Apple plans to impress investors on its earnings call next week with an announcement to increase its stock buyback to return more cash to shareholders, according to Bernstein Research analyst Toni Sacconagh.
Sacconagh believes Apple will add $30 billion to its current stock repurchase plan, where it has already said $60 billion will be repurchased by the end of 2015.
“We expect Apple to announce a decision on incremental cash returns on its earnings call,” Sacconaghi said in a research report on Wednesday. “We believe that many (particularly value-oriented) shareholders are looking for Apple to provide a framework and commitment for capital return, such as a minimum percentage of ongoing free cash flow that would be returned to shareholders.”
Apple originally set-forth with its $60 billion plan in April 2013, increasing it from the $10 billion level announced in 2012. Sacconaghi estimated in his research that Apple is moving along quickly with its buyback plans, having already bought back $45 billion to $50 billion of that total.
Apple has been under great pressure from investors as of late to increase the amount of cash it returns to shareholders. Most notably, activist investor Carl Icahn called for Apple to initiate a $150 billion buyback program of its stock. At the end of 2013, Apple had roughly $159 billion in cash and securities.
“If Apple does not raise the authorization, it would imply (about) $2 billion of repurchases per quarter vs. an average of nearly $8 billion per quarter over the past six quarters,” Sacconagh said. “If Apple adds $30 billion to its current repurchase authorization, it would imply (about) $6 billion per quarter over the next seven quarters.”
“We’re a big believer in buying back the stock,” Tim Cook, CEO of Apple, said on the company’s latest quarterly earnings conference call in January.
Apple reports its fiscal second quarter earnings on April 23, where Sacconagh believes Apple will also announce the increased buyback. iDownloadBlog will be bringing you the latest.