From Alex Webb’s “The Global Chip Crisis Is a Blip for Mighty Apple” posted Wednesday:
The havoc besetting global trade is lapping at the feet of Apple Inc. The world’s most valuable company looks set to cut production targets for its new flagship smartphone, the iPhone 13, by 10 million units, Bloomberg News reported on Tuesday.
That even Apple is feeling the supply chain ructions reveals the extent of the problems. But it also underscores the mastery that Apple wields over that supply chain.
Because if you unpick the numbers, the actual impact on the company will be far from cataclysmic. Indeed, the stock closed just 0.9% lower after the scoop.
My take: The air is coming out of Tuesday’s story.
See also: Report of iPhone 13 production cut slices Apple in the aftermarket
I love one of your replies:
“Pro tip: all inside info is bogus.”
And it worked like a charm. Too bad Apple is on the sidelines due to its blackout, but don’t believe for a minute that wasn’t part of the plan.
Come on, Robert: I might as well ask you to prove that Apple does NOT enter a blackout period! And ASR’s are NOT the same as open market repurchases. You know that.
I refuse to get into an argument on how many angels can dance on the head of a pin. I have my opinion, and you (and others) have theirs. Neither can prove or disprove the others, short of Apple coming out and saying something point blank, which isn’t going to happen.
But like global warming and the Covid pandemic, it’s far better to ASSUME THE WORST than to entertain the thought that it’s not actually happening. Well, unless you’re a congress-critter, that is….
I’ve said this before and I’ll say it again: Other than ASR’s there’s no proof that Apple buys stock during times when it could be accused of “insider trading”. It really doesn’t necessarily matter that there are no hard rules against it; it’s the propriety of the thing.
From here, for example:
journalofaccountancy dot com/issues/1999/may/mccarthy dot html (replace ” dot ” with “.”)
“Even if a board of directors authorizes the immediate launch of a buyback program, the rules covering the timing of purchases around major developments within the company may cause the CFO to delay implementing it. “We advise the company not to conduct a program at all if there is any material inside information that the company is aware of that has not been publicly disclosed,” says Jayne M. Donegan, a corporate and securities-law attorney with Brown, Rudnick, Freed & Gesmer in Providence, Rhode Island. “For example, if the company is in merger negotiations or it knows the earnings but those earnings haven’t been released, the company should not be out purchasing its stock.”
To address potential insider trading, many companies inform their brokers that they may be required to suspend on short notice purchases authorized as part of an ongoing repurchase program. In fact, many companies apply the same “blackout period”—forbidding all trades—to corporate repurchases as they do for insider stock purchases by individuals. For example, a company may decide not to trade during a period that extends from 10 days before through two days after any earnings release.”
So I say again: I’m not asking you to prove that Apple doesn’t do blackout periods, so why are you asking me to prove that they do?
“Joe: The reason that I ask is because you keep referring to an extended “black out” period which does not exist.”
Do you have proof of that? I just quoted you from a source that said companies are well advised to put one in place.
A careful read of the original rumor/article reveals the rumor was merely that the end of year builds may not hit their original target. The term “production cut” implies intentional throttling back IMO.
In any event; let’s take solace the FUD machine couldn’t trot out the yearly “Apple slashes iPhone production” trope and had to get creative and try and twist component shortages into a production “cut”.
Our yearly buying opportunity.
Although I don’t have spare dry powder ($) to buy big, when I saw AAPL dip below 140, a long-tenured and rarely-rung bell went off in my head.
Time to buy.
Ding-ding.
demand outpacing supply i can sleep on.
www dot ssga dot com/library-content/pdfs/etf/us/b27-buyback-blackout-periods-do-not-negatively-impact-performance.pdf
“As a refresher, buybacks are when a company purchases its own stock in the public market for reasons that range from managing capital allocations between debt and equity to returning cash to shareholders. Some companies temporarily suspend share buyback programs during earnings blackout periods. These periods typically start a few weeks3 prior to reporting and end a few days after the earnings release.”
The number “3” which follows the word “weeks” is a footnote, which reads: “Under Securities and Exchange Commission’s (SEC) Rule 10b–18 companies also need to consider corporate trading windows when repurchasing stock. The length is variable, but typically is a few weeks prior to announcement.”
This report is dated September 2019, so it’s not out of date but I cannot say how authoritative this is. It says “Some companies temporarily suspend share buyback programs during earnings blackout periods.” To me this infers that blackout periods for repurchasing company stock are optional and not required by the SEC, otherwise wouldn’t they say all companies are required to implement such? OTOH, the footnote states that the SEC rule that Robert cites states that companies “need to consider corporate trading windows when repurchasing stock.” I’m confused!
Checking the month following quarter closing and end of that month earnings reporting: January, April, July, October. From 10Q’s, open & pvt. market transactions only as reported, % shares computed on # of shares basis, not $$ spent:
2021 July TBD at earning report Oct 2021
2021 Apr 57.0M sh x $129.97/sh = $7.4B, 41.9% of quarter’s shares, excluding a May 2021 ASR
2021 Jan 63.9M sh x $133.04/sh = $8.5B, 43% of quarter’s shares
2020 Oct. 25.81M sh x $116.23/sh = $3.0B, 12.9% of quarter’s shares
2020 July 67.99M sh x $94.68/sh = $6.44B, 40.3% of quarter’s shares
2020 April no shares repurchased (at beginning of Covid Pandemic) but shares bought in May and June.
2020 Jan 17.794M sh x $309.09/sh = $5.5B, 28.5% of quarter’s shares
2019 Oct 17.988M sh x $233.48/sh = $4.2B, 45.0% of quarter’s shares, excluding a Nov. ASR.
2019 July 23.86M sh x $205.36/sh = $4.9B, 27.8% of quarter’s shares, excluding finishing Feb. ASR
2019 April 30.999M sh x $201.62/sh = $6.25B, 35.3% of quarter’s shares
2019 Jan 28.04M sh x $153.57/sh = $4.3B, 39.1% of quarter’s shares, excluding a Feb. ASR
“suggests” and “continues unabated” don’t really belong in the same sentence….
Joe