Apple’s cash hoard could grow to $146 billion by end of 2012

“The $76 billion Apple reported last quarter could grow to $146 billion by the end of 2012,” Philip Elmer-DeWitt reports for Fortune.

“Apple’s (AAPL) fourth fiscal quarter doesn’t end until next week, but Morgan Stanley Katy Huberty already has her eye on the company’s massive holdings in cash and marketable securities,” P.E.D. reports. “And like many institutional analysts (see Don’t be fooled by calls for Apple to declare a dividend), Huberty thinks she knows exactly what the company should do with all that scratch. ‘Repurchasing shares or initiating a dividend is the best use of Apple’s excess cash for shareholders,’ she wrote in a note to clients issued Monday.”

P.E.D. reports, “What Huberty doesn’t mention in the text of her report is that by ‘shareholders’ she means Morgan Stanley and the other institutions that hold 70% of Apple’s shares. You have to get to the fine print in the “disclosure” section to learn that…”

Read more in the full article here.
 

32 Comments

  1. To me, the CASH HORDE represents the survival of Apple on into the future.

    The cash horde of $4 Billion from back in 1996, before Apple’s marketing division did their very best to tank the company with over-orders of $1 Billion in market rejected Performas, saw Apple through its worst times, bought NeXT, hired Steve Jobs and continued Apple’s ability to make the best computers on the market despite HATE HATE HATE from the TechTard press.

    Thanks to that cash horde, Apple was never on the brink of bankruptcy. It soldiered on into its current era of unprecedented success. 😀

    1. There’s a huge difference between $4B and $146B. If Apple gets to the point where it’s blown through $100B and really needs that extra $46B to survive, I’m not sure it’s worth it.

      I’ve seen this argument before. The rainy day. It dismissing the notion of who’s money it actually belongs to. As an investor (owner), you really don’t want Apple, or any other company for that matter to have that much cash on hand “for a rainy day”.

      1. I am a shareholder, and I am fine with it. If you have watched the trends for Apple’s cash and securities, the short term portion has leveled out and the growth has been going to long term investments. I have no doubt that Apple gets a better rate of return on investment than I, and Apple has show great restraint in acquisitions. So i am not worry about Apple wasting the money. In addition, with Apple retaining those earnings, I avoid the tax impact of a dividend distribution which I would simply plow back into more AAPL.

      2. let the board decides what is in the best interest of the company and not you or stupids journalists. They know better and they have put the company into this strong position. If they take any note of stupid articles or comments or advised from analyst then I am sure they would have gone broke. Note to Steve & Tim Do what you think is in the best interest. Ignore all comments or advise.

  2. Is there truly such a thing as “excess cash”??

    I say keep stockpiling the money. Sure things are going great now but that does not mean they won’t need the cash to re-invent the company again sometime in the future.

    It must kill these wall street dipsh*ts to see all that money sitting there with no clear path for them to rape the coffers.

  3. As an investor I am more than happy to have Apple keep the cash and use it as muscle and protection against its competitors and the “HATE” press as someone mentioned above.

    One thing that I would quite like is if instead of a dividend, Apple issued something like a coupon that allowed you to spend it on Apple products. I am sure investment funds that hold billions of Apple stock may not like this, but then again it might allow them to get rid of their PC’s and replace them with Macs. Probably not legal, but I can dream.

  4. With half of that over off shore money, Apple could buy an island large enough for their own country with an air port (the kind you land jets on) and a shipping port. Pay no taxes any more. Just establish their own sovereign country.

    To get around the currency problem, all shipments will be paid for on gold.

    You all need to “Think Different” the way Apple does.

    1. I was having the same thought of Apple purchasing an island and adding a new country to the world’s map. Islands like Singapore, Hong Kong and Taiwan have shown that it’s feasible to compete against much larger land masses.

  5. I think it’s time Apple wakes up and gives the money to the rightful owners…The shareholders…

    Sure keep enough for a rainy day but the excess horde is getting a bit ridiculous at this point….To those that think Apple needs that kind of money in reserves you’re wrong….Every company should stay a bit hungry and know that their existence rides on innovation and doing their best…Lets face it with the kind of money Apple has they all know they can afford to screw up royally for years to come…

  6. Apple needs to keep stockpiling that cash. I want to see Apple piss off every bank on Wall Street and then buy them all.

    It’s really hard to understand why Apple having reserve cash upsets so many people. It’s like Apple telling Morgan Stanley how to run their bank and Apple could probably do a better job of not having investor’s cash disappear into thin air.

    One thing for certain, if nearly every other consumer tech company goes under due to a failing economy, Apple will be able to keep its business running. The last tech man standing, so to speak. I feel fairly certain that Wall Street is going to try to rape Apple shareholders for all they are worth by driving down Apple’s share price for all sorts of vague reasons. That spare cash is the only thing I think that Apple can truly depend on as a hedge against hostile factions that are always trying to destroy Apple. As long as Apple products are selling like crazy, Apple needs to keep stockpiling that cash and shouldn’t pay attention to any analyst’s suggestions.

    Apple is currently sitting firmly as the wealthiest publicly-owned company by market cap and i guess Apple aims to keep it that way. Largest market cap and largest cash pile. I don’t think any Apple investor of five years ago would have ever imagined such a thing to happen. I certainly didn’t.

  7. The problem with these kinds of predictions is that Apple doesn’t meet them, then they will portray Apple as a failure, which of course is ridiculous. The other problem of course is that even if it does reach that level, these stock “analysts” will clamor even louder for a buy-back/dividend, which of course won’t happen.

  8. A tip for those of you without a business background:

    If Apple NEVER pays a dividend or NEVER buys back shares, then the proper value of its shares is $0. A share’s inherent value is the present expected value of all future payments to shareholders (through dividend or share repurchase).

    Every company, at some point in time, must begin to pay profits back to its shareholders, or being a shareholder is worthless. The value of the stock can’t keep going up forever if no profits are ever returned. The question is when is the right time to start – typically companies in high-growth mode don’t pay dividends so they can retain the earnings for reinvestment in more growth. But it’s hard to see how Apple needs so much cash to invest in growth, considering how much they’re generating already.

    Apple’s return on its cash hoard is actually fairly poor. At least they should “invest” it in buying back Apple stock, which is undervalued. They can always sell shares later to raise cash if needed.

    1. Then kindly explain why their share price is as high as it is. A share represents the worth of the company divided by the number of shares issued, simple really. All I can see dividends/buybacks doing is to allow speculators free rein to wreck havoc come earnings/dividend calls time. Apple has decided not to play ball and investors are pissed. As I said in a post below – if it is so bad, sell your shares and stop bitching, simple really.

      1. Yes, but what is the “worth” of the company to an owner of the company? It is, quite simply, the present value of expected future profits paid to the owner. But if those profits are never paid to the owner, ever, then the present value of those future profits is 0.

        I’m not saying they need to return some profits to shareholders now. I’m just saying that they need to do it at some point in time -either through dividend or share repurchase.

        Simple logic – all companies will eventually go out of business. Maybe in 1 year, 10 years, 100 years, or 500 years. Eventually it will happen to all. And by definition, if a company goes out of business without ever returning any of its profits to the shareholders, than the shares were never worth anything to begin with.

        1. its not that I don’t understand your argument, I did take a few finance courses in college. But to argue that apple stocks are worth nothing because they don’t pay dividends is misinformation. By that same argument then stock buybacks are worthless too – still not paying anything back to the stockholders. Instead look to ROI. There’s your worth right there. From where I sit, it looks like shareholders looking for dividends basically want money without having to sell their shares, sorta like being paid interest on a fixed deposit. However, if said dividend was paid the stock price of Apple will not be as high as it is today because the Cash on Hand has been baked into it.

  9. As an Apple fan, I look at that $146bn number and make a happy giggle. What a huge f**** you to all those who doubted them over the years, knowing they hold the kind of financial power that could squash all of them like bugs.

    But as a fan of the US economy, I look at that same number and let out a weary sigh. That’s $146 billion dollars that’s just sitting there, not doing anything productive. More than anything else right now, we need those billions of dollars moving through the economy, from business to business, person to person, buying things and making the economy grow. Giant cash hoards don’t help at at time when the last thing we need to be doing is taking money out of the economy.

    I just wish Apple had some kind of incentive to spend some of their cash. Not on an acquisition — that just moves the cash from one hoard to another — but on something that results in money moving around again. Building that huge, ambitious campus is great start. Building some more huge ambitious Apple stores would also be nice.

    ——RM

  10. Be real…..

    Back in the beginning of this century when the bubble burst and the economy went in the toilet, it was Apple’s cash reserves that allowed them to keep up research and development at a time when other companies were cutting back or stopping.

    Apple’s cash allowed it to produce the iPod, and iTunes store when others were doing nothing.

    The mega obscene amount they have now allows them to keep up the pace when others are starting to realize that they need to be doing something. It allows them to purchase in advance all the parts needed.

    Everyone who claims Apple needs to burn through cash can stfu. Horde away Apple, get a trillion in liquid assets, let they naysayers twist in the wind

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