The Turning Point For Apple Inc. (AAPL)
We first accounted for Apple’s cash in early 2014, again later in the year, and about a year ago. Last week Apple announced its first decline in iPhone sales since it launched that iconic product in 2007, and first decline in total revenues since 2003. Shares got slammed as many investors exited, and observers question whether the company hit a wall. As Apple announces its second quarter results, we again update our accounting, and suggest a bold move.
AAPL Cash as of 3/26/16: $233 billion, pretty, pretty good.
AAPL Debt as of 3/26/16: $69 billion
Net cash as of 3/26/16: $164 billion, higher than ever.
Operating cash flow generated, last 12 months: $67 billion
Forecast net operating cash flow, next 24 months: How about$120 billion?
Expected net cash as of 3/31/18 before share repurchases and dividends: $284 billion, really?
Original share repurchase authorized: $60 billion, way back in 2012
Share repurchase authorized through 3/31/18: $175 billion,after the just-announced increase
Shares repurchased through 3/31/16: $117 billion
Share repurchase remaining through 3/31/18: $58 billion
Expected dividend next 24 months: $26 billion, or $3 billion per quarter, or $2.40/share for 5.5 billion shares for a 2.5% dividend yield, not terrible but we’d happily take more
Forecast net cash through 3/31/18, after expected share repurchase and dividends: $200 billion exactly, how about that!
Provision for operational expense variability: $64 billion (20% downside variability in $40 billion in quarterly COGS and opex, or $8 billion per quarter, for eight quarters through 3/31/18,without offsetting product price increases)
Net cash remaining for investment, after variability provision:$136 billion
Capex, last 12 months: $11.6 billion, how about $24 billion through 3/31/18?
Interest and dividend income, last 12 months: $3.5 billion, with significant interest rate derivatives that could change that figure, and which implies a 2.1% rate of return, which while good as corporate treasury goes, pales in comparison to what investors could do investing in their own portfolios
Total Apple acquisitions since 1988, including Beats: $6 billion
Amount available for deals or returning to shareholders, after expected capex: $112 billion
Market cap of Volkswagen AG, the largest carmaker in the world, with world-class engineering, manufacturing, and marketing, a compatible design ethic, and a beaten-down stock:$67 billion
Other ways to fulfill a strategic goal using offshore cash and also perhaps double the expected share repurchase for the next two years: not many