“In its quarterly results on Tuesday, Apple Inc. likely will report that its cash hoard has topped a quarter of a trillion dollars, an unrivaled milestone for a private corporation that raises a question: Why would any company want to hold that much money?” Tripp Mickle reports for The Wall Street Journal. “Apple has added to its pile at a blistering pace, doubling it in just over four-and-a-half years. In the last three months of 2016 it wracked up new cash at a rate of about $3.6 million an hour. Its current total, not accounting for debt, exceeds the market values of Wal-Mart Stores Inc. and that of Procter & Gamble Co. , and outstrips the foreign-currency reserves of the U.K. and Canada combined.”
“The stash has drawn fresh attention recently as President Donald Trump tries to revamp the U.S. tax regime,” Mickle reports. “Apple, like many big companies, keeps most of its cash offshore—some 93% of its $246.09 billion total cash, cash equivalents, and securities as of December—to avoid U.S. corporate taxes that executives consider too high.”
“The Trump administration this week proposed a one-time tax holiday to encourage companies to bring that cash home, and said it wants to slash the U.S. corporate-income-tax rate to 15% from 35% and largely exempt future foreign profits. That could make it easier for Apple to put its money to use, through acquisitions or by doling out more to shareholders,” Mickle reports. “Apple Chief Executive Tim Cook early this year said he was eager to bring cash home if tax changes enable it, and Chief Financial Officer Luca Maestri said such a move would give Apple flexibility to do more capital returns… One possible approach would be a special dividend. Apple could deliver such a windfall.”
“With $250 billion, Apple could buy both Tesla and Netflix and still have plenty left over. It also might want to use some cash to pay down some of its debt or look to boost U.S. manufacturing after facing calls last year from then-President-elect Trump to build a plant in the U.S.,” Mickle reports. “Either way, there is a growing sense that Apple’s cash hoard has far outstripped its needs.”
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MacDailyNews Take: It’s a mind-boggling sum. Outstrips the foreign-currency reserves of the U.K. and Canada combined! There’s enough to fuel Apple’s R&D, reward shareholders, and acquire pretty much anything.