The Apple cash FAQ

“How much cash does Apple have?” Horace Dediu writes for Asymco. “To the nearest million, as of the end of September 2017, Apple’s cash and investments totaled $268,895,000,000.”

“Note that this includes investments in the form of short- and long-term marketable securities. Long-term marketable securities are not always accounted as ‘cash’ because strictly cash is considered a liquid asset and some securities may not be sufficiently so,” Dediu explains. “Nevertheless, most analysts would agree that Apple’s securities are sufficiently liquid to qualify as cash. Note that for archaic reasons this cash is separated into US and non-US holdings with $17 billion located in the US.”

“Apple’s cash is extraordinary. It amounts to about 30% of its market capitalization. One reason is that Apple has taken many loans, totaling about $100 billion,” Dediu writes. “‘Whoa! Why would Apple need to take out loans? Does it have problems with cash flow?’ Quite the contrary, Apple’s operating cash flow is eye-watering. In the 2017 fiscal year (ending September) Apple generated $63,598,000,000 from operations. The loans are not needed to operate. They are used to pay shareholders. ‘Why does Apple need to pay shareholders?’ Because it’s their money.”

Much more in the full article – very highly recommendedhere.

MacDailyNews Take: We round our cash and investments to the nearest million, too. 😉

[Thanks to MacDailyNews Reader “Dan K.” for the heads up.]

20 Comments

  1. Boeing is doing a lot better than Apple in terms of share gains with far less money and way much more debt. It’s not how much money a company has but more about how a company uses it. Wall Street appreciates Boeing much more than they do Apple and it shows. It’s a waste of time for a company to be just waving money around. A company needs to know how to use it. The big investors think Apple is run by idiots. When was the last time Wall Street ever said Apple was doing everything the right way? With that much cash and a P/E of only 19, something has to be very wrong.

    1. Hey magnificentseven48: as a perpetual pessimist about Apple, why don’t you put money where your mouth is with Boeing. Amazon, Facebook, Nefflex, etc. We really want you making more money, so don’t invest with Apple. We are so sick and tired of your complaints. 👎

    2. you have to remember that most analysts don’t track EGG trajectories (+-BUN) with respect to BACN; rather most still follow SAMN which, as I’m sure you know, is no longer even taught in business school.

    3. If you have every run a company you’d know that cash on hand will save you from extinction far better than the millstone of debt. Unless you plan on going bankrupt as a business strategy, then debt is your best friend.

      I dont think Apple plans on the latter. If you look at Apple history They have never really cared as much about the wall street carnival. They give back to the share holder when it makes sense.

      The cash they have on hand allows them the position to pay $0 on their debt in the long run.

      Cash = collateral

      Cash flow = debt pay off

      Interest rate – tax write off

      Smart on their part and they still have ample resources. Can you say the same?

    4. 49.. idiots have somehow managed to make this company the worlds most valuable company..
      Not bad for bunch of idiots… as wallstreet and you think they are.

  2. “‘Why does Apple need to pay shareholders?’ Because it’s their money.”

    In a word: BULLSHIT.

    Apple’s cash IS NOT, and NEVER HAS BEEN the stockholder’s money.

    It is only some naive stockholders and greedy Wall Street types who put forth that ridiculous idea.

    Tell me…
    If you have a few thousand shares of Apple stock can you walk up to Apple’s accounting department and demand that they pay you your relative percentage of that $268,895 million? No!
    If you have a few thousand shares of Apple stock can you walk into Apple and demand they show you what you own? No!
    IF you have a few thousand shares of Apple stock can you walk into Apple and demand that Apple buy that stock back from you (at any value, even at $1 a share)? No!

    The money belongs to Apple. It does not belong to the shareholders.

    Apple’s board and officers have a legal duty to do the best with that money to make Apple, the company, as profitable and viable as they can. They have absolutely ZERO responsibility to make any shareholder rich. This is a fundamental misunderstanding that most people who own publicly traded stock believe.

    Publicly traded stock is just a legal form of gambling. To think of it as otherwise is deluding yourself. It’s all about perception of worth. You buy a company’s stock based upon your belief that the perceived value of the stock will go up. People base some of their beliefs on the future perceived value of the stock based upon past and expected future actions of the company. However, it is still a belief in what others will perceive. There is no absolute causality relationship.

    You, as a holder of shares of AAPL, do not have a legal right to demand that Apple pay you anything. It’s not YOUR money. It’s Apple’s money

    1. What a load of crap! The stockholders are owners. period. That alone makes the money theirs. If you had a businessman come to you and tell you that he needed money for expansion and development, and that he would make you 50% owner if you would invest in his company, when he had made it big because of your money investment, and had stored away a lot of cash in the company, would you not consider it half yours?

      1. Of course buying ownership of a company is gambling. So is starting a business and so is running a business. Your comments indicate that all gambling is wrong. You gamble when you go out on the highways to work.

      2. In a corporation, ownership is shared (usually) with others. If a shareholder bought all the shares, you damn right he could demand that Apple give him the cash available. Stupid though because, as owners, we have put management into the hands of the CEO, who by the way, is our employee.

      3. No, you’re wrong. Being a shareholder gives you rights to buy or sell shares that have a ‘market trading’ value. You invest in the company and get to own some paper certificates that you can trade, you do not get to own the company. ‘If’ the company makes money and decides to pay dividends then you get to earn some profits, but again, the company is under no obligation since ‘you’ do not own the company.
        Depending on the class of shares you buy, you gain the right to attend the AGM, make proposals for the board’s consideration ‘if’ you can get the necessary votes. You could even make a proposal that all profits for the coming year are payable to shareholders born on a Tuesday in Buttzville NJ but that’s all your entitlement will get you.
        AAPL is not Apple Inc.

        1. No one said that a share holder owns the whole company. A share holder owns a share of the company. The more shares one holds the more influence he or she has in the direction of the company.

          Just because a share holder owns an insignificant portion of the company, it is a specious argument to say he or she is not an owner. If you said that owning a small share of a company means you don’t have much say so, that would be true. However, it is still ownership. If enough share holders got together with their votes, They could (and have in many corporations) change the leadership.

    2. look at Apple’s Corporate Governance Guidelines Point NUMBER ONE:

      (I copied and paste from Apple’s own website).

      CORPORATE GOVERNANCE GUIDELINES:

      . The Role of the Board of Directors

      The Board oversees the Chief Executive Officer (the “CEO”) and other senior management in the competent and ethical operation of the Corporation on a day-to-day basis and assures that the long- term interests of the shareholders are being served.

      ——
      NUMBER ONE : is that “long- term interests of the shareholders are being served. ”
      (actually no where in the document are demands to ‘serve the public in general’ etc)

      “Publicly traded stock is just a legal form of gambling”
      Well, whether people like it or not years back Apple took the path of becoming a public listed company — that’s Steve Jobs etc decision , to get financing it sold shares and now it is bound by it.
      Without shareholders Apple probably wouldn’t have grown.

      the truth is that Apple exists mainly to serve the Shareholders.
      (too long to discuss public listed companies but basically they are owned by the stakeholders which are Debt Holders, Shareholders and to some extent staff — companies have responsibility to fund pensions etc if any. )

      (if the CEO does stuff that shareholders don’t like — like too small dividends , they can get the Board to remove him and get a more compliant one. The Board removed HP’s CEO numerous times. Only thing is that you need MAJORITY and right now most aapl holders like the management. )

  3. Why should there be any rush to spend all the cash they bring back? The market is probably growing faster than the value a many companies. When I look at how things are going I sense a bubble could pop in the next 12 – 18 months. Why pay top dollar when prices may well fall.

    Let’s be honest – them last time we had republican President who delivered a big tax cut we had the GOP Great Recession. How many companies failed to have protective levels of funding in order to not only last through the recession, but to finance growth and come out of the top Recession stronger than ever. That takes cash and commitment to the future.

    In terms of market potential, Medical is the most attractive by far. Apple is already working with Stanford on a list of projects and consumer demand is ready to explode. EKGs on your Apple Watch next year? It’s available now for a watch band or on the iPhone/iPad. If you look at the high volume medical conditions (like Diabetes) you’ll see that Apple is in the game. big time. A big Chunk of that

  4. Why should there be any rush to spend all the cash they bring back? The market is probably growing faster than the value a many companies. When I look at how things are going I sense a bubble could pop in the next 12 – 18 months. Why pay top dollar when prices may well fall.

    Let’s be honest – them last time we had republican President who delivered a big tax cut we had the GOP Great Recession. How many companies failed to have protective levels of funding in order to not only last through the recession, but to finance growth and come out of the top Recession stronger than ever. That takes cash and commitment to the future.

    In terms of market potential, Medical is the most attractive by far. Apple is already working with Stanford on a list of projects and consumer demand is ready to explode. EKGs on your Apple Watch next year? It’s available now for a watch band or on the iPhone/iPad. If you look at the high volume medical conditions (like Diabetes) you’ll see that Apple is in the game. big time. A big Chunk of that cash haul should be set aside for leading developments in this area for the next 10 to 20 years.

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