Apple earning just 0.75% return on $51 billion stockpile

“Apple Inc.’s piggybank, stuffed with $51 billion in cash and investments, is earning a lower return than a typical U.S. savings account. Some investors say Steve Jobs should put that money to better use,” Adam Satariano reports for Bloomberg.

“Apple got a 0.75 percent return on the investments in the past fiscal year, according to a regulatory filing last week. The gain pales next to the roughly 10 percent investors would have earned from the Standard & Poor’s 500 Index and the Dow Jones Industrial Average over that time,” Satariano reports. “Apple’s stock itself also was a much better investment, rising 60 percent.”

“Jobs, Apple’s chief executive officer, said last month that the company has a good track record of using cash, saying it’s holding money for one or more ‘strategic opportunities,’ rather than a dividend or stock buyback,” Satariano reports. “‘We’ve demonstrated a really strong track record of being very disciplined with the use of our cash,’ Jobs said in a Oct. 18 conference call with financial analysts. ‘We don’t let it burn a hole in our pocket. We don’t allow it to motivate us to do stupid acquisitions. And so I think that we’d like to continue to keep our powder dry because we do feel that there are one or more strategic opportunities in the future.'”

Satariano reports, “Apple had $25.6 billion in cash and short-term investments as of Sept. 25, and double that amount when including the longer-term holdings. That means the total is larger than the gross domestic product of Costa Rica last year ($50.1 billion).”

Full article here.

MacDailyNews Take: Hey, if Steve wants to buy Costa Rica, that’s his prerogative. wink We’re not going to argue; we like his strategy, we like it a lot.

[Thanks to MacDailyNews Reader “JES42” for the heads up.]

97 Comments

  1. The fact that Apple doesn’t listen to “experts” and their conventional “best practices” thinking is what makes the difference between Apple and companies like Microsoft. Sure, let’s take the advice of somebody who runs a <$1B stock fund when it comes to managing one of the largest companies in the world with >$50B in the bank…NOT!

  2. The fact that Apple doesn’t listen to “experts” and their conventional “best practices” thinking is what makes the difference between Apple and companies like Microsoft. Sure, let’s take the advice of somebody who runs a <$1B stock fund when it comes to managing one of the largest companies in the world with >$50B in the bank…NOT!

  3. I would prefer that they bought a set of islands of the west coast of Europe. They almost look like the Apple logo already. With a couple of bulldozers and a little time I think we could have a new headquarters for Apple.

    ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

    Cheers

  4. I would prefer that they bought a set of islands of the west coast of Europe. They almost look like the Apple logo already. With a couple of bulldozers and a little time I think we could have a new headquarters for Apple.

    ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

    Cheers

  5. Checking some investment options at Schwab yesterday, most CDs were earning under 0.5%; same for most bonds. One had to go to AA-rated bonds over one year out to break the 1% figure. So Apple’s 0.75% return is consistent with available conservative investment options. I don’t think most of us want to see Apple engaging in currency speculation or running an in-house hedge fund to spike its investment earnings.

    It might consider doing as Intel did a few years ago, running a sort of venture capital fund for investing in promising technologies. But Apple’s approach so far has been to *find* promising technologies relevant to its current developments and buy them outright. So far that strategy has proven itself.

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