Apple’s Debt-Funded Repurchases-Buy Or Not?

Analysts have been asking on recent quarterly calls about foreign currency headwinds of Apple Inc. (NASDAQ:AAPL) and their impact on finances of the consumer electronics company.

The market giant has remained a premium brand and has internally transformed into a profit-making machine literally. Apple commands top dollars for its products and the company has its greatest advantage in the form of superior margins. The company benefits hugely because of low per unit costs that let it present competition at virtually any price point it deems fit. And the best part is that the consumer electronics company has no fear of competitors earning enough to put any kind of credible competition for the majority of its business.

Apple’s ownership of Unix-based operating systems and the iPhone’s chip design allow it to preserve margins advantages over competitors who are predominantly dependent on acquiring critical technologies from third parties. The ownership also allows Apple to aromatize fixed development costs across rising global unit sales.

The trend lines in operating margins of top companies truly reveal the picture. BlackBerry (NASDAQ:BBRY) and Nokia (NYSE:NOK) have operating margins less than 1 percent. The 10-year chart shows Apple has not lost its margins advantage and also reveals that the consumer electronics company is way ahead of Microsoft (NASDAQ:MSFT) and Google Corp (NASDAQ:GOOGL).

It was recently announced by Apple that it is adding $50 billion to its share repurchase authorization in addition to increasing its dividend. This was done with an eye on expanding cash return program of the company to $200 billion. Repurchases improve performance for the company’s shareholders as superior per-share metrics and better capital performance are attained.

The share repurchases of Apple Inc. are shareholder-friendly, justified, and will magnify the pre-share result of the company’s gains strategically. The management of Apple has got this one right and there is all reasons for investors of the company to smile with the market giant expanding its market with more store, growing global service business, and entering into strategic relationships.

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