Apple reports on Tuesday, May 1st. Here’s what

Apple reports on Tuesday, May 1st. Here’s what we expect:

Here are 3 key topics, in order of importance:

Other, less important topics:

Repatriation impact. In January, Apple announced that they’re paying $38B in repatriation taxes, which implies they’re bringing $215B back to the U.S. If there was no tax holiday Apple would have paid about $80B in repatriation taxes, compared to the $38B they are actually paying. At the same time, Apple announced $30B in capex investment over the next 5 years, including a new Apple campus for technical support.

What to expect from capital return update. On the Mar-18 earnings report, we expect Apple to increase its buyback over the next 3 years by about $70B. We also believe Apple will announce a one-time cash dividend of $12B. Lastly, we anticipate a 15% annual dividend increase that will cost Apple about $10B over a 4 year period. We believe most of this is already priced into AAPL shares. As a point of reference, last year Apple added $35B to its buyback plan and increased its dividend by 10%.

Two negative data points from supply chain. As mentioned, we expect Apple to guide 3% below the Street for Jun-18. This is based on negative comments from two Apple suppliers, TSMC and AMS. That said, negative supplier comments are nothing new to the Apple story. Our level of concern jumps if three suppliers give a cautionary outlook and, to date, only 2 have given warnings:

Disclaimer: We actively write about the themes in which we invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we will write about companies that are in our portfolio.  Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.