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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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