After this mornings article about the Apple Dividend and Share Repurchase announcement I became curious what the real impact would be on Apple’s cash position on a go forward basis. (i don’t profess to be an expert in these areas, but i do play one)
Well it appears the ultra modern day Gutenberg of Cash doesn’t have a lot to worry about. The quarterly dividend @ $2.65 per share will take approximately $2.5 billion per quarter or approximately $10 billion per year in cash. The share repurchase of $10 billion over 3 years works out to $3.33 billion per year or $ $1.11 billion per quarter. So, for the next 4 quarters or 12 months the cash depletion from Apple stockpile of $100 billion + in cash is roughly $13.3 billion (a rough estimate to be sure, but good enough to make the point below).
Now, we can expect Apple to print/make a tremendous amount of cash over the next year (several for that matter). How much per quarter? Expectations are around $10-$12 billion per quarter average and with the introduction of the new Ipad and Apple TV this quarter, the new iphone next quarter or in following quarter and an extra strong Holiday quarter if the last one is any indication, the number very well may be over $50 billion cash generated in the next 4 quarters.
Once both programs ar going, it’s reasonable to expect that Apple will have $135 billion + cash ( $100 billion (on hand) – $10 billion (dividend) – $3.3 billion (stock repurchase) + $48 billion + (cash generated) ) four quarters from now and upwards and onwards from there.
No wonder analyists, shareholders and Wall Street were beginning to question what Apple plans were for all that chedder. The company has always been consertive in it’s approach to what it does with it’s cash – smartly so. At somepoint however, beyond any raining day planning, downturn worries, possible acquisitions and worst case scenarios they are smart to get out of the money management business and return some to it’s shareholders. We expect there is more to come on this front down the road.
One other note on the $100 billion currently – only roughly $35 billion of it is held in the US with most been outside of the country where it has been earned and taxed. As we can see from the above and using the 1/3 onshore ratio, it’s easy to see how Apple can easily meet it’s obligatoins with the local cash. Can you imagine what they could do in North America with all that cash if they given an incentive or for that matter less of a disincentive to bring it home?