Yes, Apple’s cash hoard really is that big

“People come from all around the world to see Mount Everest. But if you lived in Nepal and saw it lurking in the distance every day, it might not seem nearly as impressive,” Charles Lewis Sizemore writes for Smarter Analyst. “You might take it for granted or even dismiss it as no big deal.”

“That’s really where we are today with Apple Inc. and the absolutely gargantuan Apple cash hoard. It has been so large for so long that no one really pays attention to it anymore,” Sizemore writes. “Frankly, that’s ridiculous. Even allowing for a massive tax haircut, Apple’s cash hoard would rank as one of history’s largest treasures… a fortune that would make Croesus blush.”

“As of Apple’s latest quarterly earnings report, the company had $231.5 billion in cash and marketable securities. The Apple cash balance – the gross number, before any debt or tax considerations – would be the 13th largest company in the world, bigger than Wal-Mart and just a hair smaller than Procter & Gamble,” Sizemore writes. “So, yes. The Apple cash hoard is a big deal, no matter how you slice it.”

Read more in the full article here.

MacDailyNews Take: Apple’s pile of cash would be the 13th largest company on earth. That pretty much says it all.

53 Comments

    1. “fair share” says it all. “Fairness” is the childish cry of the socialist. Ireland lowers its taxes and successfully competes with high tax countries for business. Totally “fair” and pro-growth.

      1. Fairness does matter. Civil societies require laws that are fair and apply equally to all. When the game is rigged, it undermines everyone in the long term.

        Why do you think every sport has rules and officials to enforce them? Because sensible people will refuse to play or attend a match if they know that it’s all a charade. Financial markets are less transparent, but still are bound by society to provide some semblance of fair play.

        1. In this instance the rules are clear, and they were made by the people of Ireland through their democratically elected representatives.

          Often I hear people implying that Apple’s cash pile was accumulated tax free. It was not.

          Apple has already paid their taxes in all of the countries in which they’re doing business. They just haven’t been double-taxed on that money.

          The already-taxed money was moved to Ireland where it hasn’t been taxed again, instead of being moved to the US where it would have been taxed again at an astronomical rate.

          The issue is the government taxes the earnings that US companies make overseas as if it was earned right here, even though those earnings have already (and rightly) been taxed where they were earned. Is that fair?

          1. “Apple has already paid their taxes in all of the countries in which they’re doing business.”

            That’s flat out not true and simply demonstrates your ignorance of Apple’s business specifically and international tax practices by multi-national companies in general.

            Are they breaking any laws? Probably not.

            Are they paying their fair share in all countries? Certainly not.

            1. You need to be careful about what you read and write, Christo. Disposable said that “Apple has already paid their taxes in all of the countries in which they’re doing business.” And that’s exactly right. According to Apple’s financial statements, it pays taxes in every country it does business in, and it pays those taxes in accordance with the laws of those countries.
              Now, you’re probably referring to tax deals it has cut with certain countries, notably Ireland. However, Apple still pays its taxes according to Irish law. There’s a dispute about whether Irish law is contrary to EU law and whether Apple pays enough tax, but that’s not what disposable said. Whenever a tax deal worked out by Apple has been found to be unlawful in any country (Australia comes to mind), Apple has promptly ponied up the money.
              You even contradict yourself by conceding that Apple probably isn’t breaking any laws.

            2. A lot of people feel that corporate income tax represents double taxation, since corporate profits are already taxed when distributed to owners/shareholders.

              It may make more sense to ensure the individual personal income tax system fair & equitable. Then eliminate corporate income tax entirely.

            3. In that case it would be triple taxation.

              First, in the country the money is earned.

              Second, when the cash is brought to the US.

              Third, when the shareholders pay taxes on the dividends.

      2. Apple has gobs of lawyers looking for ways and loopholes to not have to pay. They also have lobbyist working in Washington to make sure they get to keep their sweet deals.

        Do the American people have lawyers and lobbyists working for them so they don’t have to pay their fair share? I don’t think so.

        1. Actually, there are no “loop holes” for apple. No lobbyists to get better tax rates, and no special deals. Apple pays the most taxes in the USA, more than any company or person. The only tax write off they take advantage of is the R&D exemption- they get to deduct the expenses of R&D from their tax liability, but that is something all companies do. Apple pays an approximate 30% rate.
          Please don’t lump Apple in with all the special interest groups, you need to know before you type.

        2. A “loophole” is actually part of the law. Written by the government to promote some kind of behavior. You can’t blame the company for following the law.

          Most of the tax code is actually defining what is income. For example, when a company reinvests in CAPEX under certain conditions the cash used for that expense is no longer income. Nations compete against nations.

        3. I am sure Hillary Clinton and her Crime foundation, Obama, and Donald Trump must surely do.

          Anyways,

          “Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.” Judge Learned Hand.

          Imagine life without Apple’s contribution to society, which is unmeasurable. Now think about the corruption and wastefulness in our ever growing government bureaucracy. Their gift to American citizens is a 20 trillions dollar debt; plus many more trillions in unfunded liabilities.

          But you know … it is all Apple’s fault. One of the largest taxpayers in the World. I would even venture to guess, the largest. Not that I would know.

          And what about Google, Amazon, Facebook, and their ilk. I am sure they have zero lobbyists in Washington. Nah, only Apple is the bad guy.

          It is certainly not fair, nor patriotic, for American citizens to have to fund government waste, fraud, and incompetence. Specially after they’ve paid more than their fair share.

        4. “Do the American people have lawyers and lobbyists working for them …”

          Yes they do, Apple’s lawyers and lobbyists. By using all legal means to reduce corporate taxes, like any other cost of doing business, they work to keep costs, and therefore product prices, down. If you want Apple to pay higher taxes, be prepared to pay more for your next Apple product purchase.

            1. I’m not making any assumptions. It’s a fact that corporations don’t pay taxes, their customers do; as they also pay for labor, overhead, materials, physical plants, tooling, maintenance, packaging, transportation, R&D, advertising, and countless other costs. Any cost reduction puts less pressure on price increases. Econ 101

            2. Companies exist to create a profit. One of those methods is to reduce costs by lobbying for law changes/modifications. Consumers pay for a company’s costs + profit. All I’m saying is that Apple has positioned itself to increase their profit margin through those methods and not passed those cost (mainly tax) savings to the consumer.

            3. Unless you are the CEO or CFO of Apple you can’t possibly know that. But something you can know is this: Any cost reduction puts less pressure on price increases. Econ 101

            4. Quite true that I cannot know with any certainty whether they are passing any savings to the consumer. It would be a lot simpler if all corporations were capped at a maximum profit margin in exchange for not being taxed at all, which as you claim is actually a tax passed on to the consumer of the company’s products.

      3. Wish that the US has seen this lucrative of lowering tax rates to attract more business. It is a win win win situation for the US businesses and government would have more money.

      4. That might be fine if Apple had all its employees and shareholders in Dublin, but last I checked my phone says “Made in Cupertino”. Therefore, it’s just a scam, albeit a possibly legal one.

    2. Apples effective tax rate on average is 27%. They pay their taxes. You’re an idiot. There are a lot of companies that do not pay taxes at all, like GE and in some quarters Google and Amazon. Apple is the most transparent corporation in the world when it comes to sales figures and financial disclosures, and people like you still beat them up for no logical reason.

    3. The immediate slap-down response to that is that Apple has always paid their taxes and never broke any tax laws, of course.

      But obviously, that is not the point of your message. Fair share would mean a tax amount that is appropriate for the size of revenue. As Warren Buffet says, it is truly unfair that his maid has a higher tax burden (and she can barely comfortably eek out a living), while he gets to hoard cash he can’t possibly spend, thanks to all the tax loopholes his tax accountant was able to find for him.

      Regardless of propriety of Irish corporate tax rates, it would certainly help immensely if a one-time tax holiday in the US allowed Apple to bring back all that foreign money, instead of having it just sit there.

      1. “… it would certainly help immensely if a one-time tax holiday in the US allowed Apple to bring back all that foreign money, instead of having it just sit there.”

        If a tax holiday is a good thing “one-time” why isn’t it good all the time? No corporation in it’s right mind is going to repatriate money, at 35%, it already payed taxes on where it was earned, and none do. In other words, the repatriation tax is useless because no one pays it, it only prevents that money from coming into the country where it could have an immense positive impact on our economy.

        The Law of Unintended Consequences: Instead of helping our economy, any repatriation tax is detrimental. We need to get rid of it.

        1. According to this article just 15 firms made up over 50% of the tax’s ‘lost’ during the last tax repatriation holiday and there is no proof that the fund repatriated were used to help the U.S. economy by creating new jobs or domestic investments. Instead it appears those funds were used to repurchase stock, or pay dividends. Perhaps if such a Repatriation holiday is once again passed, there will be need for making sure those funds actually are used to benefit the U.S. economy. For example, if any portion of those funds are used for anything other than job creation or domestic investment, that portion will not be allowed to benefit from any other tax loopholes that may exist at that time to prevent ‘double dipping’ tax breaks.

            1. I reject the premise that there is a cost of repatriation. If companies paid the 35% (an arbitrary number to begin with, and higher than any other country) there would be no need for a tax holiday. Since no one does that, the tax nets 35% X 100s of billions = 0.

              With a tax holiday, say 5%, then 5% X 100s of billions = $$$, and since $$$ > 0 that is a net gain. There is no loss, or cost of repatriation; on the contrary, it’s a windfall profit for the government because they don’t get any money without the holiday.

              Beware of false premises, they are often proffered to lead ones thinking astray.

            2. I’m sure that was the reasoning used when the first Tax Repatriation Holiday was enacted in 2004. According to Wikipedia the attempt in 2009 was defeated and the Wallstreet Journal had a report in 2011 that it was a failed policy. There may not have been a direct ‘cost’, however it appears there were unintended consequences.

          1. If you were to keep more of your income due to a tax cut, or whatever, would you want anyone, especially the government, to tell you what you should do with your own money?

            1. I’m just proposing an incentive for those making the decision to have another Tax Repatriation Holiday by proposing a possible solution to alleviate the perceived ‘mistakes’ of the prior one not fulfilling the purpose lawmakers intended. As it is right now there is no perceived benefit of another Repatriation holiday based on the results of the first one.

            2. The reason that companies are moving out of the country isn’t that they are greedy, it’s because the government is. In their greed for other peoples money to buy more votes with, politicians are making it more difficult for businesses to survive here to the detriment of us all, including the government itself.

              Look up the definition of Cancer.

            3. It’s basically a give and take.

              The fact of the matter is the first Repatriation Tax holiday was considered a failure, the second attempt was voted out and in order to convince those making the laws a third try is worth doing is to ‘fix’ what went wrong the first time. If corporations don’t want to repatriate with those conditions that’s their choice.

            4. That companies are free to make that choice is a false premise. They shouldn’t have to choose. The narrative should be: What can the government do to help make it easier for American companies to compete on the world market. This, and defense, are two of the few legitimate functions of good governance.

              Again, false premises lead to false conclusions.

            5. I believe we are arguing this tax expatriation holiday from 2 different positions. Mine from that the situation is either status quo or attempting a compromise to make a tax expatriation holiday a possibility. I see yours as eliminating expatriation tax with no recovery of tax on foreign held profits. Perhaps, we can agree that a fair tax be paid. To that I propose that profits that are brought back to the US pay taxes on those funds as if they were made in the US adjusted for any taxes already paid to foreign governments. Reptriation tax would be out of the picture and corporations can argue with the IRS about just corporate tax rate.

            6. “I propose that profits that are brought back to the US pay taxes on those funds as if they were made in the US adjusted for any taxes already paid to foreign governments.”

              Meant to write “I propose that profits that are brought back to the US pay taxes on those funds as if they were made in the US WITH THE TAX BURDEN adjusted for any taxes already paid to foreign governments.”

    4. Apple pays taxes in every country they make money including in the USA. Most of the money they make is outside of the USA because they sell products worldwide. Apple could bring that money to the USA and pay additional taxes for that. But there’s no reason they should have to do it.

    5. The question is about fairness. American companies pay about 50% more in taxes on money earned and taxed in another country when the company wants to bring that money to America. The average G20 country taxes their companies to bring their money home from foreign countries at about 20%.

  1. Having money for the sake of hoarding it is counterproductive to Apple and to its customers.

    Cook, how about developing new hardware and software that delights your users?

    How about delivering both mainstream products and professional level products?

    How about offering higher value rather than higher superficial fashion?

    Cook, you inherited a gold mine. Use it to better the tech world instead of advertising your personal lifestyle.

  2. Thats $231 Billion but Apple has to deduct about $75 billion in debt from this!!!! This was done as bond issues to pay for dividends and share buybacks. So this total value is bit misleading

  3. If Apple sales cratered and the cash was still around it would be a prime target for a buyout and breakup. Worth more dead than alive.

    Apple has morphed from a company dependent upon the Macintosh to a company dependent upon the iPhone. The combined income from non iPhone business is not sufficient to support the massive headcount and physical plant the company now has.

    Even though the Mac business is small by comparison to the iPhone it is still the heart of the ecosystem and the software for every iOS and tv OS device is written on a Mac. Every book in the online store is written on a Mac. The business is still a substantial one and has been ignored and allowed to go adrift for far too long.

    Every Mac for sale excepting the MacBook is outdated and needing a refresh. The current Mac Pro is a joke as a high end computer for the technical and Pro markets. The consumer models are outdated and non-upgradeable thanks to Jony Ive’s desire to seal every orifice on every Apple product.

    As a customer and shareholder I do not want a bigger dividend or more buybacks. I want new Mac hardware designed for someone who does more than FaceBook.

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