Apple's Tim Cook has 'missed opportunity' with share buybacks by not waiting for Trump's tax reform

Key Points
  • Apple plans to spend $210 billion buying back stock by March 2019.
  • The company has a cash hoard of $256.8 billion.
  • Questions raise over how innovative Apple execs are being with money pile.

Apple boss Tim Cook has been criticized for missing a trick by carrying out a share buyback before the introduction of Donald Trump's tax repatriation plan.

Apple posted quarterly earnings revenue of $52.9 billion Tuesday. The figure was just shy of expectations, but the firm appeased investors with an increased quarterly dividend of $0.63.

The firm also upped its buyback program by $35 billion and plans to spend a total of $210 billion buying back its stock by the end of March 2019.

This is all made possible by Apple's $256.8 billion cash hoard but one investor thinks Apple's Chief Executive Tim Cook, could have done better.

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"We are looking at tax reform in the U.S, so there is going to be an opportunity probably later this year to do something with that cash pile, and do something more efficiently for shareholders and I think Tim may have missed that opportunity," said Stephen Isaacs, Chairman of the Investment Committee at Alvine Capital, to CNBC Wednesday.

Share buybacks have been popular with tech companies in recent years, offering short quick-fire boosts to share price.

One example is Microsoft who announced in September last year that it was authorizing up to $40 billion in buybacks.

Stephen Isaacs argued that there is increased cynicism in the market about tech companies buying shares at elevated levels.

"I think generally speaking share buybacks shows a little bit of a lack of innovation, a little bit of a lack of sense of where they can invest money," the investor said on air.

In a follow-up telephone call, Isaacs elaborated on why Cook should wait until Trump's tax reform is in place and bringing cash to the U.S. from overseas is cheaper.

"Investors would rather see the cash reinvested into the business, a [further] increase of dividend or simply accumulate the cash, wait until after the tax deal and then distribute to shareholders," he said.

Trump's tax plan

Trump's tax repatriation plan will reportedly cut the tax rate on offshore earnings which are repatriated to 10 percent from the current 35 percent

An estimated 90 percent of Apple's $250 billion cash hoard is currently overseas and boss Tim Cook told CNBC that a rate between 6.5 and 10 percent "seems rational" for a one-time tax holiday on foreign-earned income.

On the possibility of Apple using its treasure chest to buy companies, Isaacs said while this was an exciting option for media and onlookers, the investment community isn't convinced.

"I think people like the fact that Apple hasn't blown cash on a trophy acquisition," he said.

However not everyone agrees.

Speaking during CNBC's "Closing Bell" on Tuesday evening, Gerber Kawasaki Wealth and Investment Management CEO Ross Gerber said Apple needed to expand its portfolio.

"They have all this cash, and all they can come up with is the same playbook, which is buy back stock and pay dividends," Gerber said.

"Buy something, please. Go out and do something aggressive."