“From a timing perspective I believe it would be best for Apple to update its dividend and buyback program when it announces its financial results on January 27,” Jones writes. “Carl Icahn intends to submit a proposal at Apple’s upcoming shareholders meeting for the company to repurchase not less than $50 billion of stock by the end of September 2014. If the company makes an announcement in January management should be more in control of the debate of Icahn’s proposal before the shareholder meeting.”
“I expect the company to announce it will raise the quarterly payment from $3.05 to between $3.25 to $3.35 or a 7% to 10% increase,” Jones writes. “On December 5 last year Moody’s published a report that Apple could take on an additional $20 to $25 billion before it could affect its credit rating… Management may decide to increase the buyback program but if it does I don’t think it will be any more than $20 billion especially since there are two years left on the current program and multiple events requiring U.S. cash may occur. Also I don’t believe management will want to risk a downgrade to its credit ratings.”
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