Tech Analyst and Industry Vet Suggests $50 Dividend; High-Profile Acquisitions for Apple Cash Hoard (AAPL, DIS, SNE, GOOG, INTC, EZCH)
Numerous news sources have published stories recently detailing Apple’s (AAPL) large stash of cash, as well as providing speculation as to what might be done with the nearly $100 billion the company has on hand. However, that news came as no surprise to Next Inning Technology Research readers, where for more than a year Editor Paul McWilliams, whose Next Inning model portfolio has returned over 300% since inception, has reported on the issue and provided insight into possible scenarios AAPL might consider for the money.
Apple CEO Tim Cook, when talking on February 23 at an annual investor meeting, said the company was in “active discussions” about what to do with the cash, noting the $97.6 billion in Apple’s coffers is “more than we need to run a company.” Publications from Bloomberg, to Fox News, to Motley Fool jumped on the bandwagon fueling speculation of what the future might hold.
In his quarterly State of Tech reports McWilliams has kept readers informed on this issue dating back to April 2011 when he wrote that with its cash and long-term investments “Apple could buy any company it wants,” including such giants as Walt Disney Company (DIS) and Sony (SNE). But he also cautioned that regulators would likely make such an effort more trouble that it would be worth to the company.
In his State of Tech report published on January 23, McWilliams provided an in depth discussion of why a large acquisition would likely be problematic for Apple due to such realities as Apple’s proprietary operating system, a fact that might make it difficult or impossible to integrate technology gained from a high-profile acquisition. McWilliams said that smaller acquisitions would more easily pass regulatory scrutiny and be folded into the Apple ecosystem, but would do little reduce the large cash reserve.
“I think its stash of cash is doing it more harm than good,” McWilliams wrote at the beginning of the year. He suggested paying a one-time divided on the order of $50 per share that would leave the company more than $30 billion in cash on hand, or an ongoing dividend of $12 to $15 per share annually.
McWilliams has been in front of the Apple juggernaut providing a bullish outlook dating back to the introduction of the first iPod and in January 2009 advised Next Inning readers about how certain accounting laws that have since been changed were masking Apple’s true earnings power. Apple was trading for less than $100 then. Nine months later these masked earnings became a hot topic on Wall Street, but by then Apple was already trading for twice the price it was when McWilliams revealed the secret to his readers. Late last year and early this year, McWilliams advised readers that significant gains were still ahead. Since the new year Apple has seen its stock rise from about $400 per share to more than $500 per share. Next Inning free trial subscribers will have immediate access to McWilliams’ comments on where he believes the stock his headed next.
McWilliams’ insight provided to Next Inning readers continually keeps them in front of the curve. Most recently, he broke a story about Google’s (GOOG) application to the FCC to build an “antenna farm” in Iowa and, in a subsequent story, provided evidence that Google has applied to both the states of Kansas and Missouri to deliver IPTV in the Kansas City metro area. Google announced last year it chose Kansas City as a test bed for its new 1Gbs fiber optic broadband deployment, but so far has said nothing about its obvious intent to enter the service provider business.
Finding the hidden secrets of the top tech companies before they are discovered by Wall Street or the mainstream media is what McWilliams does best and it doesn’t stop with Apple and Google. In early 2008 when Intel (INTC) was trading solidly in the mid-$20s, he warned readers it was headed for $12 and when it bottomed there late that year, he explained why Intel was poised to substantially top Wall Street estimates going forward and it was now a stock investors want to buy. It’s not just the big names McWilliams finds early for his readers; at the same time he was suggesting Intel at $12, he explained why tiny EZChip Semiconductor (EZCH) was poised to win big in the network processor space. It has since moved up nearly 500%.
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