Apple (AAPL 1.98%) 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.