Cantor Fitzgerald analyst Brian J. White comments on the recent news that Apple’s CFO is retiring, noting that the announcement does not come as a shock to those who follow the industry.
This morning, Apple Inc. (NASDAQ:AAPL) announced that Peter Oppenheimer (CFO, SVP) will retire from the company at the end of September and Luca Maestri (VP of Finance and corporate controller) will take over the CFO role in June. Despite retiring at a relatively young age (~51), Mr. Oppenheimer has spent 18 years at Apple (a decade in the CFO role) during a period of rapid growth for the company, major new product category launches, and significant wealth creation for employees (and investors). For all of these reasons, we are not surprised by today’s announcement
A period of rapid growth, strong FCF, and big shareholder returns
During Peter Oppenheimer’s reign as CFO, Apple Inc. (NASDAQ:AAPL)’s stock rose by approximately 3,660%, sales grew by 40% per annum to $171 billion in FY:13, and EPS increased by 68% per year. Also, the company’s free cash flow grew from less than $800 million per year to over $45 billion in FY:13, resulting in aggregate free cash flow of nearly $165 billion (or $200 billion if we include our FY:14 estimates) during his CFO tenure. Finally, Apple also instituted a major share repurchase program and a healthy cash dividend payment under his watch. In our view, Mr. Oppenheimer will be missed by Apple and the investment community.
Apple new CFO is no Surprise, either
In June, Apple Inc. (NASDAQ:AAPL)’s vice president of Finance and corporate controller, Luca Maestri, will begin to take over the CFO role. In our view, his hiring by Apple Inc. (NASDAQ:AAPL) a year ago was a clear sign to us that he was to be Mr. Oppenheimer’s successor. Mr. Maestri joined Apple in March 2013 and has spent 25 years in senior financial management positions. He has a reputation for being shareholder friendly. Before Apple, Mr. Maestri held CFO positions at Xerox and Nokia Siemens Networks.
Valuation
Cantor’s $777 price target is based on nearly 13x firm’s CY:15 pro forma EPS estimate (adjusted for interest income/expense), plus Apple Inc. (NASDAQ:AAPL)’s net cash per share of $157.39.
