Apple is likely preparing for a major shift in how it handles its massive cash reserves, as hardware chief John Ternus prepares to take over from CEO Tim Cook. The company has signaled that it will move away from its long-standing ‘net cash neutral’ goal. The update came during Apple’s latest earnings call, where CFO Kevan Parekh confirmed that the company will no longer aim to balance its cash and debt levels. Instead, Apple plans to evaluate both independently, reports Bloomberg.
‘As we move ahead, we are no longer providing net cash neutral as a formal target, and we will independently evaluate cash and debt,’ Parekh said. ‘Capital returns will continue to be important to our overall approach by delivering long-term shareholder value.’
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For years, Apple followed an approach introduced under Cook. After taking charge from Steve Jobs, Cook shifted the company toward being more investor-friendly. In 2012, Apple started rewarding investors with stock repurchases and restored a quarterly dividend. This strategy helped the company return over $1 trillion to shareholders and played a role in boosting its market value, as per the report.
Now, that approach may change. Under Ternus, buybacks or dividend hikes may slow in size or frequency. Apple could invest more aggressively in areas like research and development and large acquisitions. So far, Apple has avoided massive takeovers, with its biggest deal being the $3 billion purchase of Beats in 2014.
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Despite the shift, Ternus has indicated that he won’t completely move away from Cook’s overall financial strategy.
Ternus is expected to oversee the launch of around 10 entirely new product categories in the coming years. One of the first launches under him could be Apple’s long-rumoured foldable phone.