“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.]
“Or rather, Apple’s managers do have a current use of capital, but not one that they are likely to acknowledge publicly.”
This is one seriously profound insight, Captain Obvious!
Apple does not even divulge what they had for lunch, let alone what their plans are with $100 BILLION!!!
Seriously, how do you you keep your job???
I am all for apple hoarding it’s cash. As much as I like the idea of them buying google and killing android. I also like the fact that this level of cash makes almost immune to the global economy problems. They can afford to continue to do what they have done which is innovate their way out of the recession .
Fortunately Apple is not into big aquisitions. There is not much out their worth buying anyway.
Apple is however into big projects.
Apple keep your powder dry!
I don’t want a dividend, and I don’t think there should be stock buy backs, but maybe lowering prices just a smidge would be a good thing? Esp. if you aren’t hurting for profits. If you’re hauling in that much profit, Even lowering things by $50 to $100 depending on the product would be nice.
Apple Inc. has a highly successful business model. How the company spends its money is its business. If the mountain of cash Apple has accumulated upsets the ‘Financial Whiz & Fizz Kids’ of Wall Street then that’s just too bad. When the time comes they Apple Inc. will spend it very judiciously …
I am a socialist. I believe government is here to take care of the things that private industry doesn’t care about. The United States would have never moved forward if this were not the case. You are all short sighted and brainwashed by modern media. None of you knows history. I am Long invested in Apple. They owe me nothing but the maintenance of a good corporation that increases its market value. Jobs was right. You are wrong.
Goos socialists make the best capitalists.
It’s amusing how a lot of people reckon Apple need to go out and spend a lot of money, as if there’s some magical formula that guarantees that every purchase will be a success. Apple buy things as they need them, and in a way that they feel they can integrate them into their business and to push further into other areas. Look at all the stuff Google have bought, how much of that has truly been a success to the extent that there couldn’t be a case for them not having bothered.
MDN, your idea is radical because it makes no sense. If I owned part of a company and had questions and concerns about how it’s running, I have every right to at least voice those concerns. If enough shareholders (i.e. owners) have similar concerns there will be action taken.
A big fat clue for the TechTard journalists and AnalYsts’:
• Apple = constant target of HATE from the ignorami, professional trolls and Stockholm Syncrome PC victims.
• Apple = constant target of lunatic rumor mongering.
• After Jobs originally left the company, Apple was run by Marketing-As-Management that did its utmost to drive the company into the group, culminating in $1 Billion of market rejected Mac Performas rotting in warehouses at the end of 1996.
• The financial climate of the world over the last 25 years has been to SPEND and go into DEBT and get DESPERATE maintaining one’s self as viable. Sound familiar?
• Apple is exceptional in today’s business world as being entrepreneurial and capitalist in the face of a majority biznizz community bent upon Customer Abuse, IP robbery and corporate socialism.
As a unique and brilliant LONER in the crowd of the ordinary and the self-destructive, the WISEST thing Apple can do with its money is invest in its FUTURE. This provides SECURITY and RESOURCES for SURVIVAL.
Bravo Apple! Hang onto your security for future survival and creativity. Ignore the ignorami. Stay the course of sanity.
They “prefer” it because that’s all they know. Most regular Windows computer users I know just live with all the headaches they experience (including viruses, malware, etc, etc) because (a) they are terrified to use something else that they aren’t familiar with (b) they think Macs are too expensive (fallacy) and (c) they still have the antiquated belief that there are no programs/apps that run on Macs. Look at all the failed operating systems MS has put out. Their latest is also going to be a failure on the desktop. Apple will continue to take market share with their entire line, including iPad. You can deny it all you want, but it’s happening. Everywhere you look, more and more people have MacBooks (Airs and Pros), iMacs, iPads… Open your mind, izinxo, and you, too, will be assimilated. Look into my eyes :-S