One of the more interesting announcements coming out of MWC that caught my eye was LG buying WebOS from HP to use in televisions. Unlike smartphones and tablets that are currently dominated by Google’s (GOOG) Android and Apple’s iOS, the race for dominant smart TV operating systems is still in its infancy and its something I’ll we watching as part of my Always On, Always Connected PowerTrend. As I see it, TVs, cars and the home are the coming battlegrounds for the connected device. Much like smartphones and tablets, it’s the software and apps that make all the difference since the hardware is increasingly commoditized.
The one company that was notably absent from MWC was Apple (AAPL). Not surprisingly as Apple tends to shun events such as this and the annual Consumer Electronics Show (CES) in favor of its own venues. While its smartphone and tablet competitors were announcing new devices over the last few days, Apple was instead prepping for its annual shareholder meeting. With AAPL shares down 37% from their September peak and roughly 14% from the 2012 shareholder meeting, the 2013 shareholder meeting is bound to attract investor attention.
Ahead of that meeting there has been rampant speculation what Apple and CEO Tim Cook might announce. Odds are a new product is not in the cards following the rapid product refresh that Apple had over the last six months. A new service offering? Maybe but I suspect any such announcement is more likely to be had in June at the annual Apple World Wide Developer Conference.
That leaves the much expected review of the business, including its market position, financial performance and balance sheet. That last part will be of keen interest this week to existing shareholders and prospective ones as many are wondering what Apple will do with its $137 billion in cash. That’s a big number -- roughly $146 per Apple share.
That cash position -- more like a mountain than a position -- and has attracted a ton of interest in recent weeks following Greenlight Capital’s David Einhorn’s efforts to block Apple’s ability to issue preferred shares and CEO Tim Cook’s recent appearance at Goldman Sach’s (GS) technology conference.
So what could we hear today that may spark investor interest?
The chatter around Wall Street points to either a dividend increase, stock split or buyback.
Apple already pays a hefty quarterly dividend of $2.65 per share, but with $137 billion it could join Walmart (WMT), the TJX Companies (TJX) and others and raise the dividend. Even if Apple were to do this, it could still be a can of worms for the company depending on by how much it raised the dividend. A token dividend increase -- read that as something that falls significantly short of Walmart’s recent 18% dividend hike by Walmart and 26% planned dividend increase by TJX -- could leave a bad taste in investor mouths.
A stock split in my view has more cosmetic effects than substantive ones. While the argument goes that it would make Apple shares more affordable, many including my self would see through this because it doesn’t address the cash position, improve the yield and leaves the valuation argument the same.
A share buyback would be interesting and help support Apple’s shares, but remember that Apple already has a buyback program in place. A year ago the company announced that its Board authorized a three year, $10 billion share repurchase program that would begin at the start of fiscal 2013. Apple could certainly announce it will be upsizing the current buyback program. Such an announcement would be a positive, but given the number of companies increasing their dividend payouts of late it would probably leave Mr. Stock Market wanting more.
The last possibility is a combination of the above. That would be optimal but as the saying goes, the devil would be in the actual details.
