“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
SEE ALSO:
Why a record $38 billion U.S. tax payment is a good deal for Apple – January 18, 2018
‘We want to help America,’ Apple CEO Tim Cook says of moving foreign money back to the U.S. – January 18, 2018
Apple to build new U.S. campus, pay record $38 billion repatriation tax – January 18, 2018
Apple gives employees $2,500 bonuses after President Trump signed the GOP’s Tax Cuts and Jobs Act – January 17, 2018
Looks like Apple is bringing nearly all of its $250 billion foreign cash back home to America – January 17, 2018
Apple plans to add $350 billion to U.S. economy and create over 20,000 new jobs over next 5 years, pay $38 billion in repatriated taxes, the largest ever made – January 17, 2018
Stock market optimism from pros reaches highest level in nearly 32 years – January 17, 2018
Apple expected to issue less debt in 2018 now that President Trump has signed the Tax Cuts and Jobs Act – January 16, 2018
U.S Treasury: 90% of U.S. workers likely to see more money in take-home pay next month – January 13, 2018
U.S. sees strongest holiday sales since 2010 – January 12, 2018
Dow, S&P 500 and Nasdaq rocket to new all-time records – January 11, 2018
S&P 500 and Nasdaq rise to records on first trading day of 2018 – January 2, 2018
Apple makes Trump-friendly investment in Finisar – December 13, 2017
Apple is backing up iPhone X’s Face ID and AirPods with American jobs – December 13, 2017
How Apple and Finisar are transforming the future of Sherman, Texas – December 13, 2017
Apple awards $390 million to VCSEL-maker Finisar; award will create 500 high-skill jobs at Sherman, Texas facility – December 13, 2017
U.S. employment jumps more than expected in November, boosts U.S. stocks – December 8, 2017
U.S. third-quarter GDP revised to three-year high of 3.3% – November 29, 2017
Goldman Sachs sees U.S. unemployment rate hitting lowest level since the late-1960s – November 20, 2017
American consumer confidence soars to highest level since December 2000 – October 31, 2017
U.S. jobless claims plunge to lowest level since 1973 – October 19, 2017
U.S. economy picks up steam; second-quarter GDP up 3.0% reflecting robust consumer spending and strong business investment – August 30, 2017
U.S. consumer confidence shows Americans upbeat on jobs, economy – July 25, 2017
Corning shares boosted by Apple’s $200 million investment – May 15, 2017
Apple’s billion-dollar advanced manufacturing investment is a blueprint for U.S. job growth – May 4, 2017
Apple to invest $1 billion to promote manufacturing jobs in the U.S. – May 4, 2017
Apple’s top manufacturing partner to meet with U.S. President Trump today – April 27, 2017
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.
The way a company “dumps” investors (also known as owners) is to buy them out. That’s what share repurchases do.
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.
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.
Well, Apple could stop selling shares, right? So the same criticism applies to its continual sales of shares.
Dear John,
Please stick to being an “artist”.
The End
The world needs artists.
Making art is my core being, but I also make fundamentally insightful comments.
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.
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.