$90 billion in buybacks expected

when apple The company reported its quarterly earnings on Thursday, and the results are expected to be somewhat muted — the company has already instructed investors to drop revenue by 5% due to a significant decline in Mac and iPad sales.

But Apple will still remind investors of its sheer size and market power, as the company uses its second-quarter financial report to tell investors how much the board has allowed it to spend on share buybacks and dividends. It’s another way to tell the world how profitable its business is and how much money it spends each quarter.

Wall Street expects that figure to reach $90 billion, equal to last year’s authorization number, based on a range of analyst reports.

“We think they’re keeping that the same,” Angelo Zeno, an analyst with research firm CFRA, said in an interview.

The iPhone maker has been the buyback king for the past decade. From 2012 to the end of 2022, Apple Inc spend More than $572 billion on stock buybacks, which is more than any other company, according to FactSet data. Since 2013, Apple has announced board authorization levels in its second-quarter earnings report.

It’s second only to Apple in buybacks, and it’s competitive the alphabet, with $178.5 billion in share buybacks over the decade. Google’s parent company just said that its board of directors has authorized a $70 billion buyback for the year.

Analysts at Bank of America Securities said in a note earlier this month that capital returns are the “center” of Thursday’s report. They expect $90 billion in licensing, and Barclays analysts expect the same figure.

But some are wondering how long Apple can maintain this pace. “We expect AAPL to continue working towards being net cash neutral at some point in the future,” Barclays said in its report.

Net cash neutral — a phrase Apple CFO Luca Maestri uses when asked about buybacks — denotes a point at which a company’s cash pile is equal to its debt. At that time, the board of directors can decide to slow down the pace of return on capital.

Apple is currently chipping away at a pile of cash that has ballooned to $269 billion, its highest in the past decade. company He says It now has $165 billion in cash and $111 billion in debt against $54 billion in cash, its lowest position in years.

While investors are ready for a quarter, guidance is a big question mark.

Apple has not provided official guidance since the start of the pandemic in 2020, citing uncertainty. But management has consistently given data points to investors about individual product lines and the company’s overall sales.

Some analysts expect another annual drop in sales for the June quarter.

“We expect the evidence for F3Q to point to another decline (y-o-y); but we expect this to be lower than for F2Q,” Bank of America’s Wamsey Mohan wrote in a note this week.

Analysts, on average, expect Apple’s revenue in the third quarter to increase about 2%, to $84.7 billion, according to Refinitiv.

Even if the outlook is weak, Samik Chatterjee, an analyst at JPMorgan, said Apple could benefit from positioning a “journey to safety.”

“The bottom line may simply be driven by F3Q guidance, as investors may look for guarantees and clarity on the limited downside despite the challenging macroeconomic,” Chatterjee wrote in a note this week. Chatterjee wrote that if its forecast is for an annual decline of less than 5%, Apple could still “triumph” on fundamentals.

After all, Apple sells a large number of devices at high margins, even when there is no growth.

For the second quarter, the company is expected to post $1.43 in earnings per share against $92.97 billion in sales, Refinitiv estimates. That sales number would be a 4.4% year-over-year decrease.

iPhone revenue is expected to decline 3.8% year over year to $48.66 billion, according to a FactSet estimate. Declines are expected in every Apple product line.

– CNBC’s Gabriel Curtis and Michael Blum contributed to this story.

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