Investors might soon find out what will Apple do with its mountain of cash

When Apple reports earnings on April 30, AAPL shareholders will be looking for an update on the company’s plan to shift to a zero net cash balance sheet, including what the dividend will be for the next 12 months and how Apple plans execute stock repurchases.

Apple cash. Image: Apple logoEric J. Savitz for Barron’s:

While most of the focus will be on the company’s supply-chain and consumer-demand issues connected with the COVID-19 pandemic, Apple’s plans for its cash pile are no small matter for long-term investors.

Apple finished its fiscal first quarter, ended in December, with about $100 billion in net cash. [Evercore ISI analyst Amit] Daryanani notes that, since announcing its intention to reduce its cash balance two years ago, Apple has returned 135% of free cash flow via a combination of dividends and stock repurchases, reducing net cash by about $50 billion in the process.

The analyst thinks Apple will keep ratcheting down the total over time, reaching zero in four years or so. Keep in mind that Apple’s business continues to generate gobs of cash—Daryanani estimates Apple throws off $60 billion to $70 billion in cash a year.

MacDailyNews Take: Apple’s capital allocation plans – and any potential adjustments due to COVID-19 and its aftermath — will be very, very interesting. Also of interest: just how many shares has Apple repurchased during the COVID-19 panic that saw AAPL briefly trade below $240?


  1. I haven’t seen any major reduction in share count on Yahoo finance since that drop to $240 and I’m rather unhappy about Apple wasting a major opportunity to buy back shares. Apple is not getting much bang for the buck for that mountain of cash and what’s worse is Apple is also carrying a mountain of debt. Both Microsoft and Amazon seem to be doing much more with their cash than Apple is doing or should I say they’re both getting more out of it with their much higher P/Es. Wall Street has far more confidence of growth in Microsoft and Amazon than with Apple. I honestly hope stock buybacks are the way to go for Apple rather than a major acquisition. I think big investors prefer major acquisitions much more than buybacks.

  2. While this doesn’t apply to Apple as much, this stock buyback obsession is getting ridiculous. Instead of having cash on hand, major companies seem to have no money set aside for difficult times. How can that be considered rational or sensible? I do not applaud Apple’s goal of zero net cash balance sheet. Corporate decision-making is being distorted by people who do not have the interest of the company’s viability first, but just about quick profit at the expense of long-term strength. Wall Street opinions should not be the only ones considered.

    1. $100 billion in cash on hand, and that is after buybacks and distributions to greedy investors. How about lowering prices or investing more in U.S. manufacturing? Philanthropy? If you’re acquiring that much cash there’s an imbalance somewhere.

  3. Lots of companies borrowed huge amounts over the last few years during the period of unusually low interest rates. Often these borrowings were used to then pay dividends rather than paying dividends from real profits.

    Whilst there is no imminent indication (unfortunately) that interest rates will rise, many of these companies now loaded with vast debts may go bust because even at these unusually low interest rates if you have no income due to Covid-19 you are still going to struggle to pay back these loans.

    One starts to wonder if Governments have been conspiring to keep interest rates artificially low so they also can borrow vast amounts at cheap rates. Now they need to borrow even larger amounts to deal with an emergency. At some point the amount of debt no matter how cheap the interest rate becomes too much to afford as then even small increases in the interest rate have a disproportionate impact.

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