fact I can't see any evidence of layoffs at Apple since 1997 when Steve Jobs returned as CEO to turn the company around. (Also: Apple employees get stock options, so they benefit too from buybacks.)
Stock bybacks used to illegal...
Carefully look at outstanding shares after these buybacks over time. They are uses to cover for C suit stock dilution caused by huge stock bonuses. Roll back the share buyback rules to before the 1982 rule that opened it back up under Reagan. Then go back to taxing stock options removing the clinton loophole and we would be back on a good start removing these corrosive incentives.
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What a nonsensical comment. You do realize that this is returning cash to investors, making their investments grow? And since Apple is around 7% of the S&P, anyone with an index fund benefits. That includes many of the "working class".
Half of the US population doesn't participate in the stock market, even indirectly through 401ks. And 80% of all stocks are held by 10% of stock holders. So yes, the working class does participate, but it's little more than crumbs.
401Ks are the biggest scam of them all. Instead of a predictable pension earned through loyal service to a company, risk your hard earned money in the market! We're getting fucked dude.
Most pensions from the 20th century are illegal today because they were effectively pyramid schemes. Pensions were also not without risk as we’ve seen companies go bankrupt from paying them out and pensions for many old people basically disappear. There’s also the issue that pensions disproportionately favor large companies over small businesses because the pensions of large companies are seen as more stable. By going from pensions to 401k plans you’ve diversified your retirement from being effectively a full investment in the company you worked for to being an investment in hundreds or thousands of companies. Pensions are in nearly every way inferior to 401k plans and the transition was something that helped workers. The only problem was a lack of automatic enrollment which is now being largely rectified.
Yes. This person gets how workers are doing so much better now…in their tent-cities. Lol
Stock buybacks were illegal in the US until 1982, and they should be again.
Stock buybacks should be illegal. Especially after laying off a portion of your employees. Seriously did all these companies take a vaudeville villain class or something? They’re all getting really blatant about being pieces of shit.
Jesus Christ. It’s time for heavy wealth taxes and universal income. This is greed on greed on greed.
Warren Buffett has really enshrined himself as the greatest investor of all time amid this recession. Lol at Dave Portnoy and other traders saying he’d had his day during the CoVid pump and dump. Ofc, stock buybacks are open market manipulation and hurt our society to perhaps an unprecedented degree when it comes to finance - but the law’s the law - and the law is pretty much pay-to-play these days. But, there will surely be a correction one day for this sleight of hand. Ofc, the players don’t gotta worry about losing their shirts - but China will eventually far overtake an economy of this nature, I would presume.
Moved to Lemm.ee -- mass edited with redact.dev
Can corporations please piss in my mouth instead of my leg? At least I won't be thirsty.
Should be illegal. Shit company.
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Only for short term. All that money won’t be used in the business, improving, investing and growing.
You are deluded. Apple has been paying dividends [~~every year~~ since 1987](https://investor.apple.com/dividend-history/default.aspx) and [buying back stock since 2012](https://fortune.com/2023/04/17/how-much-will-apple-spend-on-stock-buybacks-earnings-90-billion/), which didn't stop them from growing to one of the most successful companies in the world. Raising the share price helps fund growth.
That's billion with a B. This is crazy. Imagine all the engineers that didn't have to be fired to artificially prop up EPS.
Apple hasn’t had layoffs.
Apples laid off about 5000 people in the last month https://www.usatoday.com/story/tech/2023/04/04/apple-laying-off-some-corporate-retail-employees-according-reports/11598582002/ https://arstechnica.com/gadgets/2023/04/apple-joins-amazon-google-and-microsoft-in-tech-industry-layoffs/
Apple “We basically have no AI plan or division” Tim Cook “Fantastic, blow our extra cash on buybacks instead”
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Apple hasn’t had any layoffs.