Apple, Inc.'s New CFO: "A Champion Of Shareholder Return"

Apple CFO Peter Oppenheimer will retire in September. Apple has appointed shareholder-friendly Luca Maestri to take his place. Image source: Apple.

Apple  (NASDAQ: AAPL  ) CFO Peter Oppenheimer will be retiring this year. Under his 18-year watch, Apple's annual revenue grew from $8 billion to $171 billion. With Apple's growth days behind it, the shareholder-friendly Luca Maestri that Apple has appointed to take Oppenheimer's place is great news for Apple shareholders.

A shareholder focus
Maestri is "a champion of shareholder return," said Barclays Capital analyst Ben Reitzes, cited by The Wall Street Journal. A former colleague of Maestri's from Xerox agrees. "He's very shareholder friendly in terms of making sure that the return to shareholders is balanced, whether that's dividend or share buybacks. He was very good at that at Xerox," Maggie Wilderotter told the Journal. Authors Daisuke Wakabayasahi and Emily Chasan added their own commentary in the WSJ article, "During [Maestri's] tenure, Xerox sharply increased its share repurchases, to $1.1 billion in 2012, from $700 million in 2011 and none in 2010."

Maestri's emphasis on creating shareholder value is certainly appropriate given that Apple has more cash on its balance sheet than ever before -- a whopping $158 billion in cash and marketable securities as of Apple's first fiscal quarter of 2014. Further, Apple is ultimately converting about $0.25 of every dollar into free cash flow, generating $44.2 billion in the trailing 12 months. With cash that far outweighs Apple's investment opportunities, a shareholder-friendly CFO is probably the most important thing investors want to see in a financial chief right now.

Of course, it would be tough to argue that Oppenheimer wasn't a champion of shareholder return as well. He initiated the largest capital return program in the history of the world and last year expanded Apple's plan to repurchase $10 billion worth of shares to $60 billion by the end of fiscal 2015 last year. Further, Apple has proven to be extremely opportunistic with its repurchases recently, spending $14 billion to repurchase shares after Apple stock recently sold off on less-than-expected fiscal 2014 first-quarter iPhone sales.

What can investors expect from Maestri?
Hopefully, more Oppenheimer-like moves. And given Maestri's history as a shareholder-friendly financial chief, this is a likely outcome. I wouldn't be surprised to see Apple continue boosting its dividend under Maestri's tenure. Last year, Apple boosted its dividend by 15% in April.

With Apple's gross profit margins stabilizing at very lucrative levels and top-line growth slowing, aggressive capital return programs are crucial in creating shareholder value. Further, Apple's stock still trades conservatively at 13 times earnings, bolstering the case for repurchases today. So, given the circumstances, Maestri's shareholder-friendly reputation is great news for Apple investors.

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  • Report this Comment On March 06, 2014, at 7:41 PM, Renee wrote:

    Just one thing: Maestri is taking over as CFO. He has no say in share buybacks or dividends or any such thing. It's like saying that a racecar driver is astronaut friendly--good to know, but useless info.

  • Report this Comment On March 06, 2014, at 11:01 PM, TMFDanielSparks wrote:

    @Renee,

    CFOs certainly have a say on share repurchase programs. As financial chief they're intimately familiar with the company's cash flows and the reliability of cash flows -- the most important factors in assessing wither dividends and share repurchase programs are feasible.

  • Report this Comment On March 07, 2014, at 12:39 AM, demodave wrote:

    "With Apple's growth days behind it," ...

    Is that a fact? really?!?

    So I sorta agree with Renee that the CFO doesn't set shareholder return policies (that belongs to the board), but I also agree (with Daniel? maybe?) that the CFO supplies the data that the Board requests in order to plan those policies, but ...

    To me, it is clearly too early to say that Apple's growth days are behind it. What we can say is that Apple has amassed a ton of (unfree) cash. The Question becomes what Apple *can* and *does* chose to do with it.

    That's not really a bad problem from an investor's perspective.

  • Report this Comment On March 07, 2014, at 10:20 AM, Renee wrote:

    Yes, ofcourse the CFO supplies data. But do you really think the outgoing CFO was hiding the fact htat Apple had tonnes of profit and tonnes of cash on hand? It was no secret with him either.

    So the new CFO, unless he lies about exaggerated profits or money on hand, won't be able to do anything more for shareholder return than his predecessor.

    Apple's growth days are behind it if you use the last 3 years of statistics and look at its market share. You'll notice that the slope has flattened out quite a bit. It only looks rosy if you project further than that, but even 3 years is pushing it when it comes to predicting growth in the technology business.

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