“Apple has $45.8 billion cash and marketable securities, so it’s easy to view Apple’s top-heavy balance sheet with the eyes of a kid in a candy store,” Munarriz writes.
Unfortunately, investors are forgetting a few things:
1. You can’t buy pride, but you can give it away. Whether Apple invests $30 billion to eat its own shares or heeds others calling for a chunky one-time payout for the same amount, Apple’s market cap could shrink by roughly $30 billion with either fewer shares outstanding or in the act of going ex-dividend.
2. One-time ransoms are for quitters. You know who wears the “I paid a special one-time dividend” badge? Losers, mostly. Recent slackers that have gone that route include goth retailer Hot Topic and meandering GPS has-been Garmin. Does Apple want to run with that crowd?
3. Apple may still need the money. It’s true that Apple hasn’t had much of an acquisitive appetite in the past. It’s also true that Apple is unlikely to come into a greenback-slurping funk in the near term. However, you never know when an arms race is going to kick off.
4. Today’s tech leaders aren’t conventional. As companies mature, a dividend is a natural way to replace growth investors with income-chasing shareholders bent on value. Well, that’s the way the companies in your father’s portfolio went about their life stages. But Apple [isn’t] playing by conventional standards.
Munarriz writes, “Leave Apple’s billions alone. If you’re buying into Steve Jobs’ company, it better be because you think that he can make more sense of the company’s greenery than you.”
Full article here.
Apple should just sit on that pile of cash with a shotgun.
Buy backs are for struggling companies.
Munarriz writes, “Leave Apple’s billions alone. If you’re buying into Steve Jobs’ company, it better be because you think that he can make more sense of the company’s greenery than you.”
You couldn’t have anyone better working for you.
Apples War Chest is too small. They have to be able to buy out even the biggest players. When you think about it.. Apple does make big long time investments.
“Apple has entered into a strategic, long-term agreement with LG Display Co. for the supply of flat panel displays through the year 2013, according to regulatory filings made Monday with Securities and Exchange Commission.”
http://macdailynews.com/index.php/weblog/comments/19698/
“Apple prepaid a total of $1.25 billion to Hynix, Intel, Micron, Samsung Electronics and Toshiba in order to secure an ample supply of NAND flash memory through 2010.”
They invested a billion dollars to the new data center or was it 1,5 billion. Can’t remember. Apple has to have the money to do this kind of things when ever it feels like it. It would be idiotic to ruin the War Chest.
As a shareholder I am really confidend that the Apple management knows what they are doing.
Build their own network. Then you’d see just how fast the likes of AT&T would scramble to get theirs up to speed.
Oh yeah and forget this whole Google-Verizon nonsense. Nobody will want to play in their sandbox.
I know it sounds insane, but Apple is going to buy Microsoft. Might be 10 years from now when mobile completely rules and Redmond is worth a third of what it is now, but it will happen.
Or, Steve will lose interest in that conquest. Kind of like the hot girl who snubbed you back in high school. Then you see her 15 years later and you wouldn’t touch her with someone else’s private parts.
The ability to assure supplies and dictate terms on displays, flash memory, server capacity on the cloud and other commodity items solidify the foundation that all future conquests will be built upon.
Ready cash = freedom to not only think different, but to proactively create the future.
@MidWest Mac – Sorry, but M$ was never the hot girl. Bloated, self absorbed, follower, but never hot.
Why would Apple buy M$? Apple already has the better operating system and full control of the hardware that runs it. Why bother getting into a second class OS that runs on every piece of junk cobbled together anywhere with astronomical numbers of possible hardware configurations? That would be a waste of money.
Thanks, lurker, I agree with your assessment. One also has to consider that the military-industrial complex would fight an Apple buyout of MS to the death.
Steve Jobs thinks about Microsoft and Bill Gates and Steve Balmer a hell of a lot less than we do. He was over that a long long time ago.
Now, he just plain knows he’s right and they are stuck back in 1998.
Watch out, Apple. Anybody with cash might be ‘asked’ by the government to ‘donate’ it shore up Union pension plans.
@argusx
It is funny that US has money to burn to its military, but doesn’t have money to take care of its own people.
But it is good that Apple has the money available if something like that happens.
Big War Chest is also a “poison bill” against anybody who tries to attack or buy Apple because Apple can seriously fight back.
@ One Guy From Finland
Apple is the second largest company in US and rates as the largest Tech Company in the World by share value. No company in the World can raise enough cash to mount a hostile take over of Apple Inc.
It would take 5 times Apple’s Market Cap in cash to mount even a half hearted hostile take over action of Apple. What company in the world could raise that much cash without attaching a lot of attention very quickly.
If I were with Toni Sacconaghi and Bernstein Research last week, I wouldn’t be with them this week.
@One Guy From Finland
You, and all of free Europe should be especially grateful that the United States of America has been as generous as it has been in defending freedoms, and liberating others from tyranny.
Make no mistake, the Us could have been richer had it chosen not to have a good conscience…
If you have too much money, sooner or later the Barry and his merry band of socialists will demonize you, then take it away from you.
With deflation headed our way the best thing is cash.
As prices drop cash will increase in purchasing power without having to pay taxes.
Good for you if your earning interest too, a extra bonus.
(@Macaday
I don’t think so. US is just messing around at the moment. The damages takes decades to repair. US spends more to military than the EU, China, Russia, India and the rest of the world but together. BTW US does not defend freedom nor liberty.. just oil.)
Back to the topic.
@DUH!
Yes it is and I do know that. If Apple starts to burn it’s money then it does not stay that way. I own 7*** AAPL . I invested to Apple right after Steve Jobs game back to Apple.
Toni Sacconaghi can talk what ever he want’s to because Right Stuff aka Steve Jobs and Apple managmend team are not listening. They are way too busy and focused doing that Apple does best..
damn typos 🙁
Considering Apple’s market cap it looks like the market likes what they are doing just fine, and can safely ignore ANALysts telling them what to do.
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Apple won’t and cannot buy Microsoft. That would be considered an anti-trust action. Since Microsoft has yet to show any real potential for the future of competing, for Apple, buying Microsoft would be like buying a typewriter company. You would own the market but it would be struggling to find relevance in the new world.
Remember, Steve Jobs declared the PC wars are over and Microsoft won. However, the current front of the war is no longer on the PC side, it’s mobile devices and Apple is winning there. Even Apple’s ad play is on these new platforms rather than simply search in a browser which is a PC paradigm.
That’s where Apple has been and will continue to spend its money. It bought out a chip fab company, a mobile ad company, a music streaming company, potentially some gaming companies – all because of computing anytime, anywhere.
At some point, there may be a need to make a big, bold purchase that cements its domination in mobile (not a carrier – that is too localized) but I think that they will continue to use small chunks of that war chest to push the envelope with their strategy.
Any company that makes software that continues to ignore Apple does so at their own peril and risks becoming irrelevant in a few years.
Ah, how quickly they forget. I’m sure there are European countries that are glad they’re not speaking German, but can’t quite remember why not.
I think Steve Jobs’ conservative “rainy day” philosophy with respect to Apple’s cash reserves is a smart move. That money is best spent enabling the company to take risks (as JObs himself has stated), pre-pay for components contracts and acquire smaller companies that add some valuable assets to the company (not just for the mere sake of acquisition). The smart Apple investor understands those things. Yes, Apple is flying high now with few missteps and looks set to continue to do so for the immediate future, but who knows what the future may hold? The tech sector can change quickly, and it’s best not to get caught with one’s pants down. In this regard, $45 billion is about as nice a security blanket as a corporation could ask for. Given Apple’s tumultuous history and hubristic lessons learned, Jobs understands better than anyone the need to be prepared for the unexpected and to avoid resting on laurels.
@ Macaday & Uncle Al
Don’t be jerks. Read your history books. What does US/Europe rivalry have to do with Apple’s cash pile?
Apple will buy M$ and shut the company down.
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