“In a press release about accelerating the company’s U.S. investments Apple announced that it would pay an estimated $38 billion in repatriation taxes on its overseas cash. It is not surprising that the company will be bringing back a lot of the $252.3 billion that it had overseas as of September 2017 since it could be used for operations, acquisitions, dividends or buying back stock,” Chuck Jones writes for Forbes. “When you go through where Apple could spend an estimated net of $207 billion, it will probably be applied to stock buybacks.”
“The key to paying dividends and buying back stock is that U.S. cash has to be used,” Jones writes. “Even if debt is raised in other currencies for these purposes the repayment still has to be with U.S. cash.”
“Since Apple hasn’t shown an inclination for large acquisitions, I believe very little, if any, of the $207 billion will be used for them,” Jones writes. “I believe Apple will increase the dividend by at least 11% and maybe up to 20% but may be reluctant to go much higher even though it could… Stock buybacks is probably where most of it is used.”
Read more in the full article here.
MacDailyNews Take: Yes, we agree. Buybacks also mitigate dilution via RSUs and stock options.
Think buybacks and dividends, not major acquisitions. — MacDailyNews, January 5, 2018
What Apple could buy with all its cash – January 19, 2018
Here’s what Wall Street thinks of Apple’s cash repatriation plan – January 18, 2018
UBS: Buy Apple as company could acquire more than $120 billion of its stock in two years – January 8, 2018
GBH: Apple likely to repatriate $200 billion of its $252 billion foreign cash hoard – January 5, 2018