What’s Apple to do with $246 billion in cash?

“Apple has $246 billion in cash sitting around, and investors have lots of ideas about how the company should spend it,” Emily Bary writes for Barron’s. “Most of them, for now, seem unlikely.”

“A Baird survey of U.S. consumers found that 22% would most like Apple to develop a car within the next five years,” Bary writes. “This was the top response, followed by a preference for an Apple streaming service that’s like Netflix.”

“Netflix, Tesla, and Disney [acquisitions] are discussed from time to time, but Baird analyst William Power says these are unlikely,” Bary writes. “Unfortunately for Apple dreamers, the company will probably opt to invest money in less flashy areas, like its ‘Services’ business. Another investor-friendly use for the cash that Apple may choose: buying back more stock. Power notes that 94% of Apple’s cash is overseas, so a policy that makes it cheaper for companies to bring that money stateside ‘could result in a large increase in share buybacks.'”

Read more in the full article here.

MacDailyNews Take: Yes, look for increased buybacks (and maybe a bit better dividends), post-tax reform/repatriation.

SEE ALSO:
President Trump promises big league corporate tax cuts coming in 2-3 weeks – February 9, 2017
Apple raises $10 billion in debt ahead of President Trump’s repatriation tax plans – February 3, 2017
After Apple’s blowout earnings, the Street looks toward ‘iPhone X’ and President Trump’s tax reforms – February 3, 2017
President-elect Trump’s corporate tax reform expected to have some positive impact on Apple EPS – January 14, 2017
Exploring Apple’s tax situation under U.S. President Donald Trump – November 21, 2016
Morgan Stanley: Apple stands to benefit the most from President Trump’s corporate tax plans – November 11, 2016
Apple and U.S. President-elect Trump: Can a tax cut for overseas cash heal wounds? – November 10, 2016
Donald Trump plan calls for cuts in corporate taxes, personal income tax rates – August 9, 2016
Barring a tax holiday, Apple will need to raise over $50 billion in debt the next 2 years – July 15, 2016
Cramer: Apple’s Tim Cook is ‘patriotic’ on taxes – December 21, 2015
Apple CEO Tim Cook is absolutely right – and wrong – on U.S. corporate tax policy – December 20, 2015
Apple CEO calls corporate tax rap ‘total political crap’ – December 18, 2015
Apple avoids $59.2 billion U.S. tax bill – October 7, 2015
U.S. companies now have $2.1 trillion overseas to avoid corporate taxes – March 4, 2015

29 Comments

  1. oh, let me see . . . how about 0.2% for a new MacPro and then maybe the same for restarting the monitor division (and then keeping them current). With the other 99.6% buy something nice, like Canada or maybe France.

  2. How about finding some spare change for a desktop computer development program. I’m old enough to remember when Apple had one. Maybe a dollar or two to develop and release a real media hub that allows you to get to All of the movies and videos in your iTunes account. I’m only interested in the spare change. You others can fight over the big stuff.

  3. Might as well say it’s $146B in cash after Apple clears the debt it’s been accumulating for the past few years.

    I’d definitely like Apple to use some of that money to change the way it is building desktops. It really doesn’t seem fair that Apple desktops can’t run standard modern DESKTOP GPUs from AMD and NVidia. Have at least one model that can do that much. Just one usable PCIe x16 full-length graphics slot is all I’m asking for.

    Make a MacMini at least somewhat comparable/similar to HPs Z2 Mini Workstation. Seriously, a struggling company like HP can build a balls-out mini desktop computer and yet Apple can’t manage that much. It’s open and packed with power. I’m not saying Apple has to copy the Z2 but Apple has completely closed up (crippled) the current MacMini. I’m really proud to own an i7 QUAD-core MacMini and that’s where Apple could have used as a starting point. Make it easier to install drives and memory. Look at the cost of the present high-end MacMini and it’s not even upgradeable. I just don’t get it. Refurbished MacMinis sell out fast and Apple could probably sell a lot more if they even tried to keep the MacMini upgraded to current tech standards.

    If Apple could sell a display that contained a high-end graphics GPU solution, that would help, but why does Apple have to do everything different. Apple could do what other companies do and do it better. They can afford to do it better. I get Apple’s penchant for energy conservation but all the other companies seem to build more powerful computers and only make Apple computers look weak in the eyes of the tech community.

    Couldn’t Apple build at least one monster desktop computer for the tech-heads to drool over. Loyal long-term Mac users have nothing to look forward to in terms of bragging rights. Windows computers have left Apple computers in the dust in terms of power and expandability.

    Maybe Apple doesn’t believe in desktop computers anymore. Maybe not enough money can be made from selling them. I’m not sure what Apple’s reasons are for building desktops the way they do. I don’t have any say in the matter. It just makes me wonder. I’d like to hear Tim Cook explain the reason and then I wouldn’t have to wonder anymore.

  4. Tesla would be an interesting buy. Clearly the leader in electric car and automated driving but lacks the ability to meet high volume demand. So a combination of Apple’s organizational expertise and Tesla’s technical skill could really work out. Tesla’s market cap is high so that may make it a non-starter.

    1. Tesla’s market cap is only 43.31B (debt only slightly higher than cash). Apple could easily buy them with premium on the market cap.

      The other thing Tesla brings to the table is solar.

      I’d really like to see this happen.

      1. I hate to say it but I think Apple management would ruin Tesla. Tesla has an uphill struggle ahead of them. But that gets the kind of fire burning in their belly that can make great things happen. Does Apple have that burning fire any more? It’s an open question.

        1. That’s a good question. My hope is that Apple would bring resources to Tesla to overcome some of their struggles, but wouldn’t change the overall culture of Tesla.

  5. For all of the well-deserved criticism he receives, at least Tim Cook isn’t a government subsidy whore like Elon Musk. Apple should stay away from that shyster and his company. Solar panels and electric cars are great when the government is giving you hundreds of millions $$$. Apple could really think different and get into nuclear energy to actually power these progressive fantasies instead of the coal-burning Priuses we have now.

    1. Solar panels and electric cars are great, regardless, Nick. You probably believe that the oil and gas industry has not received many billions in tax relief, incentives, and subsidies over the years. Solar and wind (and likely wave, too, IMO), are a big part of the electrical grid of the future. Your bellyaching about it only reveals your shortsightedness.

      Ironically, the GOP-controlled state of Texas has installed the most wind power in recent years, despite the state’s and the party’s favoritism for the oil and gas industry. By simply expanding the tie-ins to the power grid, wind power has exploded to the benefit of the state and the nation. This is a good thing…a very good thing.

      1. Leftists are always looking for some magical solution when serious alternatives already exist. Solar, wind and wave power are like a kid pissing into the Mississippi trying to change its course. They’ll never meet more of a fraction of our energy needs. In the meantime, psychopaths in the Sierra Club and Greenpeace oppose nuclear energy, the cleanest, greenest, most plentiful source of power humans have ever harnessed.

        1. This who oppose nuclear power because of its dangers are not wrong, look at what happens when plants melt down. That being said nuclear power is a viable bridge to get us to a clean future, as long as we figure out a way to discard the waste without ruining where it’s stored or giving people cancer.

          Kingmel is also right though, solar panels have come down in cost to the point to where it is nearly as cheap as natural gas, and that price will continue to fall. Also, a ~90% efficient solar panel can produce much more energy from the sun than any gas, coal, or oil power plant and can easily replace that fuel source. If we pursue a mixed energy strategy with solar, wind, nuclear, hydroelectric, and geothermal (all solid existing technologies) we can stop burning coal and oil in less than a decade for electricity. Combine that with hybrid and electric vehicles, more public transportation, and reducing the methane cows produce, we will be well on our way to staving off the worst parts of climate change. Then if we fund NASA to continue their climate research, maybe they can come up with a way to remove the carbon and methane we’ve put into the atmosphere and return it to balance.

          1. Nuclear energy is the cleanest energy source in existence. Waste doesn’t need to be “discarded” it’s 99% recyclable and it doesn’t give anyone cancer, this is so idiotic and dishonest that it’s not worth wasting more time replying to. Your religious belief in the evil consequences of climate change is anti-science. Thankfully the Commander in Chief isn’t an environmental extremist.

        2. Come on, Nick! Don’t go down that path. Why would you automatically assume that anyone who disagrees with you on this subject is a “leftist”? And, in counterpoint, why do you use the term “leftist” to mean someone who is misguided/misinformed? That is lazy and flawed reasoning. You can do better.

          The fact is that solar and wind power provided over 5% of the U.S. power supply in 2015 — one-twentieth and growing. That is a material amount, and it could quickly and easily grow to 10% or 20% or more over the next decade (unless the oil and gas industry is successful in delaying progress in renewables under the current Administration and Congress). If nothing else, it will help to reduce the upward pressure on the prices of gas and oil and put a little dent into the funding sources for terrorism. As a “rightist” you must like that thought, Nick.

          A “fraction” can be anything from small to large, Nick. Right now all renewables contribute around 7%, or 1/14, of the nation’s power. That is a material amount of power/energy. And renewables can easily grow to be a dominant fraction of our nation’s power supply if we pursue that path.

          Reference: eia

          Coal = 33%
          Natural gas = 33%
          Nuclear = 20%
          Hydropower = 6%
          Other renewables = 7%
          Biomass = 1.6%
          Geothermal = 0.4%
          Solar = 0.6%
          Wind = 4.7%
          Petroleum = 1%
          Other gases = <1%

          By the way, I am actually in favor of maintaining nuclear power as a foundation for the national power grid. Nuclear has supplied around 20% of our needs for a while, and I would favor maintaining that level until it is no longer needed, or fusion power generation becomes a reality.

          1. Per the web site, that is preliminary data; based on generation by utility-scale facilities. If you consider the residential contribution from solar, the renewable numbers likely increase a bit.

            As VoR astutely points out, we need to pursue a robust and diversified power system. Based on everything that I have read, renewables can play a major role in such a system.

          2. Your aversion to nuclear energy is totally irrational. This ties in to your leftist belief that there is something evil or dirty about it. Your entire premise is that we just must use “renewables” (clean and virtuous energy sources) until magical “fusion power” becomes a reality. In the meantime screw the economy which has been artificially choked by government-subsidized “renewables” that will NEVER satisfy our energy needs because they are NOT on-demand energy sources. What do you do when the wind isn’t blowing or sun isn’t shining? Tell me about the magical batteries that are just around the corner to store the astronomical energy we need to run our world and economy.

            Nuclear energy is only 20% because leftist environmentalists have thrown up roadblock after roadbloack to their construction. Its been more than 20 years since a new plant has been built and the average plant is 35 years old. This is criminal. Leftism accurately describes the worldview that embraces socialism and government control-freak control over every aspect of an individuals life. Leftists are directly culpable for crushing hundreds of thousands of American families with astronomical energy and transportation costs because of their religious pursuit of “renewables” while punishing the production of cheap and readily available energy sources.

            Thankfully leftism was dealt a serious blow last November and hopefully it will be shoved aside into further irrelevance in the years to come.

  6. How about fixing all the hardware issues on the mac book pro and the buggy software since Swift debut. In the past You would get a new Apple product and it would just work now everything they produce that I’ve bought, Apple TV, 2 mac book pros in two months sticky key problems, on and on. How about reinvest in actual working products before you ship.

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