Analysts at RBC Capital Markets point out one very important thing in the debate over whether Apple Inc. (AAPL) should return some of its extra cash to shareholders. Most of that cash is overseas, and repatriating it all would cost Apple some hefty taxes.
Apple Inc. (NASDAQ:AAPL)’s big pile of cash has been the topic of debate for several days now, and it will likely continue to be at least until the shareholder meeting later this month. David Einhorn even sued Apple Inc. (NASDAQ:AAPL) over its cash hoard, claiming that the company should let its investors have some of that capital back.
But one thing not too many people are taking into account is the fact that although Apple Inc. (NASDAQ:AAPL) does have $137 billion in cash and investments, about 70 percent of that is held overseas. Bringing that kind of money back into the U.S. so that it could be distributed to shareholders is much more complicated than a simple wire transfer.
Analysts at RBC Capital Markets believe Apple would have to shell out $33 billion to bring its cash balance back into the U.S. because of repatriation taxes. They believe if Apple Inc. (NASDAQ:AAPL) does repatriate all of that cash, it would be a negative for the company, simply because of the extensive charge it would have to take in order to bring the money home.
Nonetheless, Apple Inc. (NASDAQ:AAPL) does have about $43 billion in cash here in the U.S. already, and when you add another $45 billion in free cash flow, there’s still plenty of room for Apple to give some money back to its investors.
RBC Capital analysts believe that if Apple Inc. (NASDAQ:AAPL) does make any changes to its capital allocation policy, that won’t happen until March. Last year the company announced their dividend and plan for buying back stock on March 19.
Analysts at RBC Capital have maintained their Outperform rating and $600 price target on shares of Apple Inc. (NASDAQ:AAPL). The stock was up almost 2 percent in Friday afternoon trading.