Thursday, April 17, 2014
The Associated Press
(Continued from page 1)
"No one wants to pay anything for (Apple) because you can't get the value investor to back it up," White said.
Apple sits on a cash pile of $137 billion, which currently earns about 1 percent annual interest. It's a hoard that frustrates many company-watchers, and analysts are virtually unanimous in their opinion that Apple should be putting it to better use.
Apple has taken a step in the right direction, as far as Wall Street is concerned. Last year, it instituted a quarterly dividend of $2.65 per share, a generous sum compared with most technology companies, but paltry when measured against companies with similar cash reserves. It has also started using cash to buy back shares — another way to reward investors.
But analysts say the company should be doing more. Jeffrey calculates that Apple will generate about another $103 billion over three years, but has only committed to returning $45 billion of this $240 billion in cash to shareholders.
"The company needs to change strategically in a number of ways... including in looking after shareholders," Jeffrey said.
A higher dividend would appeal to value and income investors, and buybacks would reduce the number of shares outstanding, which in turn would get the company's earnings per share growing again.
White has been one of the biggest Apple cheerleaders on Wall Street. He drew attention in April for setting a $1,111 price target for Apple's stock when the shares were trading around $600.
White backed away from his old price target on Thursday. He said he still believes the company is worth that much, but he has realized he's too far in front of the pack. Investors aren't going to give the company the credit it deserves, in his opinion.
"It's tough for people to get their head around. I can't be a visionary forever," White said.
His new price target: $888. Eight is a lucky number in China, and three eights are extra lucky.
"Look, Apple needs a little luck here," White said.