[djrogers]

>You do know that the cash Apple has in its balance sheet belongs to its shareholders and that Apple can't use that to buy itself and go private?

Not really true - what exactly do you think the current stock buyback program consists of? Apple is using it's cash to buy it's own stock from the market.

[padmanabhan01]

Share buy back is one thing. Going private using share buyback is another thing. share buy back cancels the shares that are bought back and that enriches the value of all remaining shareholders. to go private an individual has to buy back shares so his ownership gets to 100% which involves a lot more than a company using it's cash in balance sheet to buy back shares. not the same thing.

[slg]

I assume the definition of "private" that people in this thread are using is no external shareholders. Apple could theoretically keep increasing the buyback program until their are no outstanding public shares and the company is owned by the Jobs estate, Tim Cook, and all the other internal stockholders. Although there is virtually zero percent chance of that happening.

[jameshart]

An AAPL share represents about one five billionth of Apple. Tim Cook owns about 1.7 million of those - so Tim Cook owns about three hundredths of one percent of Apple. Jobs died with about 5.5 million shares, call it one tenth of a percent of Apple. So the value of the shares of Apple which don't currently belong to Tim Cook and the Jobs estate (no idea if they still hold those shares) amount to at least 99.9987% of the value of Apple.

[sokoloff]

Using your assumptions, the math comes to 99.87%. (Your excellent point remains, of course.)

[dpark]

No. As you buy out existing stockholders, the value of the remaining shares increases. That's the entire point of a buyback.

By this logic you could just hold one share of Apple stock forever and end up the sole shareholder if they just keep doing their buyback. Except of course there are many other people who would refuse to sell. And when no one wants to sell, the buyback either fails or becomes a terrible investment.

[slg]

Like I said, I think there is a zero percent chance this happens, but I am trying to explain why other people are suggesting. The piece you seem to be missing is that the value of the company overall goes down during a buyout, it is just that the outstanding shares decrease meaning the value of existing shares go up.

If the market cap of Apple is currently $500 billion and they have $200 billion of cash on hand it means the market thinks the company is worth $300 billion. While spending $200 billion on the buyback will put upward pressure on the price of the stock, offloading that cash will put a downward pressure on the stock. Since the ratio of cash to market cap is so high for Apple, the stock really wouldn't see a huge rise in a buyback. The end result would be anyone who didn't participate in the buyback would now owns a larger piece of a smaller pie. The assumption is that the "internal" stockholders would be in that group. The reason it would never happen is because those investors would have to buyout enough people to amass 51% ownership in the company. That means they would need over $150 billion of the $300 billion post buyout value in cash and stock.

[dpark]

You don't "go private" by amassing 51%. Holding a majority stake is not the same as being s private company. It's not even close. Holding a majority stake also does not allow you to simply take everyone else's shares.

[slg]

You are right, 51% doesn't allow them to take peoples shares. But it does prevent the whole people refusing to sell problem you stated earlier. Once they control the company, they can agree to take the company private. The actual cash changing hands could them be borrowed to force through a leveraged buyout.