“Apple should make better use of its cash reserves, or at least explain what it intends to do with them, says Bernstein Research analyst Toni Sacconaghi in a new memo,” MacNN reports. “‘Apple has done an extraordinary job in creating value for its shareholders over the last five years,’ he writes. ‘However, one common and growing source of investor frustration has been the company’s unwillingness to return any part of its burgeoning $46 billion cash balance to its shareholders or even discuss its vision for how the company plans to use its cash. We think Apple’s cash policy –- or lack thereof — is an important shareholder issue and one that we believe needs to be better addressed by Apple’s Board.'”
Advertisement: MacMall Special: Adobe InDesign CS5 for Mac (65062470) only $694.99 + FREE Shipping
MacNN reports, “Sacconaghi remarks that Apple now has more net cash than any US company, so much so that it’s larger than the market cap of all but 49 S&P 500 companies. An official Bernstein estimate calls for the reserves to grow by another $20 billion in FY 2011.”
Read more in the full article here.
MacDailyNews Take: Guess what? Steve Jobs knows what’s best for Apple far better than Toni Sacconaghi. Steve Jobs does big things and he surely has a plan. You can take that to the bank.
Wouldn’t they love to play with $46b? Fo getta bout it!
Silverhawk, when you get off your fat ass and get an MBA, then you’d understand that cash has 0 return on investment. Apple is a public company, and that cash should be spent on something to benefit the shareholders. I don’t think dividends are worth much, but they should be acquiring other companies, so that cash has some performance. These days, technology companies are cheap, so they can get good deals.
But, I guess you sit in your mother’s basement eating potato chips and have no clue.
They want Apple to go on a bullshit buying spree just for the heck of it.
All apple is doing to waiting until it has enough cash to buy Microsoft outright and then shut it down.
Sacconaghi has a point. Presumably the cash is intended to be a cushion against hard times—like Apple had in the 90’s, but $46B to $66B is excessive, and Apple’s owners, us stockholders, could put that money to better use elsewhere via a dividend.
Jobs is a genius in the product innovation department, but that doesn’t necessarily transfer to the finance department (which historically has been weak at Apple).
…but they should be acquiring other companies, so that cash has some performance.
You do realize that buying companies carries risk, right? Buying companies just to blow cash is as stupid as buying a car because you’re tired of having a bank balance.
You don’t need an MBA to understand that cash has no return if you don’t INVEST it. It may even lose value because of the inflation rate.
You don’t spend cash in someting to benefit share holders.
What you want to do with cash is move it into something, usually investing it, that compounds it’s value as fast as humanly possible.
Hope I said right.
Toni Sacconaghi
does not understand Apple and
therefore does not understand Apple’s tactics.
Here’s an idea. Apple buy (or build) their own network and stick it to these heathens that want to corner the internet for themselves (Google and Verizon).
Maybe buy Sprint/T Mobile and launch their own nationwide network.
If investors don’t like Apple’s cash hoarding, they should sell. These geniuses should then run their own super-profitable company and spend ’til they’re happy. I’d be happy to buy Apple at a lower price.
Would someone please poll all the villages out there so we can find out where to send this idiot!?!?!? What a blow hole!! I’m sure Apple had people smarter than him to figure out where to use this money.
My Girlfriend has an MBA and as much as I love her she has been consistently wrong about Apple for Nine Years.
Shows you how much MBA’s know how to run fresh innovative companies.
Close, but not quite. I don’t know if you are a shareholder or not. But if you listen to the most recent conference call you would have your answer. The most important issue for Apple is “the preservation of capitol” as stated by Peter Oppenheimer. It doesn’t get any clearer than that. When asked what they intended to do with cash, Tim Cook said “from time to time we buy smaller companies for their technology or expertise.” Again, it doesn’t get any clearer than that.
@ LeftCoastDude
Apple has a bigger game plan than the usual business.
@ MacMarc
I don’t want a dividend. I’d have to pay a tax on that dividend, as ordinary income. If Apple wants do some acquisitions, that’s great (as long as they are smart acquisitions) because doing should increases Apple’s value over time (because Apple is not careless like Microsoft). Otherwise, there is absolutely no problem with having that cash as a reserve.
The cash reserve “just sitting there” adds to Apple’s value as well. Even if the rate of return was 0.5% (half a percent) on $50 billion, that is $250 million per year. And AAPL’s price at any given time is higher because investors know Apple has zero debt and $50 billion in the bank. When I eventually decide to sell some shares (hopefully at some high point), that cash value is part of AAPL’s price. So I’ll take the my “dividend” as part of the stock price at the time of MY choosing, and pay the (lower) taxes as part of the long term capital gain on those sold AAPL shares.
Now, if you think you
> could put that money to better use elsewhere via a dividend
then, you should simple sell some AAPL shares now (however much you want or need), and put the proceeds to that “better use elsewhere.” Don’t wait until Apple makes the unlikely move of issuing an actual “as ordinary income” dividend.
That’s what I say.
I think a lot of shareholders think they’re entitled to more than they really are. As Steve basically said during the Antennagate press conference, shareholders buy into the company that Steve & the others execs run the way they decide is best. If you don’t like it, sell your stock and invest somewhere else.
And spending money for the sake of spending money is absolutely absurd. Apple worked hard to earn that pile of cash and they’re going to spend it if and when they decide it would be beneficial. Not just because they can.
You’re the typical short sighted nitwit that brought the world economy to it’s knees.
Think Different you muppet.
Just because you don’t know what someone’s plan is doesn’t mean there isn’t one. This may come as a surprise to Toni but Apple doesn’t shout it’s plans from the mountaintops and folks that interpret that as doing nothing have consistently been proved wrong.
“Finance Historically Weak At Apple”
What a sensationalist headline.
Take a look at the amount of people that have made huge money on Apple since the very start of the company.
You Troll Twat!
ken1w has it right. I have an MBA and I am a shareholder, and I fully trust that Apple knows better how these short term investments fit into their strategic plan than some “analyst” sitting way out in left field (or any of us). It appears even these analysts think it’s just literal cash laying around. They are investments getting a return, and they are very liquid which gives Apple incredible flexibility to defend it’s turf and strike at strategic acquisition opportunities at the ideal opening. To just spend it willy nilly on big acquisitions that dilute the company’s focus would be foolish and risky. Most large acquisitions do not go all that well for shareholders, and with Apple’s very unique culture it seems to me even less likely a large fit could be made.
I am an AAPL investor and I am not frustrated in the least by that growing cash reserve. That is a darn sight better than a shrinking cash reserve.
Something else to consider – that cash is (or should be) reflected in the stock price. So I can sell AAPL and recover that value at the long term capital gains rate. However, if some of that money is returned to me as a dividend, then I have to pay a higher tax rate. In addition, the stock value *should theoretically* decline to compensate for the disbursement of assets.
Apple may find some great deals in the future. Perhaps it will bring some manufacturing into the U.S.? I can only hope that someone will…
@LeftCoastDude
Do *you* have an MBA? If so, do you truly believe that Apple is holding $46B in actual zero return cash?? Apple is making at least a modest amount on that money, although current yields are fairly low.
Perhaps AAPL should start a credit card company… It must be nice to lend at 15%, 20%, 25%, even 30%…
I figure Steve’s saving up to buy something important to Apple’s strategic goals… Verizon, for example, has a current Market Cap of $85.8B. Can they acquire a controlling interest?
It’s very simple:
1.- Shareholders, if you don’t like it, go with microsoft or HP, who is going to give you the stability that apple gave you during the economic crisis? Microsoft? Dell?
2.- hey ANALyst, if you think you can do much better, why don’t you have 40 Billions in your bank account?..
I usually agree wholeheartedly with your posts.
Even in this post re Google and Verizon, I agree with you,
But for Gods sake, America is not the centre of the Universe.