“Apple is sitting on a huge cash reserve — $24.5 billion as of September and growing at the rate of $8 to $10 billion a year – that’s doing almost nothing for it,” Philip Elmer-DeWitt writes for Fortune.
MacDailyNews Take: It’s actually providing insulation and flexibility.
Elmer-DeWitt continues, “The money is earning about $1.55% interest after taxes, according to a report issued Wednesday by Bernstein Research’s Toni Sacconaghi, at a time when the company’s stock is trading at a unusually low (for Apple) multiple of 15 times earnings. That makes conditions ideal for a massive buyback of Apple (AAPL) shares, says Sacconaghi.”
“Of course, Steve Jobs may have better ideas than Toni Sacconaghi about what $25 billion can do,” Elmer-DeWitt reports. “The last time Apple’s stock fell this sharply — plunging from nearly $40 a share in March 2000 to $7.44 in December 2000 – Jobs used the cash he had on hand to start a chain of Apple Stores.”
Full article here.