FORTUNE -- While Greenlight Capital's David Einhorn was lobbying shareholders Thursday to support his perpetual preferred stock idea (see Would you buy an iPref from this man?), Morgan Stanley's Katy Huberty has been meeting with the Apple (AAPL) executive who rejected Einhorn's proposal last September: Chief financial officer Peter Oppenheimer.
In a note to clients Friday, Huberty reports that she came out of those meetings convinced that Apple is likely to increase its current 2.3% dividend and boost its stock buybacks.
"Our analysis," she writes, "suggests Apple can match the S&P IT sector's average FCF [free cash flow] payout of 68% if it returns $28B in FY13, implying a 6% total yield. High mix of international cash limited flexibility in the past but raising low-interest debt can help address this issue, in our view."
Borrowing money to give to shareholders is also the approach favored by Bernstein's Toni Sacconaghi, who has been hounding Apple's board of directors to issue a dividend since 2008, when the company's cash horde was less than $30 billion. Apple grew its cash holdings by $39.5 billion in just the last 12 months to reach a total of $137.1 billion.
CORRECTION: An earlier version of this story had Huberty anticipating a 6% dividend. A note she posted on Feb. 13 makes it clear that the "6% total yield" to which she refers includes both dividends and stock buybacks.
Having fallen nearly 13% since April 10, the stock popped 7.44% on the news
FORTUNE -- After losing more than $70 billion in market value in two weeks, Apple (AAPL) capped one of the strangest earnings walkups in memory by handily beating all but the most optimistic estimates, reporting record March quarter earnings of $12.30 per share on sales of $39.2 billion.
Shares reversed course as soon as the news broke, climbing more MOREPhilip Elmer-DeWitt - Apr 24, 2012 5:04 PM ET
Roustabouts, weatherpeople and Air Force pilots
As if to underscore Apple (AAPL) CFO Peter Oppenheimer's claim that "nearly all" Fortune 500 companies "approve and support" iPhones on their networks, three major purchase orders came to light this week:
Halliburton announced that over the next year the oil services company will be "transitioning" from Research in Motion's (RIMM) BlackBerry platform to "smartphone technology via the iPhone." A spokesperson told AppleInsider that about MOREPhilip Elmer-DeWitt - Feb 10, 2012 3:40 PM ET
Shares jump nearly 9% in after-hours trading on record sales of $46.33 billion, record profit of $13 billion, record 37 million iPhones, 15.4 million iPads, 5.2 million Macs
Everybody was counting on Apple (AAPL) to report record earnings, but nobody -- not even the most bullish independent analysts -- predicted anything like the blowout the company just reported.
Trading was halted at 4:27 p.m. after Apple's shares had closed at $420.50, down MOREPhilip Elmer-DeWitt - Jan 24, 2012 4:19 PM ET
Sold a record 20.34 million iPhones, 9.25 million iPads and 3.95 million Macs
Apple's (AAPL) third fiscal quarter was bigger than the most optimistic estimates. Even without a new iPhone to drive sales, revenues, earnings and profits were bigger than the biggest Christmas quarter.
Apple also announced that OS X Lion is coming tomorrow (Wednesday).
The iPhone and iPad numbers were huge surprises. Sales of the iPod, as expected, continued to fall. Only MOREPhilip Elmer-DeWitt - Jul 19, 2011 4:57 PM ET
If you ask about sales in the quarter that just ended, you get three very different answers
Apple's (AAPL) third fiscal quarter of 2011 ended Saturday at midnight. How did it go? That depends whom you ask.
In April, Apple CFO Peter Oppenheimer told analysts he expected Apple to earn $5.03 per share on sales of $23 billion. But given how Apple tends to low-ball its forward-looking guidance, nobody really believed him.
The MOREPhilip Elmer-DeWitt - Jun 26, 2011 11:34 AM ET
Leaves meeting with three top execs with "increasing confidence" in a $540 price target
Katheryn ("Katy") Huberty, Morgan Stanley's chief Apple analyst, met recently with three of Steve Jobs' top lieutenants: Peter Oppenheimer, the money man; Ron Johnson, the former Target exec who built the Apple Stores; and Eddy Cue, the senior vice president in charge of Internet services.
Apparently no company secrets were revealed. The Apple execs would not confirm that MOREPhilip Elmer-DeWitt - May 5, 2011 5:48 AM ET
Despite strong sales, iPad supplies and Japan's quake make Q2's report a hard one to call
Nobody, not even CFO Peter Oppenheimer, thinks that Apple (AAPL) earned as little as $4.90 per share on revenues of $22 billion last quarter -- the numbers he offered in January when he issued his guidance for the company's second fiscal quarter of 2011.
As usual in the Steve Jobs/Tim Cook era, the game at the MOREPhilip Elmer-DeWitt - Apr 20, 2011 8:31 AM ET
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Forrester Research projects that mobile app sales will likely reach $38 billion by 2015 and that developers will spend up to $17 billion making them. And in fact, tablet devices alone could also generate $8.1 billion in app sales, too.(Forrester Research)
.08% of all Gmail users lost access MORE
Apple execs talk about their plans to cash in on the popularity of the iPhone and iPad
In a note to clients issued Monday, Bernstein Research's Toni Sacconaghi reports on a meeting with three top Apple (AAPL) executives: COO Tim Cook, CFO Peter Oppenheimer and Eddy Cue, vice president of Internet services.
Steve Jobs did not attend.
According to Erik Savitz, formerly of Barron's, now at Forbes.com, Sacconaghi reports that the execs are MOREPhilip Elmer-DeWitt - Feb 28, 2011 2:19 PM ET
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