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Apple Buyback Scenario May Soothe Worries Over iPhone X Demand

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Apple ( AAPL ) may deliver a bigger-than-expected stock buyback, thanks to overseas cash brought back into the U.S., which could soothe investor angst over how sales of the iPhone X are doing.

[ibd-display-video id=3070790 width=50 float=left autostart=true] The Trump tax reform package passed by Congress gives U.S. companies the opportunity to bring back overseas cash at a tax rate of 15.5% vs. the earlier 35% rate.

Apple holds the most overseas cash, roughly $250 billion. UBS analyst Steven Milunovich estimates that Apple could have $25 billion more available for repurchasing its own stock after paying taxes on overseas cash.

"Apple clearly is a beneficiary of overseas cash repatriation," Milunovich said in a report. "Including regular free cash flow, we figure there could be $122 billion available over a two-year period (through 2019) or 14% of the market cap while maintaining a net cash position of $90 billion."

The UBS analyst says a buyback "should limit any potential stock downside."

KeyBanc Capital Markets, meanwhile, downgraded Apple chip supplier Cirrus Logic ( CRUS ) to sector-weight, citing a disappointing iPhone upgrade cycle.

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Cirrus Logic dipped 0.3% to 53.72 on the stock market today . Apple was down a fraction to 174.35.

There's been speculation over iPhone supply-chain cuts. The iPhone X went on sale Nov. 3 after production delays, following the iPhone 8's release in late September.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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