“Apple’s huge cash hoard is a something of a mystery,” John Carney writes for CNBC. “And, for some investors, a frustration.”
“At the close of last year, the company had $98 billion in cash and cash equivalents. By now, it certainly has over $100 billion,” Carney writes. “Why on earth does Apple hold on to that much cash?”
“This stunning level of cash accumulation — the likes of which has never before been seen in the history of corporate America — is the legacy of Steve Jobs,” Carney writes. “As Fortune magazine’s Adam Lashinsky has explained, Jobs ‘loathed stock buybacks, arguing, with good reason, that they are bribes to investors rather than good uses of capital… such topics were considered off the table with Jobs.'”
Carney opines, “This position would make sense if Apple had an investment strategy that included ‘good uses of capital.’ But the level of capital accumulation indicates that it doesn’t have a growth strategy that requires the use of this capital. In fact, chief executive Tim Cook recently said the company’s board is ‘in active discussions’ about what to do with the cash — a clear indicator that they don’t have a use of capital that is arising organically from their business strategy. Or rather, Apple’s managers do have a current use of capital, but not one that they are likely to acknowledge publicly. The current use of Apple’s capital is to preserve the fortunes of executives, employees and large, undiversified shareholders at the expense of ordinary investors.”
Read more in the full article here.
MacDailyNews Take: Or maybe, just maybe, Apple has a reason or reasons for accumulating that cash that a CNBC editor cannot fathom? Perhaps it’s as simple as Apple’s near-death experience having taught the company a valuable lesson and they never wish to be in that position again? Or maybe they just want to save up for a few more quarters and buy Microsoft outright and put it out of its misery?
Here’s a radical idea: Instead of whining about dividends, stock splits, and/or buybacks, Apple shareholders who don’t like how Apple Inc. is run should divest themselves of their Apple shares.
[Thanks to MacDailyNews Readers “Fred Mertz” and “Lynn Weiler” for the heads up.]