Apple expected to announce $141 billion investor bonanza

Apple is expected to announce a US$100 billion shareholder bonanza this week. Picture / AP

Apple is expected to announce a US$100 billion ($141b) shareholder bonanza this week as it starts spending the hundreds of billions of dollars the tech Goliath has brought back to America from overseas.

Wall Street is braced for the iPhone maker to announce plans to return tens of billions of dollars to investors in dividends and share buybacks when it reports its latest sales.

The monster capital return programme is likely to smooth over signs of slowing iPhone growth.

In January, Apple announced plans to repatriate much of its US$250b overseas cash pile following Trump Administration tax cuts for US companies bringing home cash earned overseas.

While some analysts have speculated the sum could be used for a blockbuster acquisition, with Tesla, Netflix and Disney touted as candidates, the firm has downplayed the chances of a mega deal and investors are now salivating at the prospect of a huge increase in shareholder returns.

Apple, already the world's most generous dividend payer, has announced a US$50b increase in its ongoing capital return programme for each of the last three years, but analysts say this could double to as much as US$100b.

In January, Apple said it would pay US$38b in US taxes to repatriate funds, suggesting it is returning almost all of its US$252b overseas holdings. The swelling cash pile has attracted the attention of the European Commission, which accuses Apple of avoiding billions of euros of taxes as it waits for an opening to send the money to the US.

Filling shareholders' pockets may help to soften a slowdown in iPhone sales amid uncertain demand for its current crop of models.

Apple is likely to reveal that consumers bought more than 50 million iPhones in the first three months of the year, a significant improvement on a year ago.

However, all eyes are on the company's forecasts for the following quarter, during which iPhone sales are tipped to fall. Shares have fallen in recent days as suppliers have reported a dip in component sales.

Stuttering smartphone sales in China, one of Apple's most important markets, are also likely to inhibit growth. Apple relies on the iPhone for more than two thirds of its revenue. The tech giant overhauled its roster last September, releasing the iPhone 8 and iPhone X models.

Analysts once predicted the refresh would lead to a "super cycle" that would drive the company's valuation past US$1 trillion, but have since tempered their expectations.

Daniel Ives, a technology analyst at GBH Insights, said Wall Street had gone into "full panic mode" ahead of this week's results after Asian suppliers reported disappointing numbers.

Taiwan Semiconductor, a chipmaker that supplies iPhone processors, pointed to "weak demand from our mobile sector" and Samsung said demand for displays had been below expectations.