“Eighteen-and-a-half billion dollars is a lot of money,” Arik Hesseldahl reports for BusinessWeek. “It’s more than the estimated 2007 gross domestic product of Nicaragua. It’s bigger than the estimated 2005 expenditures of no fewer than 20 U.S. states. It’s enough to give $60.78 to every person in the United States, and $2.77 to every person in the world.”
“And most importantly for Apple (AAPL) investors, it amounts to $21 for every share of company stock—and as of the end of most recent quarter, it’s the cash pile sitting in Apple’s coffers,” Hesseldahl reports. “Shareholders certainly have shared in Apple’s success over the years. The stock topped out at $199.83 on Dec. 28, an almost 19-fold increase over five years. Yet the growth in the company’s cash hoard is starting to make people wonder, What exactly will Apple do with all that money?”
Hesseldahl writes, “Apple ought to return some of that cash to its shareholders in the form of a buyback… An aggressive stock repurchase plan will do three good things for Apple shareholders.”
• It will send an unambiguous signal that management believes Apple’s best days are ahead
• Word of a buyback would probably give the stock price the kind of upward lift it needs
• Reducing the number of shares outstanding—currently about 879 million—would boost earnings per share.
Hesseldahl writes, “While I’m the first to praise Apple management for the smart way it has run the business over the last several years, its lack of plans for its cash is starting to ring hollow.”
Much more in the full article here.
[Thanks to MacDailyNews Reader “Alex” for the heads up.]
To be fair, I don’t know if Hesseldahl is an Apple fanboi, neutral, or rabid hater, but it doesn’t really matter. He, along with 95% of all the tech writers, pundits, analists, and so called journalists are NOT on the Apple Board of Directors. They don’t know whats going on.
Just dig back through any of their past crap like iPod is doomed, iTunes MS will close after one year, iPhone is fatally flawed, blah blah blah. Looking at their past and current inability to accurately predict or forecast ANYTHNG about Apple will let you know, they have no clue about what Apple should do with their cash.
Remember the .com bubble burst economy wrecking fall out at almost at the same time as 911? Apple kept introducing amazing products, and upped their R&D;efforts. These same self proclaimed experts said that it was a stupid use of their money since the economy was slow. That same R&D;and new product development during a slow economy laid the foundation for todays success.
Using that as a model, if our economy really is slowing, (thats still debatable at this point) Apple needs to really kick up their R&D;into overdrive, to put them that much MORE ahead of companies who are scaling back R&D;.
Apple knows what they are doing. And the entire share buy back is the biggest load of FUD I’ve heard in a while.
Manage the top line and the bottom line will follow. Apple will use it’s money to keep creating beautiful products.
DO NOT WORRY ABOUT THE CASH. APPLE KNOWS WHAT IT IS DOING.
Well said ‘Bite Me Arik’
F*ck ALL these self important armchair critics that have these “bright” ideas for a company that is being hugely successful..
They should all shut up and put their heads back into their necks.
A share buyback would not benefit Apple or investors. If investors want to sell their shares, they have had plenty of opportunities to do so. The only two options that make sense to me are to continue hoarding cash until the appropriate investments are mature, whether they be new product ideas or corporate acquisitions, or to pay small dividends. The shareholders do own the company and voting shareholders may eventually elect a board that is likely to return some of the profit made from investors investments.
I think they should hold on to as much cash as possible to strengthen the company in the market. Not the stock market, the electronics market.
Pan Ik said
“Stock holders own a company.
How much of the profit that Apple reports each quarter is to the interest off its cash hoard? In other words, without the cash hoard profits would Apple be not looking so pretty?
All this money sitting around shows that Jobs can´t figure out how to grow the company faster. I am sure there are lots of CEOs out there that could figure out how to make more ROI using $18 billion than putting it in CDs in a bank.”
What a load….. Stock holders may own the company, but that doesn’t mean they know how to run it. They are investing (In any company, not just Apple) their trust that the CEO and board know what they are doing.
Which CEOs could do better? Mikey Dell? Mark Hurd? not likely.
Seen that!?! NASDAQ goes down… and Apple up !??!
Strange logic…
Steve Jobs plans on buying the state of California, and then succeed from the rest of the Union. Then, he can impose a Microsoft stupidity tax on Microsoft hardware and software, and he will also be the new country where most all of the world’s tech movers and shakers live. It will be good. The country of Appletopia.
> its lack of plans for its cash is starting to ring hollow
How does he know there is a “lack of plans”?
@ken1w:
You’re right on the money!
And is less then each of the Waltons have in the bank. Wal-mart, sell cheep, sell a lot.
Tech companies do not pay dividends in general terms. Stock buy backs drain cash reserves and annoy long term investors (short term investors profit). Apple is too well managed to not have plans for the cash they have. Apple like most companies in Tech will not take on debt unless it has too. Apple should as a matter of good business have about a 10 Billion Dollar cash reserve. When in reality means they have about 8-10 Billion spendable cash 8-10 billion is chump change in Tech dollar terms. 10 Billion doesn’t buy you enough R&D;to design a new vibro from the stock wanker’s bird.
So all you bright sparks, clamoring foe a buyback or dividend know better than Apple what to do with the money and how to get a better return. Well, bless you my angels, but I am not convinced.
Therefor, let Apple keep its cash for a little while longer and make all its shareholders a bit richer before you clamor for a refund.
Wow, it’s kinda ironic when you read a mac-fan-boy site for investing advise. I never advise anyone to do that.
Apple stock has been killed over the past 2.5 months. Everyone knows this. (There are a lot of reasons this happened, some of which Apple has no control over, such as the market in general.)The author is right in sense – A buy back program would boost stock price. About every company I invest in has a stock buy back program. Some big, some as small as buying back 1 million shares per quarter(regardless of stock price). Apple could probably care less what anyone on this forum writes/thinks becasue we don’t have 100s of millions invested like big investment companies. If Apple wants a lot of those investors to stick around, and also get new investors, a buy back program sends out the message that Apple is going places – I am so sure of it I am going to put X money back into stock of my OWN company. Investors like to see things like this. I don’t think the Author was talking about Apple spending 18 Billion on apple stock – That would be terrible. I actually would not be supprised if Apple doesn’t start a buy back program over X amount of years – If there isn’t one already in place.
Granted I am a mac fan and have always been – But some people on this site need to chill the F out, and think with common sense – Or at least reaserach something before you write your ignorant comments.
18.5 billion a lot of money? Anyone remember when the Pentagon announced they couldn’t locate another 2.3 TRILLION. No? thought not, coincidentally (or not) it got buried by the next day’s news.