Apple has a problem: They’re too good at making money

“Apple has a problem. They’re too good at making money,” Michael Batnick, CFA, Director of Research at Ritholtz Wealth Management, writes for The Irrelevant Investor. “Their most recent quarterly statement revealed that they are sitting on $38 billion in cash and cash equivalents.”

Apple Park in Cupertino, California
Apple Park in Cupertino, California

Michael Batnick for The Irrelevant Investor:

If we expand our definition of cash to include current and non-current marketable securities, think bonds, then they have $195 billion in cash. You know $195 billion is a lot of money. It doesn’t need context. So I won’t tell you how many companies in the S&P 500 it could buy with all that cash. Just kidding. The answer is 460.

Apple isn’t hoarding cash because they’re preparing for the apocalypse. They literally cannot distribute it fast enough to their shareholders. Over the last five years, they’ve spent a quarter of a trillion dollars on buybacks and dividends.

But the money just keeps piling up, and they’ve gotta do something with it… Josh and I are going to talk about what Apple’s next move should be and much more on tonight’s WAYT (What Are Your Thoughts):

MacDailyNews Take: How about, for a start, if you want to distribute it to shareholders quickly, being a bit more generous with the dividend?

25 Comments

  1. There’s plenty they could do with those reserves – pay a more generous dividend to shareholders, increase employee salaries, make capital investments – I’m just spitballing here. 😀

      1. I don’t know which two you equate with “giving money away,” but if one of them is the part about shareholder dividends, that was MDN’s idea. And I doubt the capital investments one could be twisted around to be considered “giving money away” either.

  2. I’m for an increase in dividends, possibly a purchase to enhance APPLE TV+ (Critireon Collection) and an increase in pay to retail sales staff. A pay supplement could be offered to employees on the factory floors. Also keep share buyback program going.

    1. Number One on my list.

      When you take away valuable ports on Macs offering less capability and expensive pain to work around it. Combined with no EarPods and charger for the first time missing from new iPhone purchases, while not lowering prices, gee what a surprise your making more money hand over fist.

      With the amazing M1 chip if they lowered Mac prices comparable to PCs in specs, Apple would easily double or triple market share in a year or two.

      Probably not going to happen. Apple is much better at making money stuffing their bank account than knowing how to spend it…

  3. Apple should think more like Norway (Norwegian sovereign wealth fund) and less like the UK under Thatcher, just because you have the money (North Sea Oil) doesn’t mean you should waste it. Continue to think ahead.

  4. What Apple could do with all their money:

    Make a Camcorder.
    Make a wireless/wired data network of their own.
    Create their own user-friendly con-artist-unfriendly bitcoin or banking system.
    Write software to perform functions that the Mac is currently weak at: 3D rendering, Business software, Games.
    Buy a third world country and fix it.
    Make a distro of Linux that works well enough that Microsoft would be unable to make any more money.
    Make a paid ad blocker that pays the people that the ads were supporting.

    1. No, your accusations on software shortcomings are not accurate. Apple has always excelled at FPU (Floating Point Unit) math calculations and have narrowed the gap processing Integer math.

      Reason Apple is the gold standard for Pro creatives in graphics, video and 3D rendering since the 1980s introducing “desktop publishing.” But certainly not talking about the highest level of graphics processing on one of the world’s largest Linux clusters supercomputer used to make the movie “Avatar.”

      “Buy a third world country and fix it??” 🤣🤣🤣🤣🤣

      The Leftist Democrat mayors of the largest USA cities and federal government spent trillions since the “Great Society” and have not fixed the problems!

      Now Biden wants to spend five trillion in one shot combining two Stimulus bills on the same FAILED Democrat policies enriching their political buddies, union members, growing government agencies and giving handouts for votes. The same old, same old Democrat playbook that has been failing consistently for over 50 years.

      “Create their own user-friendly con-artist-unfriendly bitcoin or banking system.” What, Apple is going to create better banking than existed for hundreds, if not thousands of years? “con-artist-unfriendly bitcoin” you said it ALL and no thanks.

      BTW, Apple already has a camcorder its called the iPhone and theater quality movies were shot and released using the phone. A larger version, hmmm…🤔

      1. Type “3d graphics” into the Apple store and see what you get. The first option says it is a legacy version that is no longer being updated. The second can only do one object per scene. You won’t find anything equivalent to Poser or Blender.

        “Third world country” was supposed to be a gag. At least you laughed before going into politics.

        I think you’ll find that banking HAS improved from thousands of years ago, and could improve dramatically again.

        I’ve brought up the camcorder before, so I didn’t elaborate. The iPhone’s incredible image processing technology can do things that even pro gear can’t. But the iPhone is hampered by the tiny lenses, battery, and non-removable storage. Put this and that together and you’d have an unprecedented product.

        1. “Type “3d graphics” into the Apple store and see what you get.”

          You can’t be serious. That’s your measuring stick for Apple’s FPU dominance in the graphics industry for decades? 🤣

          Searching the pitiful Johnny come lately Apple Store that has been abandoned by PRO users for years. I never used Apple Store buy PRO software DIRECTLY and certainly would never rely on Apple star ratings, a mass social media joke.

          BTW, I’ve been running Poser since the first release, Lightwave 3D and graduated to Maya ALL on various Macs over the years. Could not care less if they are available in the Apple store, or not.

          Third world country was written as a “gag.” Yes, I have a sense of humor dealing with CLUELESSNESS.

          “I think you’ll find that banking HAS improved from thousands of years ago, and could improve dramatically again.”

          What way could banking improve? Right now you can bank on your phone 24/7, take a photo of a check and wirelessly deposit from home and except for obtaining cold cash you can accomplish most daily banking services. You did not specify, so only pie in the sky wishful thinking? Got it.

          OK, you acknowledge the iPhone capabilities shooting video that produced theater quality movies and nowadays growing number of pictures on front pages of newspapers shot by reporters.

          Understand the limitations you outlined using an iPhone. I agree a larger iCam with wireless internet, storage, Apple Apps connectivity with devices et al. at a lower or competitive price, could replace cameras used at Fox News or your local TV station. Hollywood filmmaking is on a much higher level similar to “Avatar” graphics processing.

          My wish list for Apple investments is back to the future. Apple ignited desktop publishing and graphics revolution dominance with the release of the Macintosh in 1984. They began running third party graphics software until about a decade ago or so, introducing Pages, Numbers, Keynote, etc.

          BUY ADOBE.

          Apple creativity Apps don’t fully measure up to PRO software rivals. Maintain the free Apple Toy creative Apps for neophytes and offer PRO ADOBE SUITE programs at the same price, or better.

          Think about it, with optimized M1 silicon and integrated with MacOS Apple would DOMINATE the creatives world of graphics, publishing, photography, video, web publishing and others like never before on one platform. License the Apple Creative Suite for additional revenue similar to MicroSoft licensing Office 360 programs on the Mac.

          Creatively speaking and in the immortal words of Ralph Cramden, “to the moon Alice!”…

          1. Maya & Poser still run under Rosetta on M1 macs. For $1700/year, Maya ought to come with a free Mac. Daz 3d doesn’t even support Big Sur. Apple is trending to make all Mac software Apple Store only, as it is on the iPhone. If pros are abandoning the Apple Store, they are abandoning Apple. Many developers see no good reason to have to use Metal and not OpenGL. Apple’s unpredictable censorship and prudishness means they will never be any good for games, even if the hardware starts outperforming Windows systems.

            The day before the iPhone launched, people were asking how phones could be improved, and saying that Apple had no room to innovate. Today you see nothing wrong with banking. But it is very overpriced and inefficient.

            As a viewer, it might not be obvious what limits an iPhone puts on a director or a news crew. But the fact that those guys usually run around with 20 pound cameras and bags full of lenses should tell you something. iPhones are only used when the budget is too low for other cameras, or when the director wants to intentionally degrade the image. Also, the soundtrack on those films was recorded on a totally separate device and did not go into the iPhone at all. Can you guess why not?

            Apple buying Adobe would likely result in and anti-trust suit, and non-mac pros dumping Adobe for other programs. The surge in competitors to Adobe would be a good thing, but they likely would not put much work into their Mac versions.

    1. Yes! Yes! Yes!!! Take on Android smartphone and PS market share DOMINACE. You nailed it, all that holds Apple BACK since the 1980s is price, price, price!!!…

      1. Ah, Comrade GeoB, we cannot set prices in America like you can with your Five Year Plans. Prices here are set by the law of supply and demand. We call it “free market capitalism.”

        We allow manufacturers to control the demand for their products to match the supply. Raise the price, and you sell less, thus avoiding a situation where orders outrun the available supplies and produce intolerable wait times and customer dissatisfaction. Apple already has roughly a million people in China and many thousands in other countries making its devices. Lower the prices enough to double the orders, and they would need to double their labor force and plant infrastructure. They cannot do that and wean themselves from China at the same time.

        You might look into this capitalism thing.

        1. Ahhh, I’m not your comrade condescending TxUseless A-hole. I did not bother to waste my time reading another obfuscation Apple APOLOGIST post.

          F*ck the Apple elitist TAX. Their margins and profits are HIGH and their slave labor costs in China are LOW. If any company in business history can lower their prices to compete toe to toe, it’s the world’s first two trillion dollar company with more money than they know what to do with.

          Bottom line: All that holds Apple BACK since the 1980s denying themselves market dominance, and making much more money selling in VOLUME — Business 101 — is PRICE, PRICE, PRICE!!!

          UNDENIABLE TRUTH, “and that’s the fact, Jack!”…

          1. It is completely deniable that Apple can fire a million contract employees while substantially increasing production. They aren’t in China because of labor costs—FoxConn pays above the prevailing local wage, and labor is only a minor component of final iPhone cost. They are in China because of labor availability.

            If they can’t find enough workers outside China to meet their current production numbers, where are they going to find enough to sell in much higher volume? I guess that in your fantasy universe the Keebler Elves would be available.

            1. Only a Leftist HYPOCRITE, that would be you, would defend Apple doIng business in Communist China over and over.

              Yes, China has plenty of indentured slave laborers Apple uses to make obscene profits and not a peep about human rights. The HYPOCRITE SJW CEO Cook doesn’t care, goes happily along without opening his mouth to free the oppressed people in China…
              CRICKETS : : : : :

              You have not ONCE acknowledged Apple’s pitiful role in China as capitalist pirates making money hand over fist at the expense of human rights and never will, right? I thought so.

              Leftists typically railed against big corporations and held the company and its business practices feet to the fire with boycotts of products. Not with Apple, the Leftists and media sycophants silence DOUBLE STANDARD is deafening.

              Now on to the point of my post you cannot answer and deflected away from TWICE. Apple has enough money and in a N.Y. minute could lower their prices to compete with Samsung and PCs and dramatically increase market share. A total no brainer. Only a pea brain Apple AOLOGIST like you doesn’t see it. Pity.

              Exactly what is holding Apple back for market dominance since the 1980s — PRICE! PRICE! PRICE!…

  5. So stupid. How about lowering prices? How about giving employee raises? How about increasing stock dividends? How about focusing on charitable causes around the world? This is a bullsh*t problem.

    Corporations, politicians, and the wealthy control the money and have all the power. How about investing in small businesses and providing more opportunity to the underprivileged (not giving it away, but, proving education and true opportunity to be successful).

    Amazon and Bezos are the worst at this. All their success and billions are on the backs of folks barely getting by in a sweatshop atmosphere, and, at the expense of small business and retail itself. While Apple may not be quite as bad in many aspects, they are contributing to the problem.

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