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.
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?