Morgan Stanley Meets with $AAPL CFO, Predicts Higher Dividend

$AAPLMorgan Stanley analyst Katy Huberty met with Apple CFO Peter Oppenheimer this week, and she walked away from that meeting with some insight on Apple's plans for both its cash and iPhone line.

Ms. Huberty said that Apple could return as much as US$28 billion in cash to shareholders in fiscal 2013, representing a 6 percent yield for shareholders. Doing so, she argued, would, "match the S&P IT sector’s average [free cash flow] payout of 68 percent." The analyst's numbers are based on the fact that Apple's cash hoard increased by $40 billion in fiscal 2012.

She also told her clients that, "a lower priced iPhone makes sense," and said that she saw "several signs" that Apple could release such a device.

The first is that Apple's smaller, cheaper iPad mini has expanded its customer base in China and Brazil. The second is that she believes Chinese customers want to buy a cheaper latest-and-greatest, rather than discounted previous generations. The third is that iPhone 4 surprised to the upside in the December quarter.

"Even at a low 40 percent gross margin and 1/3 cannibalization rate, we see an 'iPhone Mini' as incremental to revenue and gross profit dollars," she concluded.

She reiterated her "Overweight" rating on $AAPL, the equivalent of a "Buy." She also maintained her $630 per share price target.

$AAPL is trading higher as of this writing, at $449.39 per share, up $3.33 (+0.75 percent), on light volume.

Apple's annual shareholder meeting will take place on February 27th. The Mac Observer will be on hand for the event for detailed reporting.