UBS analyst Steven Milunovich weighed in Wednesday on how Apple Inc. can winnow down its $163 billion net-cash pile and achieve its goal of becoming net-cash neutral, a target the company cited on its latest earnings call. “We think Apple leans toward buybacks with the potential to increase the dividend yield closer to other large technology companies,” he wrote, adding that the possibility of large M&A or a special dividend would be “surprising.” He sees Apple being able to achieve a net-cash neutral position by fiscal 2023 through a 5% annual reduction in share count and a yield of 3%. Apple’s dividend yield is 1.54%, compared with Microsoft Corp.’s yield of 1.88%. He deems other possibilities for the money unlikely. CEO Tim Cook said at Apple’s shareholder meeting Tuesday that he wasn’t a “fan” of special dividends, and Apple has traditionally opted for small acquisitions rather than major ones. “Transformational M&A would result in a collision of different cultures and priorities, which Apple has thus far avoided,” Milunovich wrote. Apple shares are down 0.4% in Wednesday morning trading and up 22% over the past 12 months. The Dow Jones Industrial Average has risen 20% in that time.
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