Apple’s chief financial officer, Luca Maestri, said during the last earnings call that Apple will eventually hold equal debt and cash on its balance sheet. Suppose the company aims to get there over three years. It should generate some $165 billion of free cash flow, after capital expenditures, over the rest of the year to September 2018 and the following two fiscal years, according to estimates compiled by Thomson Reuters.
At the $50 billion pace of buybacks and dividends seen last year, the company would shell out about $135 billion more to investors over the same period. Assume a minimal $5 billion for M&A, given Apple is famously averse to big deals – the biggest it has ever done is $3 billion for Beats in 2014. Add $14 billion of tax installments. Sum it all up, and the company would still increase its cash pile by more than $10 billion, boosting net cash above $170 billion – and that’s assuming no debt repayment.
Apple needed less than $30 billion tied up in working capital at the end of 2017. That means increasing buybacks or dividends by $50 billion in each of the next three years is feasible, in theory. Debt markets are always an option, too. Investors, waiting to hear Apple’s plans when it reports earnings on Tuesday, may be in for a flood of cash.
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