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Apple Aims to Reduce Net Cash Balance to “Approximately Zero”

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According to a new report from the Financial Times, Apple is looking to reduce its net cash balance to “approximately zero” over time.

Apple’s CFO Luca Maestri said that, thanks to a new US law, this will allow the company to repatriate its overseas profits at a lower tax rate.

In an earnings conference call on Thursday, Maestri said Apple is looking to shrink its cash balance, which currently stands at $285 billion or $163 billion excluding debt, down to almost nothing. He said:

“We have now the flexibility to deploy this capital,” Maestri said, adding that the process will be completed “over time because that amount is very large.”

The move means that shareholders might see a significant increase in dividend payouts or share buybacks. The other possibility is that Apple uses that cash for acquisitions. Maestri was very vague when asked what Apple plans to do with the $163 billion, saying that Apple intends to “make the best decisions in the interest of our long term shareholders.”

Last month, Apple announced plans to bring $350 billion into the U.S. over the next five years. As a result, the company is expecting to pay $38 billion in taxes.

During today’s conference call, CEO Tim Cook noted the allocation will bring cash and debt in equilibrium. Cook said:

“What Luca’s saying is not cash equals zero, he’s saying there’s an equal amount of cash and debt.”

Maestri said a more detailed overview of Apple’s cash plans would be unveiled when the company reports next quarterly results.

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  • Bring Back Steve

    At the rate they’ve been screwing up they’ll be broke by sundown.

  • Spittt

    Mr. Warren Buffet begs to disagree with your investment advice

  • Cornfed710

    Like when the sun actually burns out?

  • Geoffrey Spencer

    Most likely they will make a major acquisition. Netflix? Amazon? Disney/ABC?

  • Decodering

    I think Apple is an honourable company in many ways, but their offshoring of profits is really a blemish on their reputation. ““We have now the flexibility to deploy this capital,” Maestri said…” They always had the flexibility to deploy the capital, they just chose not to in order to avoid paying taxes.

    Yes, I know, Apple is just playing by the rules of “the system.” But to pass it off as anything other than having made a choice in their practices is disingenuous.

  • Mr Dog

    Would you be ok paying another 40% of taxes on your already taxed income?

  • Taylor

    The other thing as well is if Apple had taken a 40% hit on their cash pile their stock holders would of had a meltdown. It’s also wall street that is blame for these companies holding their cash overseas.

  • Taylor

    if they bought Disney life would get scary quickly. I think Netflix is a possibility though.

  • Taylor

    They just posted 88billion dollars in one quarter…. I think they’re fine.

  • Geoffrey Spencer

    Why would Apple buying Disney get scary? Disney wants to set up its own streaming service and Apple has some experience in this. I also thought Disney would buy Netflix since they have (or had) streaming agreements. What if Apple bought both Disney AND Netflix?

  • Decodering

    I’d be okay with being appropriately taxed on my earnings, which I am.

    I don’t think anyone should be okay with the current system of tax havens being part of business as usual. Companies benefit greatly from government investments and thus have an obligation to contribute appropriately. If nothing else, it should be seen as self-preservation to maintain good infrastructure and a social and legal environment that fosters the very conditions that made their existence possible in the first place.

    But back to the original comment, Apple saying that all of the sudden they have flexibility, that seems misleading to me.

  • Mr Dog

    ‘appropriately taxed’ that is the thing. A lot of the US companies did not feel like their foreign profits were being taxed fairly.

    And that tells you something when almost all big companies resorted to these tactics. And with the new tax laws are going to start bringing the money back now.

    They always paid what they owned in sales in the US. The fact that the corporate tax changes are not for a short period also tells us that the new corporate tax laws are sustainable.

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