What if Apple wasn't publicly traded?

[scottrichardson]

Let me preface this post with this: I really honestly don't understand the stock market all that well. But what is the main point of floating a company and making it public?

It seems to me that Apple might be better served if they were no longer on the stock market, and instead could focus on what they do rather than investor pressure to constantly break earnings records?

I don't understand (very well) how Apple just had their biggest quarter, yet wall street and others are disappointed with Apple. When is a profit not enough?

Yes I should go educate myself on the stock market, but it's not something I have a lot of time for. So hoping people with a better understand of it all can explain it to us in pretty basic terms!!

Scottie

 

[powerstrokin]

It's all about the Benjamins, baby. Plain and simple.

 

[ElectronGuru]

There are several layers to your question.

The original function of the stock market was to raise capital to get a company going. Investors put in money, business turns that money into product or service, customers buy it, investors get a take of the profit. Along the way, there became enough money to get things started without going to the trouble. But the people involved wanted more than a piece of the profits. The point at which early (angel) investors get to cash out is called a liquidation event. The need for this is why many private companies anymore, bother going public. But they also have the ability to sell additional stock to get additional cash.

A key bit to a company's stock performance is benefit of the doubt. Microsoft gets the BOD, so when they do okay the stock goes up and when they screw up it stays flat. So people watch for and exaggerate successes. Apple doesn't get the BOD. When they do really well, the stock goes up and when they go flat (or even up less than expected), it goes down. So people watch for and exaggerate failures.

Companies on the stock market have something called market cap (capitalization). This is the stock price times the total number of shares. To go private (like dell just did), you have raise enough cash to buy all those shares back. It would take serious capital to gather a total anywhere near apples market cap. And the new investors may not be any improvement on the old ones. So they go on.

 

[maflynn]

Let me preface this post with this: I really honestly don't understand the stock market all that well. But what is the main point of floating a company and making it public?
Scottie

Raising cash and for the most part laws protecting the owners since corporations are a legal entity.

Look around how many multi-billion dollar companies are around that are privately held? Compare that to multi-billion dollar corporations.

Apple's stock woes are because at the moment, they're making lots of money but they're not showing any growth. Their iPhone is aging in a maturing market and need other products, so far they've not released any. It doesn't matter if they're a private company or a public company, they need to continually innovate and bring different products to the market. Since Steve Jobs passed away they've not really released anything new, just updates to existing products.

 

[nebo1ss]

Raising cash and for the most part laws protecting the owners since corporations are a legal entity.

Look around how many multi-billion dollar companies are around that are privately held? Compare that to multi-billion dollar corporations.

Apple's stock woes are because at the moment, they're making lots of money but they're not showing any growth. Their iPhone is aging in a maturing market and need other products, so far they've not released any. It doesn't matter if they're a private company or a public company, they need to continually innovate and bring different products to the market. Since Steve Jobs passed away they've not really released anything new, just updates to existing products.

Not hitting forecast is a big part of the problem. Research Analyst predict what the company is going to do for the next quarter in terms of income, product sales profit etc. They use a lot of tools to come to their conclusions including sometimes meetings with the comapny. The problem for Apple this quarter is that they did not meet the forecast for example the Analyst were predicting Iphone sales of 54 million and the actual number was 51 million. In addition to this Apple released sales forecast for the next quarter which is in fact lower than the equivalent quarter last year.

There is a trend here that Wall street does not like. You may think well the Research Analyst got it wrong not Apple and you would be right but the problem with that is the stock would have appreciated during the past quarter based on the forecast of the Research Analyst and hence would see a correction.

There are also multiple other factors like lack of new products, a general lack of growth and inability to see where that growth is going to come from,

 

[Rogifan]

Most of Apple's peers don't provide guidance or give sales figures. Maybe Apple needs to stop doing it. There might have been a point in time when providing sales figures mattered as Apple was getting back to health but it's not necessary now.