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Apple Unveils $350B Investment Roadmap, to Pay Record Tax

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Apple (AAPL - Free Report) will pump in $350 billion into the U.S. economy over the next five years, which includes $55 billion for 2018. The iPhone-maker recently announced that it will directly contribute $75 billion in capital expenditures related to manufacturing and tax payment on repatriation of overseas profits.

Apple expects to pay roughly $38 million as repatriation tax (highest by any company) under the new tax law.

Per Bloomberg, Apple will also award Restricted Stock Units (RSUs) worth $2,500 as bonuses to global employees in the coming months.

Apple’s Move In-line With President’s Goal

Apple’s latest announcement is in line with President Trump’s goal of increasing investment in the country’s manufacturing sector. The company has been subject to criticism from Donald Trump for not creating enough manufacturing jobs in the United States and focusing on other nations.

Apple now expects to spend $30 billion in capital expenditure in the country over the next five years. The investment is likely to create 20K jobs. The company employs 84K people in all 50 states.

Moreover, the company plans to build a new campus in a different location that will initially house technical support for customers. The campus will be fully powered by green energy.

Apple Inc. Price and Consensus


Apple Inc. Price and Consensus | Apple Inc. Quote


Apple’s decision to increase investments in the United States was lauded by President Trump through a recent tweet, as reported by MarketWatch.

Advanced Manufacturing Fund Size Increased

Apple also announced that it is widening the size of the Advanced Manufacturing Fund from $1 billion to $5 billion. The fund was established to support innovation among U.S. manufacturers. The company used the fund to support projects from the likes of Gorilla-Glass maker Corning (GLW - Free Report) and Finisar (FNSR - Free Report) .

Apple invested $200 million in Corning to help create better products. Notably, Gorilla Glass, a staple in every smartphone nowadays, was an outcome of the Apple-Corning collaboration.

Moreover, Apple awarded $390 million to Finisar for the production of advanced semiconductor lasers used in iPhone X's True Depth facial recognition camera. The award is also anticipated to create over 500 high skill jobs at Finisar’s newly-acquired factory located in Sherman, TX. The factory is expected to start functioning in the second half of 2018.

Acquisition Appetite to Increase

Per Investor’s Business Daily, Apple plans to bring back cash worth $245 billion out of $252 billion (as of Sep 30, 3017) stacked overseas. The repatriated cash will provide enough firepower to the company to pursue any kind of acquisitions including the long-rumored ones of Netflix and Tesla.

However, according to Piper Jaffray analyst Michael Olson, the company is unlikely to acquire large companies with the repatriated cash. Instead, Apple’s appetite for “smaller strategic technology business” is expected to increase significantly.

Long-time Apple analyst and Loup Ventures managing partner — Gene Munster — expects the company to use the fund primarily to support share buyback program and dividend payments.

Zacks Rank & Key Pick

Currently, Apple has a Zacks Rank #3 (Hold).

Twitter (TWTR - Free Report) with a Zacks Rank #2 (Buy) is a stock worth considering in the broader technology sector. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Long-term earnings growth rate for Twitter is currently pegged at 21.50%. The company is set to report fourth-quarter 2017 results on Feb 8.


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