Tim Cook Happy

  • Apple said that it plans to spend $38 billion in taxes on its overseas holdings.
  • This frees up Apple to bring its $250 billion in overseas cash and securities back to the United States.
  • Analysts are pumped and believe Apple will return a substantial amount of that money to shareholders.

Apple has about $250 billion in overseas cash, and although the company hasn’t said it’s going to bring it home and return it to shareholders, that’s what Wall street analysts heard in yesterday’s big announcement.

Apple made a variety of announcements yesterday, including a new campus and a plan to hire 20,000 employees. But one important number the iPhone giant revealed was seized on by analysts: $38 billion, or the amount of tax Apple will pay on its overseas holdings, implying that it planned to bring all of its overseas money back to the United States.

That makes Wall Street optimistic that Apple could spend a ton on dividends and buybacks. One analyst from Wells Fargo even suggested that Apple could spend $70 billion this year on share buybacks.

Apple usually announces its capital return plans in March.

Here’s what Wall Street is saying about yesterday’s announcement and what it means for Apple shareholders:


Rating: Neutral

Price target: $175

Comment: “Apple will pay $38bn in taxes to repatriate its international cash. Using a 15.5% rate on overseas cash, this implies Apple will repatriate virtually all of its $252bn in overseas cash. We estimate the company generates ~$30bn in overseas cash annually; thus, we do not expect Apple to be short of cash internationally. There was much commentary about jobs and reinvestment; Apple is of course a major and growing contributor to the US economy. In our view, the tone suggests its primary target was not the financial community.”

Piper Jaffray: BULLISH

Rating: Overweight

Price target: $200

Comment: “We Read More Here