Greenlight Company Presentation
iPrefs Would Be Very Safe, Even at This Scale
o Apple would still keep its $137 billion of cash
o Dividend payout ratio is key
o Free cash flow more than covers the iPref dividends
o Difficult to envision Apple burning cash or losing money
Ratio of iPrefs : Common Stock
iPrefs issued ($ billions)
iPrefs dividends paid by Apple
Apple free cash flow
iPref dividend payout ratio
Total cash on balance sheet
Years worth of iPref dividend payments
Greenlight Capital, Inc.
1:1
$47.2
$1.9
$45.0
4%
$137.1
73
5:1
$236.3
$9.5
$45.0
21%
$137.1
15
43
Remember that the issuance of the iPrefs doesn't require Apple to actually use any of its existing
$137 billion of cash. Thus even a very large issuance of iPrefs preserves Apple's financial flexibility
and wouldn't pose any great financial risk to the company.
iPref holders will be most concerned about Apple's ability to continue paying the 4% dividend. Apple
has $137 billion of cash and earns over $40 billion a year (and it is all cash). At our case of a $236
billion preferred with a 4% dividend, it is a $9.5 billion annual commitment. On that basis, Apple
would pay out less than a quarter of its earnings and will have 15 years of iPref dividends sitting on
the balance sheet in cash.
We think Apple could eventually support even more iPrefs without harming the required yield.
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