What should Apple do with its $15 billion (and rapidly growing) cash hoard?

Apple’s $15.4 billion stash is larger than IBM’s, Hewlett-Packard’s, Intel’s, and Google’s, putting the Mac, iPod, and iPhone maker into “the elite ranks of well-heeled Fortune 500 tech companies,” Jon Fortt reports for Fortune.

“So what does CEO Steve Jobs have in mind for all those greenbacks?” Fortt asks.

“If the past is any guide, Jobs & Co. could very well use some of the money to swallow smaller companies,” Fortt reports.

“Or Apple could make some investments. During tough times, the money Apple had put in Akamai Technologies (AKAM) and ARM Holdings (ARMHY) provided the company with valuable infusions of cash when necessary. It’s a bit more difficult to find places to stash $15 billion, however,” Fortt reports.

“Might the company really launch a large-scale buyback program, or begin offering dividends? For Apple, there’s limited advantage in doing that until investors force the issue. Once a company gets onto the dividend treadmill, it has to keep doing it or risk being seen as in decline. The same goes for stock buybacks,” Fortt reports.

“At Apple, there are some sizable projects ahead that could demand sizable chunks of cash [like] the brand new campus the company plans to build down the road from its current Cupertino, Calif., headquarters… Real estate experts last year suggested that Apple’s project costs could top $500 million… And, of course, it’s not clear whether their estimates factor in the possibility that Steve Jobs might decide to make a big architectural statement,” Fortt reports.

“There’s always the chance that Jobs will surprise us all, break with tradition, and buy something big. Consider this: With the money burning a hole in Apple’s pocket, he could easily buy TiVo, Netflix and Circuit City, and still have plenty left in the bank,” Fortt reports.

Full article here.

[Thanks to MacDailyNews Readers “Fred Mertz” and “Mike in Helsinki” for the heads up.]

What would we do? Well, we like to get a lot of bang for our buck, so we tend toward the dramatic: Apple should buy Adobe and, starting with Photoshop, double the price of the Windows version vs. the Mac OS X version while allowing Windows sufferers to double their number of licenses at no extra cost by migrating to Mac OS X. With the next version of Photoshop, discontinue Photoshop for Windows. Just as Apple did with Shake after they bought Nothing Real. Excecute that process down the line with the most widely-sold Adobe products. While you’re at it, Apple, buy Autodesk, and freakin’ finally get a version of AutoCAD (last release for Apple Mac: June 1992) out for Mac OS X. It’d be no small task — we hear AutoCAD a spaghetti-coded mess that’s long been mangled specifically for Windows, which is why Autodesk can’t even begin to think about, much less produce a Mac OS X version — but Apple could do it.

What would you do if you were Apple sitting on a mountain of cash?

172 Comments

  1. There are several Windows programs out there that have no Mac equivalence. AutoCAD has been mentioned, Visio is another. If you need one or the other, you need to work with Windows. And don’t talk to me about BootCamp or Parallels or whatever, they keep the Windows and throw away the box.
    We have some great consumer-level software in the iLife and iWork packages, good enough to deal with most enterprise-level tasks, but without these two, in particular, one for IT and the other for engineers, we have a small but <u>obvious</u> hole on our arsenal.
    Apple should buy in or build-their-own. Just my opinion.
    Dave

  2. Buying Adobe would be nice; however, their current market cap is around $25B. Apple’s entire cash reserver is barely above half that. Obviously, they could get themselves a controlling stake in the company, but still wouldn’t own it outright. Not to mention that if it were to announce the intention buy Adobe, it’s a given that ADBE would shoot through the roof, making that $25B much higher number.

    Autodesk is a nice idea as well, especially since their current market cap is around $11B.

    NBC/Universal is a subsidiary of Vivendi ($37B). However, Warner Music and EMI combined are below $5B and could easily be gobbled up (assuming there are no anti-trust issues).

    Strategy of picking off Windows-only tools and moving them to Mac-only sounds interesting, albeit a bit bold. They could begin under the radar, with some small, obscure tools. Moving slowly to the bigger guns, such as Autodesk. Mind you, AutoCAD is not the only horse in their stable. I’d first kill Maya for Windows, then migrate 3D StudioMax and kill that as well. Do the same thing Apple did for Logic (and a few other apps). Make options for high-end, niche market tools for Windows dwindle to the point of extinction.

  3. What should Apple do with its $15 billion (and rapidly growing) cash hoard?

    Increase it’s computer product line offerings and prepare to enter the business space where the REAL money is.

    Run Windows as a Mac OS X shell:

    1: To protect against intrusions from the internet.

    2: To offer better looking and more reliable hardware.

    Both will save businesses BILLIONS during economic slowdowns.

  4. Apple seeks out markets where the formerly dominant players are in distress. The name change was meaningful as the first step to moving the brand beyond tech.

    Apple will be the next company with a GE/ExxonMobil-sized market cap.

    The move will be consumer, with volume and margin space for them to be profitable from day one. They may buy Tesla, but they will take their muscle to the car business and shred that market by using their design ethos, consumer brand, and financial muscle to focus on the chaos and fragmentation of the car market.

  5. The most corrupt business (?) on earth is the automobile business. The most corrupt business people on earth are the car manufacturer and his partner in crime, the car dealer.

    A close second has become the technology business – especially in the personal computer category.

    The corrupt practice of duping the public by holding back the latest and best in order to create more sales through instant obsolescence is evil-doing.

    Faster, better, more stable hardware is in the back room at Cupertino (and, of course, in secret locations throughout China) being held back, waiting for sales of the current stuff to level off and cleverly timed to be launched with some lie dressed up as a Super Bowl commercial.

    We consumers, of course, could fix this problem ourselves had we any self control. But, alas, we don’t and predators suck us dry.

    Steve’s quest to change the world is within his grasp now. Rise above the lure of the next billion (you have enough, already). Use it for good. Use the money to fill the stores with the best products there are TODAY instead of trying to knock the car industry off the top of this wicked list.

  6. Sun could be a good target to get into the corporate world.

    With control over Java, it could drive more corporate and developper to switch.

    The key here is all the development under Mac OS X and implement it on any OS (and phones). Once the developpers will experienced OS X, there will be less and less needs to use other OS.

  7. At the very least, Apple should start a program that “seeds” free and lower-priced Macs to the U.S. public education system, at all levels. Not just a token donation, but a significant distribution. In addition to the positive impact those Macs will have on students and the good will the program will generate toward Apple, it will spawn generations of young adults who grew up using Macs at school. This is not an original idea… Apple did exactly the same thing with Apple II’s a few decades ago. And I think it helped Apple start and grow it’s core following among the (then) young adult population, many who would otherwise never have used an Apple computer (due to cost).

    Using “just” one billion dollars from the pot will pay for about one million iMacs.

  8. Jobs has taken only a token annual salary of $1 since returning to Apple in 1996, for which he is recognized as the world’s lowest-paid CEO by Guinness World Records. He is well-compensated by other means, however, being the frequent recipient of gifts from Apple’s board of directors, such as a Gulfstream Jet and —— tens of millions of shares in restricted stock——, which have contributed to Jobs’s estimated net worth of $5.7 billion.

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