2013...
CEO of Apple, Tim Cook (TC): Just got another call from a hedge fund manager screaming for a dividend cos' he got his short wrong.
CFO of Apple, Peter Oppenheimer (PO): Just been sent an email from Microsoft saying they are looking to buy us out because they see us as a distressed stock.
TC: Looks like we have got to get our stock price up and pay some dividends. Any ideas?
PO: Not sure about dividends as once you pay them the investors
expect them to go up every year. And anyway, our cash is stuck offshore
and if we bring it to the US, our tax liability will bring us down. What
we need is to flip their equity into debt.
TC: How do we do that then?
PO: We call a friendly bank with lots of free ECB, BoE and Fed
cash wanting to lend it out at a few bips and then we use this to buy
back truck loads of our stock. We then issue debt and pay the banks back
and pay the coupons with US generated income.
TC: So we get to keep our rainy day cash in Cayman. Excellent.
PO: Its what I call the iSucker trade. We can continue to avoid
paying tax, use free printed money provided by our new best investment
banking friends who will do us favors and ensure their analysts pump out
Buy recommendations, we keep our jobs, our stock options come into the
money and everyone is a winner.
TC: Using government money to pump up our stock price... Jobs would be proud of you.
Lunch is for wimps
It's not a question of enough, pal. It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another.
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