Apple’s big repatriation cash winners: Shareholders

“Apple Inc. announced a $38 billion tax windfall for the U.S. government this week, but the biggest beneficiary of the company’s response to tax-system changes will likely be its shareholders, analysts say,” Tripp Mickle reports for The Wall Street Journal. “The tech giant’s plan to bring back to the U.S. most of its $252.3 billion in overseas cash holdings is expected to lead to a large increase in share buybacks and dividends, say analysts, tax experts and investors, and the change in tax law should boost Apple’s bottom line by cutting its effective tax rate.”

“‘They’re getting to unlock something that’s been growing for a long time and that’s a real positive,’ said Trip Miller, money manager at Gullane Capital Partners, a Memphis, Tenn.-based hedge fund that counts Apple among its largest holdings. ‘Now it’s all about what they do with the capital,'” Mickle reports. “Apple finance chief Luca Maestri last year said bringing overseas cash home would give it more flexibility to return money to shareholders, but the company hasn’t offered more detail since.”

“The iPhone maker has been pumping cash to shareholders since fiscal 2012, with $234 billion in share repurchases and dividends, funded by borrowing and the cash its business generates. Last year it said it expects the total to hit $300 billion by March 2019,” Mickle reports. “Loup Ventures, a venture-capital firm specializing in tech research, now expects Apple to announce an increase of between $125 billion and $150 billion in buybacks and dividends through 2020—pushing the total target as high as $450 billion. Loup attributes $88 billion of that increase to the new tax system, pegging $71 billion for buybacks, $12 billion for a one-time special dividend and $5 billion in dividend increase over two years.”

Read more in the full article here.

MacDailyNews Take: Of course, Apple will also smartly continue to invest in their myriad quests to create the next big thing!

20 Comments

  1. ““Apple Inc. announced a $38 billion tax windfall for the U.S. government this week, but the biggest beneficiary of the company’s response to tax-system changes will likely be its shareholders, analysts say,” ”

    Nah, really…..

    Congress passed an $850 billion recovery package after Obama came into office to deal with the GOP recession. So this company, Apple says it will invest $350 billion into the US economy, really.

    1. Wow. Where to start?

      The economic floor was placed before Obama got into office, and well before the so-called ‘recovery package’. And what of that ‘recovery package’ that did absolutely nothing but delay an otherwise dismal recovery? Yeah, the devil is in the details, and fortunately our new administration has righted the economic wrongs of the prior administration.

      Finally, any reasonable person realize that a recession is not necessarily the fault of any one administration or party. They’re typically a result of stupid policy combined with faulty incentives. In this case, the stupid policies were placed long ago, and reinvigorated by the late 90’s Democratic president, followed up by the tone-deaf and greedy liberal congress-folk (Frank and Dodd, anyone). Ironically, the very same incentive base that they preached about (and subsequently reversed position on) was the very greed-pushing spark that swallowed Wall Street. Even Obama was in on the action. Turns out, most of the voices sending warnings were on the GOP side, including McCain and W.

      Nonetheless, Cook is right when he says that the new tax package will boost job creation and the economy.

      1. ” And what of that ‘recovery package’ that did absolutely nothing but delay an otherwise dismal recovery?”

        It prevent the US from going into a recession. But you believe the economy fixed it self. By the time Obama was sworn in the jobs rate had gone from 5% to 7.8% and continued until it reached 10%. It slowly came down to under 5% before Obama left office.

        The dismal recovery was the Tea Party taking control of the House in 2011 and becoming the least effective congress going forward. What was it Mich McConell said of Obama in his first term, the one thing we (GOP) need to do is ensure Obama is a one term president.

      2. “Nonetheless, Cook is right when he says that the new tax package will boost job creation and the economy.”

        The tax cuts to the rich and corporations will create as many jobs as the Bush tax cuts, none. As many as the Bush tax cuts extended by Obama then made some of tax cuts (under $400K) permanent.

  2. “MacDailyNews Take: Of course, Apple will also smartly continue to invest in their myriad quests to create the next big thing!”

    Like the Trash Can Mac Pro?

    Like the iMac Pro? (expensive & non-consumer up-gradable)

    Like the iWatch?

    Like the HomePod?

    1. Like hundreds of millions in executive stock awards.

      Apple doesn’t need tax breaks, they aren’t even using a fraction of the cash the have. The problem is they are stuffing their pockets first, rewarding Wall Street lenders second, and squandering more on entertainment boondoggles. Presumably with the intention of distributing their media rentals on the least impressive streaming settop box on the market, the underwhelming ATV.

      Yet Apple has no ability to update Airports, Time Capsules, Mac mini, the long promised Mac Pro, more capable MacBooks, displays, or new user friendly dongle free hardware. Pathetic.

  3. Stock buybacks are a way to get 10¢ of bang for a $ spent, but Wall Street likes it because of the fees. A Special Dividend is a better way of compensating shareholders and would be nice after paying down debt- Apple carries quite a bit.

    Tim, can we have a real Mac Pro and an updated Mac mini now?

  4. With 5B shares outstanding, $200B is $40 per share (or 22.5% of the current share price.
    So they could buy back 20% of the shares, provide a massive dividend (note share price will drop by the equivalent amount), invest in new tech, companies and infrastructure, pay off its debt (~$100B) or hold the cash and earn interest.
    Of course they are likely to do all of those. Buybacks will reduce dividend cost and allow a higher dividend rate. So my guess they could spend $50B on that alone.

  5. as a AAPL LONG AAPL, I home “management” considers us old fan boys who bough macs (and shares) because stuff just worked!

    Give ya an example I’m typing this on a MacBookPro9,2 (non retina) with two SATA SSD

    slick, thin laptops have their place but give me a laptop that has the ability to be upgraded AND has lots of “local” storage which has an OS that works and is secure from dumb bugs,…

    What to do about Apple’s shameful Mac security flaw in macOS High Sierra

    another thing,… show some interest updating in the iPad mini 4 hardware (in other words the larger iPad mini “screen size” form factor is something I like better than the latest greatest iPhone X)

    1. “but give me a laptop that has the ability to be upgraded”
      You can buy one that can be upgraded NOW… just don’t expect it to come from Apple. Also, I think I read that the mini form factor is likely dead.

    1. Mr Cook announced 20K jobs coming to the US. Did you think related interviews were scheduled for this morning and training to start after the weekend?

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