Apple has announced that it will pass out about $45 billion over three years to shareholders, including some $30 billion of dividends and $10 billion of buybacks. Robert Cyran, however, thinks that number should be looking to more buybacks, with anticipated product launches this year.
“Apple had $98 billion of cash and investments on its books at the end of December. Close to two-thirds is held overseas, and repatriating it to the United States would involve a big tax hit. So Apple is keen to avoid tapping this, preferring to let it grow while it awaits a possible tax holiday,” writes Cyran. “That still leaves $34 billion in the United States. Even this domestic stash probably won’t be touched, despite the new payouts. Apple tends to avoid big acquisitions, and the company has been disciplined with its investments in research, development and the like. And the dividend is set to start only in the three months ending in September, by which time another few quarters of cash will be in the bank.”
If Apple does make $50 billion in free cash flow this fiscal year, a third will be in the U.S., which can easily cover $15 billion a year of dividends and buybacks. Along with this, Apple’s revenue and profit are growing, with the company’s top line increasing 73 percent in the last quarter of 2011 from a year earlier and earnings more than doubling.
“Growth isn’t going to grind to a halt, either. The company’s new iPad went on sale last week and Tim Cook, the chief executive, said on Monday’s call that the result was a record weekend. Other new or refreshed products are expected in the fall,” proposes Cyran. “All that means the near-$100 billion cash pile is still going to grow, not shrink. Not surprisingly, shareholders welcomed Apple’s payout announcement, pushing the company’s market value up by approaching $10 billion. But as the money rolls in, they may soon start asking the big question again: What is Apple really going to do with its cash ”
Source: Reuters
