Here’s what Wall Street thinks of Apple’s cash repatriation plan

“Returning its overseas cash could net Apple Inc. $207 billion after taxes, according to an estimate from RBC analyst Amit Daryanani,” Jeran Wittenstein and Beth Mellor report for Bloomberg. “That’s more than the market values of Cisco Systems Inc. and Citigroup Inc.”

“While analysts expect most of the cash to be returned to shareholders in the form of share repurchases and dividends, Loup Ventures’ Gene Munster said that small acquisitions are possible too,” Wittenstein and Mellor report. “Some firms also highlighted the political nature of Apple’s announcement.”

Loup Ventures, Gene Munster: Apple’s cash will primarily be used for share repurchases rather than a large acquisition over $5 billion.

BTIG, Walter Piecyk: Apple’s primary goal was to “emphasize the $350 billion it was ‘contributing’ to the United States over the next five years while effectively announcing that it will fully take advantage of a tax cut that will save it nearly $50 billion of taxes.” “This all makes for good politics but we are more interested in whether Apple is actually increasing their overall investment rate.”

More analysts’ reactions in the full article here.

MacDailyNews Take: Yup.

Think buybacks and dividends, not major acquisitions.MacDailyNews, January 5, 2018

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  1. Apple does not need to bribe investors with dividends to remain investors now that Apple no longer needs investors. Remember the original reason for wanting investors: to provide working capital to run and expand the company. Dump the investors; They are bloodsuckers.

      1. And a very successful company can’t ever dump all the investors by taking the company private. When they are doing well, the company is worth a lot of money. As you buy back shares, the remaining public shares become more and more valuable, and the shareholders hold out for higher and higher prices. Companies only go private when the future looks bad and shareholders are willing to get out for a reasonable premium over the current share prices. The exercise also typically uses all the available cash on the balance sheet with loads of new debt put in place for working capital going forward.

        1. It can certainly stop selling shares for the same reason I offered. And Apple seems to have more than enough available cash on the balance sheet to finance all of its expenses, right? So Apple does not need to go private (thanks fo this insight) to simply abort its sales of stocks.

  2. I can think nothing dumber than to invest this cash into buybacks when the shares are the most expensive ever.

    It should also vie obvious that the current dividend rates are sufficient to continue drive the share price up. Why screw around with that?

    Forget those two waste of once only fund boost and look for what should be important long term.

    The first and most important step is to set up long term CASH protection. We cannot guarantee that our current economic conditions will continue to be sound. Last time we had a Republican in the White House who delivered big tax cuts we ended up with The Great Recession. Cash is king in that situation – for both survivability and for picking up companies and/or technologies very cheaply.

    Another important effort would be to invest in companies that have daily cash flows on a long term basis. Grocery stores are boring businesses, but their customers are spending money there every day.

    Looking at new markets is an odd option IF Apple stays with what they know. These days that includes solar power generations. Apple has invested a Billion Dollars multiple times in solar and could do a very good job moving into that market – especially if they stays in the consumer markets. They can bring the packages together, using their financial strength and reputation to offer successful programs that will deliver a steady stream of cash incomes.

  3. Share repurchases are not a once-only boost. The point is not to raise the price by the purchase itself – it reduces the number of shares, which in turn increases the earnings per share.

    Since inaugurating significant buybacks, earnings per share have increased more than twice as fast as overall profit.

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