Apple: Why the cash issue is so important

“When it comes to Apple, the company’s products obviously are the most important item, but Apple’s financial results are scrutinized quite often,” Bill Maurer writes for Seeking Alpha. “One of the biggest issues I’m constantly asked about is the company’s cash position. Apple’s large cash balance has enabled the company to restart its dividend program and buy back tens of billions of dollars worth of stock. Over the last year, the cash issue has got more interesting, and in my opinion, has become perhaps the most important issue with Apple currently.”

“Apple’s cash pile is becoming an even more important item with each passing quarter. The company’s foreign cash balance continues to skyrocket, with no repatriation in site, an issue most US tech companies are facing,” Maurer writes. “Apple can borrow against these funds, but interest costs are rising for the company. The strong buyback will continue through the end of 2015, at a slight cost to the dividend. Once we get into 2016, Apple investors must prepare for a substantially lower buyback unless US tax law changes or Apple decides to start repatriating and paying Uncle Sam.”

Maurer writes, “Either of those scenarios would further cement the long thesis. At least for the indefinite future, Apple’s strong capital return plan is a reason to own this stock.”

Read more in the full article here.


  1. Apple can bring the money home any time it pleases, but will have to pay the tax. BFD, I have to pay taxes on the money I make. It never ceases to amaze me how some guy making $75k/year is suckered into worrying about the tax liabilities of huge multinational corporations.

    BTW- While the US has one of the higher listed tax rates among OECD countries, it has a fairly LOW effective rates due to the huge number of exemptions and loopholes. Also, real inflation- not the bullshit numbers reported in the papers and on the internet- gallops along and is eating away at the value of that cash pile unless it is growing fast.

  2. Simplicity is the only way to make taxes “fair” and ensure that reasonable taxes are collected. We need to remove all loopholes from the tax code and get it straight and simple. No home deduction, no charitable deductions, no “new bushiness” deductions, no farm deductions, no “I’m too poor to pay” deductions. A simple graduated “flat” tax on people and businesses.

    1. This would require the republican-led house members to get off their fat lazy asses and do their jobs.

      Up next: reinstating a self-regulating usure cap at a reasonable low multiple of the Fed rate.

        1. The Flat tax scheme is incredibly cruel to the middle class and poor, but republicans never worry about them. Only the richest people are their concern.

          1. No, a flat tax is not necessarily bad for everyone but the rich. A flat tax, coupled with a value added tax, and featuring a relatively generous personal exemption, is a system that is far more fair than the craziness we have now. However, it will never happen because there are too many special interests involved. So, you don’t have to worry.

  3. All that money American companies keep overseas is a bit of a waste right now, only really benefiting foreign bankers. Would be great if there was some incentive to import that money and pump it into the US economy. Not just a flat tax break, but some sort of conditional tax break designed to ensure the money actually goes into the economy instead of just being pocketed by executives and stock owners. Would need a functioning legislative branch to pull something like that off though.

    1. The government (congress, senate and the Presidency) can solve the problem of offshore tax havens in a day. A simple law would do the trick. But our government has been bought by the rich who pay for our politician’s campaigns, and until money is taken out of elections, this system of widespread corruption will continue.

  4. Or, is there another option for companies like Apple? How much will Apple save / keep it Apple moves the company to the cash? At some point, the question needs to be asked. What will the Federal Government need to offer them to remain an American company? Why should they stay? As the percentage of international market share grows, this will need to be considered.

    1. GE walked away with no penalties.

      If Apple did the same, nothing would happen. iPhones would still cost the same. iPads would still sell like hotcakes.

  5. “Apple can borrow against these funds, but interest costs are rising for the company…”

    He’s probably forgetting that Apple’s borrowing for buybacks is still cheaper than the dividends paid per share (for each share that Apple buys back, there is a corresponding reduction in the dividends paid).

    This will continue to work in Apple’s favour even as interest rates slowly creep up over the next while.

  6. Cash is like fuel in the same sway you won’t run without protein and carbohydrates. Companies must have theirs too in order to weather the storms that are coming.
    The decline in purchasing power of the dollar in the last 100 years, (98%!) and the acceleration of the same in the last few years makes me wonder about transferring what little cash I have into hard assets of some kind. Something hard that can be traded for something else of a hard value.
    Hope Apple is thinking that way.

  7. If the Republicans passed the fair tax thru the House, then the Democrats would never ever let it pass thru the Senate…almost a waste of time. A fair tax takes money and power away from the Democrats, who socialize lazy, freebie-laden, non hard working people who are unaccountable and it stimulates the unaccountable in the name and cover of helping poor people. The fair tax helps poor people help themselves, but it takes time. It would take a ten year transition of people screaming murder to take effect, so it probably will never happen. It has to begin with a moral and accountability change in society, and that includes the greedy at the top and the lazy at the bottom. The smart and hard working got to the top by being smart and hard working, and they will find a way to stay smart, and that includes Apple. Tim asked for a reduced tax window, but will never get it. I wonder if I will now get audited for expressing my opinion.

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