Apple’s repatriation and share buyback could Trump all

“Apple, one of our long-term holdings, will no doubt be affected by President-elect Trump’s stance on corporate taxation, immigration and global trade,” Open Square Capital writes for Seeking Alpha. “Let’s focus today on corporate taxation, given that his campaign has already provided some high-level details of what it wants to achieve.”

“While details of the President-elect’s tax policies are still being crafted, we do know that they propose to reduce corporate taxes from 35% to 15%. His proposals also call for a 10% deemed repatriation tax. This is fairly close to House Republican proposals, which include decreasing corporate taxes from 35% to 20% and full taxation of all previously deferred income over a period of time at a high-single digit tax rate,” Open Square Capital writes. “The chance for major tax reform next year is high given the Republican controlled Congress.”

“If the President-elect’s plan were to be enacted we’ll very likely see Apple repatriate a substantial amount of its offshore cash,” Open Square Capital writes. “Flushed with $176.4B of additional US cash, we don’t think Apple will increase its dividend or pay out a one-time dividend; the former would unnecessarily constrain future cash management and the latter is tax inefficient… Consequently, we think Apple will likely fund a large share buyback… We think the company could retain $50B in the US and declare a buyback of $125B… Shortly after the share buyback is announced we believe the share price will trade 20% higher…”

Much more in the full article here.

MacDailyNews Take: Another $125 billion in buybacks would be seismic.

Again, let’s not do another “one-time-only” repatriation holiday. Let’s fix the broken U.S. corporate tax code instead. Let us eschew the easy way out, that fixes nothing in the long run, and choose to do the hard work instead (for a change). — MacDailyNews, September 2, 2016

SEE ALSO:
Morgan Stanley: Apple stands to benefit the most from President Trump’s corporate tax plans – November 11, 2016
Apple and U.S. President-elect Trump: Can a tax cut for overseas cash heal wounds? – November 10, 2016
Apple could be able to pay just 10% tax to repatriate overseas profits under President Trump’s plan – November 9, 2016

29 Comments

  1. DJT: So here you go, Tim. You can bring in all that cash but I’m going to start a trade war with your largest market so you may never sell another iPhone there again. Oh, and by the way, I’m going to force you to build your phones in the US so the price will be ⅓ higher.

    1. Relax pal. Reality check, his is the President, and if you continue to live here, he is YOUR PRESIDENT. Of course if you leave the country, then you can wear that sign around your neck.

      America is hard, progress isn’t going to come easily, quit complaining and get to work working together to move forward.

      PS, Notice to everyone, Life isn’t fair. Never promised to be. Donald Trump carried a lot of states because life is a lot harder today. Many in those areas of the country he carried have fallen behind economically, and that’s whats propelled him to the Presidency. Doesn’t have a damn thing to do about skin color for the majority of folks who voted for him.

        1. Here is an inconvenient truth:
          A good number of Obama voters voted trump.

          Why didn’t they vote for a “third Obama term”?

          If only I had the answer…

          Hate trumps love my precious ❄️.

          Stay angry my friend!

          1. Two words “Term Limit”. The 22nd amendment, passed by Congress in 1947 and ratified by the States in 1951, limits the President to 2 terms (8 years) total. Only one US President has ever held office for more than 2 terms.

    2. Don’t know where you are from Chris, but with no sadness for us, stay there. While you are at it, stop drinking the foreign press kool-aid. You have probably spent most of the last decade (assuming you are older than 10) ripping the USA for every variety of imagined offense and if Trump’s campaign bluster is all you have to rant about you should consider setting the pie hole.

      BTW, you are absolutely right he isn’t your President. Also, autistic is capitalized unless you are beginning a sentence with it.

  2. This repatriation, if it happens, will do absolutely nothing to help US biggest issues regarding economic growth. Apple will hire no more people, will build no more plants, etc. as a result of this. If they ever build product in the US in any volume the number of people involved will be a fraction of what are used in China. And the people required to maintain the robots making the product will certainly not come from coal country of Pennsylvania or Virginia or Kentucky. This is all a sham at best.

  3. I’m afraid drumpf’s last 3 cabinet picks won’t be skilled enough or focussed enough to protect our tech industry from the existential threats from russia, china and india. Next, I am afraid their education pick won’t produce the writing, math and science candidates we need to hire… flat-earthers don’t build the future – they will stagnate the US.

  4. And if Hillary was elected nothing would be getting done like the last 8 years! Trump wants to bring jobs back to America and rebuild America as the U.S. is falling apart. All you liberals are so brainwashed by the media that it’s sad!

    1. Us “liberals” aren’t as brainwashed as you conservatives who actually think any of this will come to past. Jobs are overseas for one reason: Cheap Labor. And cheap labor makes the cost of those items cheap. There are only 2 ways those jobs can come back to the US. 1. Pay US works as little as Chinese workers are paid, and of course, that won’t include any kind of health care or retirement plans… or 2. Make the cost of everything produced here at least 50% higher in cost. And if you think #2 is an option, when everything costs 50% more, will you be getting a 50% raise ? All I can say is Dream On, as you are deluded and the wool has been pulled over your eyes.

      1. Well said … and to the voices which are now talking about robotic automation – – just how, pray tell, is that going to not make things with domestic collar employment even worse?

        Case in point – – there’s a belief that robots will spur jobs because someone has to build those robots … but who says that USA will get that work and not China?

        Similarly, there’s a belief that robots will spur jobs because someone has to maintain those robots (which offsetted hands-on assembly jobs) … but who says that those robots (even if they were manufactured in the USA) are going to stay in the USA and not be shipped to a manufacturing line in China? Where they’ll have Chinese maintainers.

        And so on.

        Unfortunately, we’re 30-50 years too late in having a set of rational import/export tariffs based on metrics such as relative pollution controls.

        As such, regardless of what Politicians may promise, the middle classes’ job crunch is going to continue to get worse – – and it will also spread to white collar “knowledge workers” as AI gets better.

        1. This assumes centralized manufacturing. If with the rise of affordable 3D printers manufacturing becomes highly distributed there would far less need for warehouses and large factories. The power shift to the ‘DNA (modeling files)’ owners would be high. The next ‘revolution’ I see would have to do with sustainable small communities that can produce their own power/food/material needs with the help of technology reducing large population centers that cause all kinds of other economic/social/ecological problems.

          1. > This assumes centralized manufacturing.

            Really? I don’t see any particular reason why it should: one can just as readily have a hundred small plants of one robotic assembly line each as a single plant with a hundred robots.

            Point being that either way, there’s a reduced demand for the human workers.

            Ditto for AI supplanting/replacing knowledge workers. The internet is already pretty ubiquitous, so there’s no reason why the AI’s server has to be geo-located anywhere near the customer of that product…

            -hh

            1. Sorry, I guess what I meant wasn’t clear. My point was that manufacturing jobs would no longer have to be outsourced to another country like China let alone somewhere too remote from where the product will be used.

            2. Ah, I see what you mean … but its a moot point, because even if the manufacturing stays in the USA .. its a job for a robot, not a bunch of humans.

              And the financial analysis which will need to be sorted out is if the difference in costs in running that robot domestically are cheaper after the reduction in transportation costs are considered in the mix. Maybe, or maybe not.

              Given how cheap shipping has gotten, I’d not be too optimistic about that one.

  5. I didn’t vote for Trump or Hillary. But, it’s clear that for the last 70 years the US has been giving away economic advantages to achieve global strategies, many not in the interest of the US, but in the interest of our Allies, or to the detriment of some other entity.

    Most of our IP has been stolen, or in the case of China / India, simply handed over to get access to their markets. Therefore, we’re not so far ahead of the rest of the world anymore economically or technologically, and thus cannot continue trade deals as they have been crafted over the last 70 years. I think the US voter understands this and Trump does as well.

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