Apple stuck. Only 43B in USA. 2x dividend and it's gone in 3 to 4 years
Apple knows it is stuck because cash is only 43B in the USA. If they want to double the dividend it will deplete 10B to 12B of this per year. This means in about 3 to 4 years they will not have any US based cash left.
Forced to bring home overseas cash they take a 35% hit on it which they won't do. They don't want to take on debt and lose another 1% to 3% on the net income due to interest payments just to pay whining shareholders.
Even if they brought home the 93B overseas it gets slashed to about 60B. At 20/yr dividend (4%) they would chew through this in just a few years.
Apple is in a no win situation now that earnings have stalled to 0% YOY. Now just a value stock that is stuck paying a sub value dividend that they cannot raise enough without ripping through cash. Unless repatriation tax laws change apple is in big trouble when it come to unlocking any value. Overseas cash is basically in an untouchable vault which it will remain in until maybe someday they need it to pay the bills if cash starts burning.
Einhorn won't get anything from Apple. They may split the proposal but it ends there. Apple knows it is in a corner and cannot double the dividend, take on huge debt or do a mass buyback. If they do the cash they hoard and so fear losing will get to uncomfortable levels for them.
Complain? I made 250% on apple long stock. 1000% plus on apple options. Not sure I have much to complain about. Apple served its purpose. The brightest days are in the past. Not such bright days ahead under Cook. If you have not literally listened to the conference call this past quarter you should.
Could you please shut up until the funds sold all theier shares? They are sitting on huge losses and couldn't even beat S&P with Apple in theier portfolio. Einhorn and other fund managers need to bail out. Then you can post alll the truth about Apple's cash and declining revenues and profits, ok?
They won't take a 35% hit on overseas cash. Read up on GAAP. (Generally Accepted Accounting Principles). They've accrued the tax liabilities to the tune of $15.7B. The cash overseas has already been taxed by the foreign Country, (albeit, much lower) and will be used as a tax credit against the 35% US tax. The $15.7B accrued is more than enough to cover the overseas cash should they bring it back to the US.
You are not entirely right here. Yes they can take a foreign tax credit. However only to the extent they paid taxes overseas. Thanks to the double dutch irish sandwich tax trick they only paid 2% overseas. That means 33% tax hit if they bring it over.
Yes when they report EPS it is GAAP accounted for BUT that does not change what cash is in the bank. I look at cash in the bank and cash flow which is what they would use to pay dividend or do buyback. So if they want to bring that money back they lose 1/3 of the actual cash. Yes it won't change reported EPS but the real dollars in the bank are slashed. My post above stands. Do your research if you do not believe or understand me. You must know what your are buying