“To me the most notable number that emerged from the earnings report is Apple’s total cash holdings: Having produced $5.8 billion in cash from operations, Apple finished the quarter with $39.8 billion in cash and short-term investments, or about $44 in cash per share. That figure is sure to re-ignite criticism that Apple may not be putting its considerable cash resources to the best possible use,” Hesseldahl writes. “As usual Apple CFO Peter Oppenheimer said that the goal of Apple’s cash management is ‘preservation of capital.’ Apple invests its cash in what Oppenheimer described as ‘short dated, high quality investments.'”
Hesseldahl writes, “The time has clearly come for Apple and its board of directors to take a long hard look at its cash position consider doing something more than just ‘preserving’ it. Technically that money belongs to Apple’s shareholders, who could certainly find better things to do with it were it returned to them in the form of a stock buyback or special dividend. And happy as they may be with Apple’s stock price, it’s time for Apple’s shareholders to speak up on the matter.”
Full article here.
MacDailyNews Take: The ol’ drumbeat continues. Jobs is saving up to buy Microsoft, that much is obvious. 
[Thanks to MacDailyNews Reader “James W.” for the heads up.]
Relax. They will NOT buy Adobe.
They’ll call up their “competitor” Google and have the most expensive pillow fight ever, somewhere East of Seattle.
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“Technically that money belongs to Apple’s shareholders, who could certainly find better things to do with it were it returned to them in the form of a stock buyback or special dividend.”
The typical conservative dream. No, I’d rather let the leaders of Apple hold onto that small portion of my money and add additional value to it for the long haul. If you are diversified, you shouldn’t be concerned about the small amount of your individual portfolio that this affects. Plus, your return on investment will most likely be larger than if you tried to “find better things to do with it”.
As a shareholder I trust Apple’s judgement in this area. The large cash stockpile gives them strength and flexibility to grow the business.
If anyone has a problem with preservation of capital they can lump it and not buy Apple stock. It’s that security that allows Apple the independence it has to develop hardware and software as it sees fit. Its that cash that gives it the leverage that it needs to del with suppliers and that’s what ultimately gives us Apple products and service of the highest standard without any cutting of corners.
The consumer votes with their pocketbook – Don’t like it? Don’t invest but don’t tell the best run company in the word what it out to do according to your little narrow mind.
While I’m sure the short-term investors would like a big dividend or a stock buy back (NOT going to happen), as a long term investor, I’m happy to have Apple keep a large cash horde. It allows them to buy small companies full of smart people on a whim; it allows them to buy up massive amounts of parts that would otherwise vacillate in price, thereby controlling their profit margin; it protects them from predation by other companies; it allows them to take innovation risks on products that might fail; it allows them to protect their most critical capital investment — bright employees, who are expensive to recruit; and it gives them a BIG weapon in dealing with competitors. Companies, like countries are at war and it helps to have a nuclear weapon.
They are going to buy up the US debt from China…
“That figure is sure to re-ignite criticism that Apple may not be putting its considerable cash resources to the best possible use…”
Really? And that would explain Apple’s poor performance in sales, profits, innovative products. Oh wait, they are going gangbusters there! Exactly how would these geniuses spend this money?
Oh, I know what’s going on. Since, as Enderle says, Apple is trying to distance itself from this new product, this money is obviously a safety net for Apple because they know that the company will soon fall flat on it’s face. Yeah, that’s the ticket!
“The time has clearly come for Apple and its board of directors to take a long hard look at its cash position consider doing something more than just “preserving” it.”
Analysts can continue to pout about dividends. It’s entirely consistent with their lack of understanding of Apple as a company. Besides, I feel better about the company managing the cash; any dividend Apple would pay me would be far less well-spent.
Lower the prices and sell even more!
‘What will Apple do with their rapidly growing $40 billion war-chest?’
They’ll probably end up having to ‘give’ it to the government, you know, the whole ‘evil capitalist’ thing.
Ask Adrian Perica.
MDN’s take is obviously tongue and cheek, but a few more years like the last few and it might be true!
It could be Jobs’ gift to the world: “Since you’re all too sheep-like to buy the best computers on your own, I’m going to buy Windows and turn it into something tolerable.”
This isn’t about money for Jobs. It’s about righting one of histories wrongs.
yea verily
Last year Apple started building a BILLION DOLLAR SERVER FARM and that is all the talking heads know. If they can figure out huge clues and start reading the tea leaves, than all the talking heads know is what Apple tells them.
Investigative reporting or research? Is it pulling power or water yet? How about the town building inspections? Is the server farm required for the iSlate release?
We should all be so lucky as to have the restraint that Apple does. They have a horde of cash and zero debt. Apple has the fiscal management that I wish our government had. Can you image the how much more could be done about this recession if the country had a huge fiscal surplus? (and no, this is not political dribble at the current administration, but a disapproving glare to all politicians who have put us in this quandary, Democrats, Republicans, et al).
Buy me! The offer is a paltry one billion USD (negotiable if paid in pounds sterling).
“Technically that money belongs to Apple’s shareholders, who could certainly find better things to do with it were it returned to them in the form of a stock buyback or special dividend.”
As a shareholder, I find myself very much like Apple. My financial adviser insists I should be doing something with my cash holdings. But given the economic climate, I’m still looking for that “better thing”.
Apple might consider bailing out Obama’s gummint.
“Technically that money belongs to the shareholders”.
NO. As a business owner I can say it: NO.
That money belongs to the corporation. The corporation is ruled by a board appointed by the stockholders. And that board is the one deciding how to use that money. It pays dividends, invest it in new technologies, stores it for a bigger purpose, and/or does other things.
To complete the idea: It’s not the money but the SHARES to belong to stockholders. A share of stock is a piece of the company. So, stockholders are the owners of the CORPORATION, and with it, owners of whatever decision it takes. And if the company decides to save the cash, stockholders own a company which decided to save money.
BY NO MEANS cash-in-hand means “it’s time to go to Disneyland”. We don’t know what Apple’s strategy for the future is. But one thing is for sure. They are at NO obligation of paying stockholders money unless the board decides so.
Maybe, they plan to buy some real estate, like Canada (just kidding, you Canucks).
Apple TV… the distribution network.
Just like DirecTV or Dish, for a few billion dollars, Apple could build and launch their own satellite system and feed it using their new data center.
I hear there is a used Space Shuttle for sale!
Give it to the Government. Typical liberal dream.
I could use some cash. Do the right thing, Apple!
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As a stockholder owning more than just a few shares, I for one trust Apple’s money management people 101%. Now if I had lost my a** investing in AAPL I would probably be singing a different tune. But as they say, don’t rock the boat. What they’re doing is working just fine.