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Carl Icahn has had quite a year picking stocks, from Netflix (NASDAQ:NFLX) to Herbalife (NYSE:HLF) and CVR Energy (NYSEMKT:CVR). He just bought Apple (NASDAQ:AAPL) and apparently plans to push for more buybacks and dividends at the tech giant. This comes on the heels of David Einhorn's successful ploy to get Tim Cook, Apple's CEO, to initiate a dividend and share buyback program. However, my question is: Why isn't Icahn looking at Cisco (NASDAQ:CSCO)?

According to Yahoo Finance, AAPL has $28.30 per share in net cash (that means cash minus debt) on its balance sheet. As a percentage of the stock's current trading price, which is ~$512 as of the writing of this article, that is a net cash balance equal to 6% of Apple's market capitalization. That's a lot of cash. Now, having a cash balance isn't bad if you're holding it to invest in future growth. Let's take a look at how much of its cash Apple is spending annually on capex (read: expenses needed to grow the business). According to Morningstar, Apple spent $9.4 billion last year on capex and generated operating cash flows of $50.8 billion. Not bad, right? With their cash balance and an assumed free cash flow of $50 billion, Apple will have approximately eight years of cash to pay for its capital expenditures ($50 billion CFO plus $25.72 billion in net cash divided by $9.4 billion in capital expenditures).

As per Yahoo Finance, CSCO has $6.40 per share in net cash on its balance sheet. As a percentage of the stock's current trading price, which is ~$24.35 as of the writing of this article, that is a net cash balance equal to 26% of Cisco's market capitalization. That's a lot more cash. Let's take a look at how much of its cash Cisco is spending annually on capex. According to Morningstar, Cisco spent $1.1 billion last year on capex and generated operating cash flows of $11.5 billion. Pretty good, right? With their cash balance and an assumed free cash flow of $11 billion, Cisco will have approximately 40 years of cash to pay for its capital expenditures ($11 billion CFO plus $34.4 billion in net cash divided by $9.4 billion in capital expenditures).

It is also worth noting that Apple's capital expenditures have jumped from $2 billion in 2010 to $9.4 billion in 2012, indicating significant and high capital expenditures may be the norm going forward, which is not surprising given the competitiveness of the industries in which Apple participates. Conversely, Cisco seems to operate from a more stable market position in a less competitive industry, evidenced by the fact that capital expenditures have been essentially flat since 2007. Note that Cisco has not increased its cash flow during that time period, but it is simply accumulating huge hoards of cash for a company its size.

John Chambers needs to step up dividends and buybacks to shareholders, and he could easily do so while continuing to operate a capital investment program equal to or exceeding its current levels.

Disclosure: I am long AFL, COH, VRA, C, MDLZ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: If I Were Carl Icahn, I'd Buy Cisco, Not Apple