“As of June 27, Apple had a whopping $31.1 billion in cash and investments, up 27% from the year-earlier figure. The company’s cash position is the strongest among all technology companies, reckons Brian Marshall, an analyst at Broadpoint AmTech. (It’s not the largest, strictly speaking; Cisco Systems recently reported $35 billion in cash and Microsoft listed $31.4 billion, but both companies have debt that takes them below the net cash position of debt-free Apple, Marshall says),” Don Clark blogs for The Wall Street Journal.
“During a conference call last month along with its third-quarter earnings, Chief Financial Officer Peter Oppenheimer said the company’s ‘investment priority for the cash continues to be preservation of capital, which has served us well in the current environment,” Clark reports. “On the other hand, Apple can use its cash in strategic ways that other rivals can’t afford. Oppenheimer said the company recently made a $500 million prepayment to Toshiba for future supply of NAND flash chips; those are crucial components in iPhones and iPods, and chip shortages or big price swings can cause problems for hardware makers.”
Clark reports, “What else might the company do? Marshall suggests that ‘the bank of Apple,’ as he calls it, would be wise to fund a broader assault on the enterprise-technology market. Some companies and government agencies already are buying iPhones in large quantities, he writes, and he expects more will follow as employees put pressure on managements to offer the popular devices.”
Full article here.
[Thanks to MacDailyNews Reader “James W.” for the heads up.]
How about funding my guys weekend at the cottage!
ADBE
Market Cap: 16.87B
How about financing corporate purchases of Apple hardware at a low but reasonable interest rate.
Cheers
What to do? Keep he attitude that the money isn’t burning a hole in your pocket. Most importantly, make sure you have enough cash on hand so you don’t ever have to cut back on R&D;through any recession.
Don’t be in a rush to find a way to spend it.
Unless you want that shinny new iPhone.
Cash is King! When the Cash in Apple Horde gets to $50 Billion let me know.
How about a one-time dividend, for loyal AAPL investors? $2 per share would cost less than $2B.
Now I see it! Steve is going to buy the US back from China!
$31.1 billion?!?!?
Thats a lot of money to give back to the shareholders!
” width=”19″ height=”19″ alt=”wink” style=”border:0;” />
A nice contribution to the Bizlaw Foundation for Research of Potential Apple Product Uses would be very appreciated.
“The bank of Apple” could take half their cash and buy a small country of their own or a small island from some country and make it a new country.
But, then again, California could sell 25% of the land to pay down their debt and cover those IOUs.
I could use an economic stimulus package, m’self.
hahah
one day apple will be worth more than ms
AND SOON
then they will buy them out
steve jobs ROOLZ
Lets just hope Apple continues to be conservative about how they invest their reserves and do NOT take any advise from the dumbwads at Harvard’s endowment management group. Or from Porsche’s former CEO – who was as brilliant as Jobs in product execution until his ego got in the way and he decided that making great product with good margins was just not good enough. Now he is just another dumbwad (although a rich one – even though his scheme indirectly led to the suicide of an investor).
I know, I’m not a business person but . . .
Why would a company that has $35 billion or $31.4 billion have the need to be in debt?
@The Other Steve
I am not a business person, either. I can think of a couple of reasons. It could be long term debt that is not callable, so you have to keep paying interest until the bond matures. This doesn’t seem all that likely for big companies like M$ and Cisco, though. Another possible reason is that the cost of debt is low enough to warrant keeping the cash in hand. For example, in the late 1990’s just about anyone could make more money in the stock market than it cost to borrow (as long as you cashed out in time!). But neither of these possibilities seem to make much sense in this instance.
That’s a long winded way of saying, “I’m not sure.”
@The Other Steve, if your cash is earning more than you’re paying for the money you’re borrowing.
Wings2Sky write, “Now I see it! Steve is going to buy the US back from China!” Unfortunately, US debt to China is growing far faster than Apple’s cash pile. It’s already around one TRILLION and climbing fast. Persian Gulf countries collectively hold about as much. Face it. The US is in debt up to our eyeballs.
As to Apple’s available cash, I’m confident they’ll ignore the “Buy Adobe – Buy Sony – Buy Dell” crowd. Bloody waste of well earned money. They’ve done fine without taking my advice, but they’ve certainly got the wherewithal to fund the future Apple Business/Enterprise initiative when the time is right. Yeah, they’ll be mocked as they were when they started the Apple Stores. But most of the pieces are falling into place.
@The Other Steve,
According to an accounting friend, it has something to do with borrowing money for investment purposes (doesn’t necessarily mean stock in other companies).
My impression is that it’s like using a credit card, even if you have plenty of money in the bank to either pay a purchase off right away in cash or debit–just as people have credit scores, companies have something similar too.
@The Other Steve – Apple doesn’t have any debt, nor has it since 2004.
@ Jay
The Other Steve is asking about why the other two companies mentioned (that have more money in the bank than Apple) have debt that exceeds their large cash hoards.
Good question… I’m sure it makes sense to have some debt, but they should retire some of it with the cash on hand.
give some ca$h to your beloved shareholders, please
Apple is saving all them cashola just in case Ballmer goes nuclear and let’s out all that green and yellow gas farts. Apple will fund emergency gigantic hepa filtered machines to clean up Ballmers mess!
@ken1w – Thanks for pointing that out. I mistakenly read his $31.4 (referring to Microsoft’s cash) as referring to the $31.1 cash balance at Apple.
So, to answer The Other Steve’s question —
Take a look at Cisco (CSCO). As of July 25, 2009, they had $35 B of cash and $10.3 B of long-term debt for a “net cash” position of $24.7 B. So, why are they potentially better off keeping both that extra $10.3 B of cash and debt on their books? The simplest answer is liquidity. Since the debt is long-term in nature, it will be payable over some period going years into the future. The cash, on the other hand, is all available today. Management must think that the terms of the debt, combined with their liquidity needs, make the debt worth keeping. Perhaps they are eyeing large acquisitions. Or are just trying to accumulate as much cash as possible to weather the economic storm. A company is always far better off borrowing money when it can get it, rather than when it needs it.
On second thought let me know when Apple’s Cash mound hits $200 Billion then they could buy Intel with $50 Billion or so in cash left over.
As an Share holder in AAPL I’d rather keep the Cash horde and improve their position as a company with it by reinvesting it in the company and do big prepayment deals for components to save money. Strategically using and building the cash horde to the point of being able to use it to pummel the competition with outstanding R&D;in innovative new products.
Save it for the day AT&T;and Verizon try to destroy them…then become an investor in Clearwire and become a national MVNO