“Apple delivered an impressive quarterly earnings report for the fourth quarter,” Eric Ervin reports for TheStreet. “Apple surpassed analyst expectations with year-over-year profits up 31% and earnings a share of $1.96, up 38%, on revenue of $51.5 billion. Apple’s guidance of $75.5 to $77.5 billion in revenue surpassed analysts’ expectations, as well. It was by all accounts a strong quarter, and encouraging for long-term Apple investors.”
“But for some poring over Apple’s financials, questions remain about Apple’s huge cash pile of more than $205 billion and its ramifications for shareowners,” Ervin reports. “As Robin Wigglesworth, U.S. Markets Editor for the Financial Times, tweeted after Apple’s earnings announcement, ‘If Apple was an asset manager it [would] be bigger than Loomis Sayles, Babson, Janus, Bridgewater, TCW, Putnam, Henderson, Standish etc…’ For investors betting on a company that delivers stylish electronic devices with sleek operating systems, it was a potentially alarming insight.”
“Apple now has more than $99 billion of corporate bonds in its portfolio, representing almost half the cash on its balance sheet, which are considerably more risky. With that scale, Apple manages more fixed income assets than Jeffrey Gundlach’s Doubleline Capital Management, which reported $76 billion of assets under management as of June 30. In fact, just the most recently quarterly increase in Apple’s cash position, $3 billion, is more than double the total assets managed by Bill Gross in his Janus unconstrained bond fund,” Ervin reports. “Which raises the question: Are Apple investors really seeking exposure to a massive fixed income mutual fund? Or would they be better served if Apple returned more cash to them?”
Read more in the full article here.
MacDailyNews Take: Since there is so much cash, more than enough to develop an Apple Car (and a manned Mars mission or twelve), Apple would do well to at least bump up the dividend to competitive levels or — dare we say it? — even make the dividend attractive.