With Apple’s shares making a new all-time high this morning at $187.67, former analyst turned Venture Capital executive Gene Munster says that Apple is starting a whole new era. Munster says that Warren Buffet’s purchase of 75 million additional shares of Apple during the first quarter is just one sign of this new “Apple story.” Munster adds that this new era is a week old, and started with the release of the company’s fiscal second quarter earnings report. “The big picture here is, we’re essentially one week into a new type of thinking around the Apple story,” said Munster.
The former Piper Jaffray analyst says that with iPhone sales less volatile, investors don’t have to worry about quarter-to-quarter changes in Apple’s handset sales. He also points out that Apple has plenty of cash available for more share buybacks. Last week, the company announced that it is returning $100 billion to stockholders by buying back its own shares. It also raised the dividend by 16%.
Independent analyst Neil Cybart says that Apple’s balance sheet initiative is what will now drive the company’s shares instead of iPhone sales. And that change is happening just in time; iPhone sales made up 62% of Apple’s net sales in its latest quarter, down from 67% a year ago. Munster has followed Apple for many years and says that this new era for Apple could be just as big for the company as the introduction of the iPhone turned out to be.
Shares that are bought back by Apple are retired and are no longer considered outstanding. Long term investors like Warren Buffet like to see this type of activity because it means that the company thinks its own shares are a value. And if there is one thing that attracts Buffet like flies to honey, it is a stock trading below what he sees as its future intrinsic value. And in theory, who would know more about the real future value of Apple than Apple?