What Apple could do with its cash

“Most folks think that Apple will announce some sort of dividend, and that’s certainly possible. One ludicrous element of U.S. tax rules will apparently make it impossible for Apple to use the cash it has stashed outside the U.S. to pay a dividend (without getting socked with penalties for ‘repatriating’ the cash), so this would limit the amount Apple could pay. This tax rule seems particularly absurd–Apple’s stock is held all over the world–but it is what it is,” Henry Blodget writes for The Daily Ticker.

“Last night and this morning, the smarter folks seemed to think Apple would do nothing–and use the call to bash the government’s tax policies,” Blodget writes. “Government-bashing seems unlikely (at least to me). A clear explanation of why the company isn’t paying a dividend would accomplish the same purpose with agitating the powers-that-be. But ‘do nothing’ seems possible.”

Blodget writes, “I’ll bet the company also authorizes–but does not commit to–a stock buyback. Like most other companies’, Apple’s stock occasionally wilts, and there’s no reason not to have the authority to buy back a few tens of billions of dollars of it at what appear to be cheap prices. This costs the company nothing, and it would provide psychological “support” under the stock price.”

Read more in the full article here.

12 Comments

  1. I’m not too swift when it comes to corporate finances, but what about a stock split? This article never mentions that per say I don’t think, is this possible?

  2. IMHO, Stock buybacks are a stupid mechanism, they don’t really increase a companies value and they drain available cash.

    dancamera, a stock split doesn’t affect the market value or the cash on hand (it is simply an accounting construct, you now have twice as many shares but they are each worth half as much)

    What apple should do is create a “technology start up fund”. A new division that would invest in technology startups. Apple has a real eye for quality and purposefulness of ideas where new technology is concerned.

    1. Granted it would… but it would allow for more people to buy it, vaulting the price up for those people that now own 2x as much… A 3 to 1 split would allow for people to get in that hadn’t when the stock was at a purchasable level. Very few can afford the stock now, no? Thoughts?

      1. Again IMHO, If you don’t have at least $1000 -to loose- you really shouldn’t be investing in the stock market. Stock prices can be volatile and often behave irrationally.

      1. Agreed, but I would hate for Apple to discourage developers like the pixelmator team. While it is not in the same league as CS (more like express on steroids) However, there are many things it does better and faster/more interactive than CS does. Apple buying adobe would likely kill products like Pixelmator

        1. Apple has killed lots of products on a regular basis! Plus, CS is industry standard professional software. It should be the best. And lately, it’s not.

          1. Yes I have to agree, though they would likely have to (eventually) scrap most of that can ‘o worms codebase.

            Or they could buy pixelmator, and ramp up the development 10X, surpass the feature-set in PShop and then price it at $199 (and watch Adobe twist in the wind)

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