UBS: How Apple could get to zero net cash

“Apple Inc. has an enormous pile of cash — about $163 billion, to be exact. So how will the tech giant follow through on plans to get that $163 billion down to zero?” Kinsey Grant reports for TheStreet. “‘We think Apple leans toward buybacks with the potential to increase the dividend yield closer to other large technology companies,’ said UBS analysts in a February 14 note. The fastest means of getting cash to zero would be aggressive buybacks, while another slower option would be doubling the buyback program and increasing the dividend yield.”

“According to analysts, the most likely scenario is that Apple reduces its share count by 7% per year for the next six years and boosts its dividend yield to 3%, achieving net zero cash by fiscal 2023,” Grant reports. “Should such an ‘accelerated’ share buyback program be announced, Apple will likely enact further upward revisions to earnings estimates.”

“Apple, an Actions Alerts Plus portfolio holding, has historically accounted for between 1% and 4% of the stock’s daily trading volume,” Grant reports. “‘We assume Apple could reach a maximum of 5% of daily trading volume without impacting the price, if it intends to aggressively buy back stock,’ UBS said.”

Read more in the full article here.

MacDailyNews Take: Aggressive, accelerated buybacks with repatriated overseas profits would be good news for AAPL shareholders.

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

SEE ALSO:
What Apple will likely do with their repatriated $207 billion – January 22, 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

11 Comments

  1. Toni Sacconaghi of Bernstein (well known Apple/Cook hater) downgraded AAPL to $161 on 2/2/18 based on BS rumors from Asia, some people are so married to their narrow views, he is an angry analyst unable to forecast the big picture.

    1. only wall street and the big banks want that, …..well…. also ceo’s and boards of directors foolish enough to fall under the sway of those entities.

      no doubt goldman sachs and others want to be in the position of apple needing loans from them to finance their future operations, as many american corporations already do.

      dumb move.

      as i recall st. steven of jobs always believed in building and maintaining a big, healthy bank account to weather the hard times that inevitably come around, and around, and around over time.

      the potential depletion of apples grubstake would be a huge mistake.

  2. This news is just in guys, Warren Buffet upped his stake in AAPL to 165,333,962 shares from 31.2 shares. AAPL is higher after hours $168.43. $163 Billions buybacks that is a HUGE piles of money. Very soon AAPL hits $185 to $200 a share.

  3. stripping out cash may be cute for the shareholders, but it also cuts Apple’s ability to maintain operations in another recession or actual depression. The way the lower income Apple customers have been treated by deadbeat Donald a recession is a high probability and Apple is going to need that cash.

  4. I’d prefer a larger yearly dividend increase if Apple can’t find a way to boost revenue through M&A. I sure wish Apple could find a way to increase its P/E like all the other major tech stocks are able to do. It’s just crazy how Apple’s P/E continues to compress while other tech stock’s P/Es are expanding.

    Is Apple the only major tech company stuck at zero growth or investors simply don’t like the way Tim Cook is running the company? Most big investors seem to have no confidence in Tim Cook or Apple.

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