As predicted, the bulk of its repatriated billions will go to buybacks and dividends.
From a note by Loup Ventures’ Gene Munster posted Thursday:
We … anticipate Apple will increase its share buyback by $69B, which will be added to the $166B that Apple has already spent on share repurchases from Jun-12 to Sep-17. Additionally, we expect Apple will increase its annual dividend by 15%, higher than the 10% increase they announced in April of both 2017 and 2016. We believe Apple will maintain its debt level at the $104B. In theory this will leave Apple with about $150B in cash, but in practice it won’t get that low (more on that below). We look for this to be announced in April 2018, when Apple reports its Mar-18 quarter.
About the cash that remains: It’s unrealistic to assume that Apple will reduce its cash balance from $269B to $150B. Keep in mind our $150B cash estimate reflects the total cost of the buyback and dividend. In practice, the cost of those two programs will be spread out over 3-4 years, and Apple will continue to generate cash during that time. To give a sense of Apple’s current cash generation, the company generated $31B in cash from Sep-16 to Sep-17. If we assume $30B in annual cash generation for the next 4 years implies a 2022 cash ending balance of $270B, unchanged from the $269B today.
Unchanged in Muster’s scenario: Apple’s appetite for acquisitions and its global headcount.
My take: Munster sounds like he knows what he’s talking about. Of course, he’s been wrong before.