Barring a tax holiday, Apple will need to raise over $50 billion in debt the next 2 years

“Apple increased its stock buyback program from $140 billion by March 2017 to $175 billion by March 2018 when it released its March 2016 quarter results,” Chuck Jones writes for Seeking Alpha. “At the same time it announced a $0.57 per share per quarter dividend and that the company should spend $75 billion in dividend payments in the same timeframe.”

“To pay its dividends and buy back shares Apple has to use US based cash or debt but it is not generating nearly enough US profits so it will have to materially increase the amount of debt to achieve its goal,” Jones writes. “Apple could decide to pay the additional US taxes on its overseas profits but I suspect it is waiting until after the elections to see if a tax holiday or lower tax rate is implemented.”

“Apple had $233 billion in cash and investments at the end of the March quarter along with $80 billion in debt for a net cash position of $153 billion,” Jones writes. “However $209 billion was overseas so it only had $24 billion in the US and actually had a negative US cash position of $56 billion since it has used most if not all of the debt it has taken on to pay dividends or buy back stock… Since it started the buybacks Apple has spent $121 billion on stock buybacks ($116.6 billion) and net settling shares ($4.6 billion), which leaves $54 billion to be spent of the $175 billion goal.

Read more in the full article here.

MacDailyNews Take: Free money is free money. Use it until a tax holiday or, far better yet, a new U.S. corporate tax structure is implemented for modern times.

Under the current U.S. corporate tax system, it would be very expensive to repatriate that cash. Unfortunately, the tax code has not kept up with the digital age. The tax system handicaps American corporations in relation to our foreign competitors who don’t have such constraints on the free flow of capital… Apple has always believed in the simple, not the complex. You can see it in our products and the way we conduct ourselves. It is in this spirit that we recommend a dramatic simplification of the corporate tax code. This reform should be revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S. We make this recommendation with our eyes wide open, realizing this would likely increase Apple’s U.S. taxes. But we strongly believe such comprehensive reform would be fair to all taxpayers, would keep America globally competitive and would promote U.S. economic growth.Apple CEO Tim Cook, May 21, 2013

Cramer: Apple’s Tim Cook is ‘patriotic’ on taxes – December 21, 2015
Apple CEO Tim Cook is absolutely right – and wrong – on U.S. corporate tax policy – December 20, 2015
Apple CEO calls corporate tax rap ‘total political crap’ – December 18, 2015
Apple avoids $59.2 billion U.S. tax bill – October 7, 2015
U.S. companies now have $2.1 trillion overseas to avoid corporate taxes – March 4, 2015
Intel CFO: Obama repatriation tax proposal ‘lipstick on a pig’ – February 4, 2015
U.S. Congress, Obama take Apple CEO Cook’s advice, eye corporate tax changes – February 3, 2015
Obama targets foreign profits with tax proposal, Republicans skeptical – February 2, 2015
Senator Rand Paul finds Democratic partner for tax repatriation holiday – January 30, 2015
Businesses hopeful Republican control of U.S. Congress will break tax-reform gridlock – November 5, 2014


      1. Apple can start by reversing the decline in Mac sales by actually incorporating cutting edge technologies into their machines instead of foisting overpriced vintage tech.

        1. By using old tech, Apple is able to boost profitability which is something Apple needs to do if they don’t sell a large number of computers. In my opinion, I think most consumers don’t need high-end computers but Apple’s top models should have the latest components money can buy. Unfortunately, I know nothing about Apple’s corporate goals, so I’m just flapping my lips. Apple is a highly profitable company and I figure they must know what they’re doing even if I don’t.

          I’ve still got a refurb 2009 iMac (core2duo 3.06) I use daily and it’s quite suitable for 90% of my tasks, so Apple must have figured something out right. I just make sure it’s maintained using Onyx and Disk Warrior and that’s about it. I definitely got my money’s worth.

  1. US corporations are crying out loud for so long about tax reforms. It is time to pushing the law makers changing it or else it will never change for the next centuries. Got to do something about it now.

    1. It’s not just corporations demanding tax reform, tax paying citizens have been demanding the same.

      For an exquisite description of the harm and hazards of excessive taxation and government largesse read the essays of Frederick Bastiat.

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