Apple’s massive mountain of cash – and everything you need to know about it

“Apple makes more money than any company has ever made,” Matt Phillips writes for Quartz.

“As a result, Apple is left with a large and growing pile of cash: more than $200 billion,” Phillips writes. “Who owns this money? In one sense, Apple does. But in another sense, it doesn’t. Since shareholders own Apple, it’s shareholders that really own the money. Apple is just managing it on their behalf.”

“Historically speaking, companies have tended to pay this money out to shareholders in the form of dividends,” Phillips writes. “Apple is one of those companies, having resumed paying dividends in 2012. It’s now one of the largest dividend payers in the world.”

“But there are other ways companies give shareholders their money back. In recent years, the most popular way has been through the repurchase of shares, also known as buybacks,” Phillips writes. “Apple is also the source of the world’s largest ever buyback operations, with three of the top five biggest quarterly buybacks among S&P 500 companies, emanating from Cupertino.”

Much more in the full article here.

MacDailyNews Take: And to think, this is really only the beginning!

24 Comments

    1. I agree, but I don’t stop there. 10.10, 10.11 I hate them and will never move to them. I’m staying, for now, with 10.6.8

      10.10 was a huge step back. Terrible cosmetic changes but, more important, functional changes that surely were not necessary. Who the hell was in charge? Shoot that person!

      I still believe Apple and its ecosystem are better than the competition but what they’ve done with the system surely pisses me off these days like it never has in the past. And I’ve been an Apple booster since 1988.

      1. I have not had any significant issues with 10.7.x, 10.8.x, 10.9.x, or Yosemite. But I generally wait three to six months for most of the bugs to be worked out.

        You stopped at 10.6.8? Why? Unless you are hamstrung by PPC-based Apple hardware or incompatible software, I cannot understand why you insist on sticking with an OS from mid-2011. There are always some changes that people do not like, but the net effect is generally positive. And most of the cosmetic/aesthetic complaints fade with time and familiarity and/or are tweaked by Apple.

        Your choice, Glenn. But your opinion does not appear to be consistent with the majority position on this issue.

    2. Really? You are leaving MacOSX for Linux because of accessibility?

      That’s like moving from a townhouse to a cardboard box because there just wasn’t any room for servants quarters.

  1. The reports should really talk about (cash on hand) minus (debts owed out) as a better indication of the available cash. With that big of a debt, the amount of cash doesn’t seem as relevant to investors.

  2. One thing I know about it is that it can’t be easily touched without heavy taxation and another is that pile of cash has no value to Wall Street. Too bad on both points.

    If Apple could use it, I wouldn’t want them to waste any more money on share repurchases but for R&D and acquisitions. Just a quarter of that cash could go a long, long way to securing Apple’s future.

    1. Apple’s historic success helps to point out that THE COMPANY should be in charge of its own decisions, not money grubbing shareholders such as yourself. Owning AAPL will probably frustrate you to no end, so you might as well sell now.

      1. money grubbing shareholders such as yourself.

        Derek, that’s easily the most idiotic thing you’ve ever said. Apple is publicly-traded, joint-stock corporation. Its fiduciary duty is to increase shareholder value. The whole reason that people buy shares of stock is the expectation of profit in the form of dividends or increased share price over time.

        Apple is a business, not a church. Get over yourself.

        -jcr

    2. You are an idiot, and should never hold any position of financial responsibility.

      Dissipating a company’s capital by 80% every quarter is a good way to drive the company into bankruptcy whenever any economic downturn happens.

      -jcr

      1. No it’s not.

        Well, let’s see. Suppose there is a company that creates 100 shares and sold 50% of the shares. That means it holds 50 shares. Now we need to pretend this company made money. Let’s say it made 1000 dollars in profit.

        The company gets to keep 20% of that profit. That leaves 800 dollars to be distributed amongst the share holders. 800/100 shares, 8 dollars a share.
        The company has 50 shares, 50 X 8 = 400 dollars
        So in total the company has 600 dollars of the total profit, 60%.

        John C., I would say you have been to business school. Just to let you know that’s 60% of the profits that stayed with the company.

        Now, the company is free to increase the percentage amount of those profits that it can keep, they can buy shares they don’t own, they can sell more products, or they cut down on expenses.

        I would argue buying the shares back gives the company freedom to tell watchers to go fly a kite, Dell for example. But as a way to return value to the stockholders it is short sited and cost a heck of a lot. The company would be paying full value and an increasing price for a share, as such a buying spree would drive prices of the share up. Paying out to share holders allows the company to pay out only a fraction of the cost of a share.

        It’s interesting to me to see how many people think a publicly traded company should just keep the money until… They sold shares to raise money. If the only expectation is that one day someone will pay more than the initial purchaser then this system is just gambling.

        Let’s scale up. apple made approximately $75,000,000,000 this last quarter?… let’s say 18,000,000,000 in profit. 20% of that is $3,600,000,000 off the top. Leaving $14,400,000,000 to be distributed amongst share holders of which apple is one.
        (What the percent of shares apple holds?)
        You can see this would drive the share price up, as institution realize this kind of cash moves their bottom line way up. Again John C. at those high price Apple could choose to sell some of the shares it holds, making money, or as you may think of it raising cash.
        Win, win,win. Traders get what they need, long time investors get what they deserve.
        All companies should pay out 80% of the quarterly profits. Or John C. … Just make money … to what end?
        Yes a company’s doors should close if they can’t make that pay out. That’s a pretty good cycle, because somebodies will start up several companies, perhaps, to fill that void.

        No profits, no pay outs. shareholders just have to pray, because they are about to lose some money, SGI, comes to mind.

  3. I continually point out that having a large cash cache is a nice hedge against the Apple 1996 fiasco when they were caught with $1 Billion worth of warehoused Mac Performas that nobody wanted. It has to be one of the most massive marketing blunders of all time. If such a catastrophe were to befall Apple once again, there’s cash to cover that.

    The danger of course, is leaning too heavily on the cash and getting stupid about it. That’s a whole other world of hurt for Apple to hopefully NOT explore.

    1. You must be a communist! And, you must not know companies can own their own shares. The more shares they own the more money they keep or make when dividends are paid. Plus you not read well, All companies should pay 80% of their profits to those that own the company.

      Derek, being a good red, you may not understand why people invest their money into things. Well, simply, it is to make money. For example Derek if you open a restaurant you would expect to bank (keep, take home) the money you are making, not just pay yourself 10.00 dollars an hour. Hopefully you would realize that if you left that money in that business when someone slips and falls that money is at risk.

      Or maybe you believe, banks, when they invest, loan money, should just forget about the money and let whoever they loan the money to decide how much they will get back, when and how.

      Or maybe you are just short sighted, and not realized that the stock would be in even greater demand. Why, you ask, I’ll you and your comrades think about it.

      1. Ah, yes, because Derek disagrees with your concept of personal enrichment, he must be a communist. What a crock.

        I’ve been a part of several start up business. Often the principles take much less in income than their key employees. Why? To ensure that the company survives and grows. Principles demanding that they get a hefty, immediate return most often just cause one thing: Business Failure.

        Another lie:
        “Who owns this money? In one sense, Apple does. But in another sense, it doesn’t. Since shareholders own Apple, it’s shareholders that really own the money. Apple is just managing it on their behalf.”

        Owners of AAPL stock are owners of just that. No owner of AAPL stock can say they directly own any part of Apple. They own AAPL stock. That is all they own. You buy and sell AAPL stock. You don’t buy or sell any specific percentage of Apple itself. There is no legal requirement AT ALL for Apple to give any AAPL shareholder one penny. None. No AAPL shareholder has any direct claim on any of Apple’s assets let alone its cash or short term securities.

        Shareholders WANT Apple to give them part of Apple’s cash holdings and short term assets. Shareholders WANT Apple to buy AAPL stock on the open market. Both cause the apparent value of the stock to go up. Both cause the stock to typically trade at higher prices. However, there is absolutely no requirement for Apple to do either.

        People who claim that Apple OWES them money because they own AAPL stock or those who claim that Apple need to “return value” to them just don’t know the underlying legality of the system.

        Yes Apple’s senior staff and board of directors have a responsibility to AAPL shareholders to do what is best for the company and IN TURN what is best for shareholders, but their responsibility to Apple comes BEFORE their responsibility to AAPL shareholders. Typically, if Apple does well the stock price does well.

        Unfortunately the vast majority of the “I need to get mine now.” crowd seems to have completely forgotten (or never learned?) this simple fact: Apple comes first. AAPL comes second.

        1. Apple is 30 years old, cut the apron strings.

          I would suggest to a startup don’t sell over 51% of it’s shares, so when it is time to pay out profits it gets to keep 60% of those profits. The rest goes to shareholders, if the startup wants more profit buy shares, sell more, take less in pay, use a card table and a folding chair, cut the lights off when not using a room, use leds, turn the heat down, turn the ac down, etc. They need to decide how much money is enough because if they think profits will always go up they will be highly disappointed when they realize profits don’t always go up. All companies should set a target. Success is hitting that target. If they do better fine, if not but they still make a profit fine, if they lose money or can’t make a profit then adjustments must be made. but to raise cash they can sell more of it’s stock fine, stockholders can make a decision to stay in or move on.

          By the way was one of your startups recent? Are you still at one?

  4. goggles massive cash hole in the meantime just gets bigger and bigger. Nothing can fill it – not even an entire print shop’s output of Zimbabwean dollars and pre-war Deutsche Marks combined.

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