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