What should Apple do with its $12 billion pile of cash?

“What would you do with $12 billion? You might have two ideas in mind, neither of which is necessarily exclusive of the other: First, do some good; and second, make sure that money keeps growing,” Arik Hesseldahl writes for BusinessWeek.

“It’s the kind of question that the financial minds over at Apple (AAPL) have to consider, for that is about the amount of cash the company had on its balance sheet the last time it reported earnings on Jan 17,” Hesseldahl writes.

Hesseldahl writes, “If the last year is any judge, Apple’s cash position—the combination of its cash on hand and short-term investments that can quickly be converted to cash—is growing at a rate of about a billion and change per quarter. It’s high time Apple spread some of that cash around, and I think one good way to start would be to launch a venture capital fund.”

Full article here.
Keep $2 billion on hand, pay $500 per Windows machine with the purchase of a new Mac (one per family), and net 20 million switchers – doubling the Mac OS X user base – before the start of summer?

84 Comments

  1. One thing I don’t want to see Apple do is hand that money back to share holders in the form of a divident payment. If you want a “dividend” payment, invest in a utility company. Apple is a forward thinking growth stock, not a settled into a rut divident payment company.

    If they do anythinig at all with that money it should be to push the envelope forward in markets that they are already doing well in, or that make sense along side what they are already working on. Namely multimedia, music, movies, digital content creation distribution and consumer markets.

    Stuff like Apple TV and iPod and iPhone and things that make sense to go along with them.

    Buying Adobe I don’t think makes sense for Apple right now, maybe someday but I think Apples efforts and money are better spent elsewhere, currently.

  2. Huh? Start a VC fund? Puleeze. Right now the VC marketplace is flooded with money. What Hesseldahl suggests is called “deworsification” by investment genius Peter Lynch. Companies do best when they stick to their knitting. $12 billion might sound like a lot to you and me, but put this in perspective to Apple’s sales and earnings. That $12 billion is an insurance policy that keeps Wall Street more at ease. If not for a good pile of cash at the company’s low point in the 90s, Apple could have collapsed before Steve Jobs came back and resurrected the company.

    Ask any successful investor or CFO and they will tell you: cash is king. It’s the first thing anyone looks at on the balance sheet, the second being long-term debt. Yes, it would be great to see Apple start paying out dividends. That often helps a stock as an investment, and in fact, many of the best stocks for long-term holdings are those with strong dividends. But in Apple’s case, don’t hold your breath.

    Something tells me that Mr. Hesseldahl was looking for something for his Thursday column deadline.

    In short: there’s nothing to see here, folks. Please move along.

  3. “It’s the kind of question that the financial minds over at Apple (AAPL) have to consider”

    He states this fact as if Apple’s financial team, Steve, etc. woke up one day and said, “Holy buckets, we’ve got a lot of money in the checking account!”

    I’m sure Apple does a lot of good work that doesn’t get publicized, and quite frankly, what Apple does with its money is Apple’s business. Apple obviously spends plenty on R&D, so the real issue is how much does Apple want to have in the bank as a war chest?

  4. Step 1 : Buy Autodesk.

    Step 2: Make a Mac version of Autocad.

    Step 3: Sell Autodesk for a substantial gain, but retain a significant share and a seat on the board.

    Step 4: Watch architects and designers worldwide flock to the Mac platform.

  5. I am still sad Apple didn’t buy Macromedia. At least they could buy Corel for 305 Millions (a bargain) and Creative. Buying Autodesk would be a dream come true, the 30″ display will be out of stock in a months. Most of my friends with macs are still using Windows for two reasons:
    1. AutoCAD
    2. AnyDVD & CloneDVD

  6. They should do a mega Naming Rights deal for a new stadium (in Europe) to reinforce their presence here.

    Then with the rest they should pay back their shareholders

    No foolish acquisitions please

    Just a thought

    Java

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