Information distortion
I was reading a street.com article on 2014 predictions, one of which concerned prediction of an Apple increase to its capital allocation program. There was a quote attributed to Peter Oppenheimer from the last earnings call on 10/28.
Here it is:
CFO Peter Oppenheimer has previously said Apple's domestic cash is likely to decline, and has stopped accumulating. "Finally, given that our capital return program must be funded from domestic cash, and as a result of our payments to date, the cash that we can net domestically and return to shareholders has stopped accumulating," Oppenheimer said on Apple's most recent earnings call.
thestreet.com
Taken at face value, the language, as reported, could be interpreted reasonably to mean Oppenheimer was suggesting that growth of free cash flow in the US is done based on current levels of dividends and share repurchase.
I took a look at the transcript and this is what was transcribed:
Finally, given that our capital return program must be funded from domestic cash, and as a result of our payments to-date, the cash that we can invest domestically and return to shareholders to stop accumulating. In fact, we have returned to shareholders or invested essentially all of the increase in available net cash generated since the beginning of our capital return program in 2012.
morningstar.com
The difference may be subtle but there are two differences in what was transcribed and what was reported. First, what was transcribed does not suggest that the current capital allocation levels will exhaust domestic free cash flow in the future. Second, current domestic free cash was completely used but it was used for both capital allocation and investments.
The take away from the reported version is that Apple could be saying that domestic growth has hit a wall. Immediately the bear arguments about market saturation, lack of innovation and growth problems enter stage right.
There are so many bearish arguments out there, express and implied. My impression is that is influencing more investors than some might imagine. |
