Apple execs are 'actively discussing' what to do with nearly $100B cash hoard

Posted:
in AAPL Investors edited January 2014


Apple's stockpile of cash and reserves grew another $16 billion in the holiday quarter, reaching $97.6 billion, as executives hinted they are considering big plans with their money, even though they aren't in a hurry to spend it.



The tenth of a trillion dollars in cash held by Apple was up from the $81.6 billion the company had amassed at the end of its September quarter. On Tuesday's quarterly earnings conference call, Apple Chief Financial Officer Peter Oppenheimer addressed the issue before analysts could even ask about it during the open question-and-answer session.



"We're actively discussing uses of our cash balance, and have no specifics to share," Oppenheimer said. "In the meantime, we continue to be disciplined with cash, and are not letting it burn a hole in our pockets."



The massive sum accrued over the holidays means Apple added a total of $38 billion to its short-term and long-term marketable securities in the last calendar year, Of the nearly $100 billion Apple has in cash, about $64 billion of it was being held offshore at the end of the quarter, Oppenheimer said.



"We have always discussed, internally with the management team and with our board, our cash," he said. "We recognize that the cash is growing for all of the right reasons. And I would characterize our discussions today as actiive as what makes the most sense to do."





The growth trajectory of Apple's cash hoard, via Asymco.







Oppenheimer was then asked by Bernstein Research analyst Toni Sacconaghi whether there is a timeframe for using the cash or when Apple might reveal details to investors.



"When we have something to announce, Tony, we will announce it," Oppenheimer said. "But I want to say again, we are actively discussing the best uses of our cash balance."



One relatively small use of Apple's cash came last quarter, when the company bought flash memory maker Anobit for a rumored price of $400 million. Apple Chief Executive Tim Cook confirmed and spoke about that strategic acquisition on Tuesday, stating: "Anobit has fantastic technical talent. We're really fortunate to have them join us."

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Comments

  • myapplelovemyapplelove Posts: 1,515member
    hire 10 people so we can finally get resolution independence for os x.
  • tallest skiltallest skil Posts: 39,984member
    Buy Dell. Shut it down. Give the money back to the shareholders.



    Buy Samsung. Shut it down. Keep the money.
  • kreshkresh Posts: 379member
    how about bringing it home and paying their taxes
  • haydn!haydn! Posts: 13member
    Buy Greece?
  • jd_in_sbjd_in_sb Posts: 1,268member
    I hope Apple doesn't feel the need to spend their cash or give it to shareholders. Apple could be struggling financially 10-20 years from now. Or maybe not. You never know what the future holds.
  • vinitaboyvinitaboy Posts: 156member
    Quote:
    Originally Posted by kresh View Post


    how about bringing it home and paying their taxes



    Not to be TOO snarky here . . .but Apple already pays a crap load more taxes that GE does (which it doesn't).
  • nonlinearmindnonlinearmind Posts: 11member
    Buy a pony!
  • kreshkresh Posts: 379member
    Quote:
    Originally Posted by VinitaBoy View Post


    Not to be TOO snarky here . . .but Apple already pays a crap load more taxes that GE does (which it doesn't).



    both should do the right thing, two wrongs never make a right [sorry for the punctuation, my wireless keyboard stopped working and i am having to use the on-screen keyboard]
  • kimghkimgh Posts: 13member
    I don't know why this is considered news. I am quite certain that this topic is ALWAYS being "actively discussed." And Apple has said so before, many times, if memory serves.



    As a shareholder, and despite the hobby horses of buybacks and dividends on the part of a couple of analysts, I really hope Apple will keep their eye(s) on the ball and only do these things if they are the only way to "maximize shareholder value."



    I think strategic acquisitions and part supply deals are much better uses for these funds than "instant gratification" of buybacks or dividends.
  • franktinsleyfranktinsley Posts: 146member
    1. Save up all the money.

    2. Buy Earth.

    3. Start Federation of Planets.
  • thataveragejoethataveragejoe Posts: 830member
    Quote:
    Originally Posted by Tallest Skil View Post


    Buy Dell. Shut it down. Give the money back to the shareholders.



    Buy Samsung. Shut it down. Keep the money.





    Yes, we all know you hate Samsung. Just remember their revenue alone is over 250 billion with assets close to a half trillion. Even the electronics division alone makes 20% more than Apple even has in cash annually.



    All for putting Dell out of its misery though.
  • jd_in_sbjd_in_sb Posts: 1,268member
    Quote:
    Originally Posted by kimgh View Post


    I don't know why this is considered news. I am quite certain that this topic is ALWAYS being "actively discussed." And Apple has said so before, many times, if memory serves.



    As a shareholder, and despite the hobby horses of buybacks and dividends on the part of a couple of analysts, I really hope Apple will keep their eye(s) on the ball and only do these things if they are the only way to "maximize shareholder value."



    I think strategic acquisitions and part supply deals are much better uses for these funds than "instant gratification" of buybacks or dividends.



    Agreed.
  • sflocalsflocal Posts: 3,419member
    Quote:
    Originally Posted by kresh View Post


    how about bringing it home and paying their taxes



    It is my understanding that all revenue Apple makes overseas is taxed at the rate based on the country the revenue was made in. So they already paid their taxes. Because Apple does not want to pay more taxes on top of what was already paid by the country of origin, they are keeping that money overseas. I'd do the same thing.



    So what problem do you have? Oh right... they should pay even more taxes simply to deposit it into a US bank and spend that money in the US right?



    Because the amount they are paying in taxes already is not enough right?
  • applegreenapplegreen Posts: 421member
    Buy a time machine (a real one) and bring Steve back.
  • mj4ev3rmj4ev3r Posts: 99member
    Quote:
    Originally Posted by AppleGreen View Post


    Buy a time machine (a real one) and bring Steve back.





    I concur!
  • paulmjohnsonpaulmjohnson Posts: 1,367member
    On the tax issue, it rather dents the argument that allowing a tax holiday to allow them to repatriate money held offshore so they could spend it in the US, when Apple have ~$34bn in the US that they aren't doing anything with.



    I say they should give a large chunk of it to their employees. Money going into the hand of people who will spend it (as opposed to giving amounts to execs that can't possibly spend it all) would help the economy.
  • rtamesisrtamesis Posts: 88member
    I still remember when Apple had only $4 billion when Jobs returned to Apple and all the Microsoft fanboys were just waiting for Apple to run out of cash and sell itself to Sun. I'm sure Apple still remembers those days too.
  • quinneyquinney Posts: 2,420member
    Quote:
    Originally Posted by kimgh View Post


    I don't know why this is considered news. I am quite certain that this topic is ALWAYS being "actively discussed." And Apple has said so before, many times, if memory serves.



    As a shareholder, and despite the hobby horses of buybacks and dividends on the part of a couple of analysts, I really hope Apple will keep their eye(s) on the ball and only do these things if they are the only way to "maximize shareholder value."



    I think strategic acquisitions and part supply deals are much better uses for these funds than "instant gratification" of buybacks or dividends.



    I agree with your points in general. There is an argument for declaring a dividend, however, in that there are several large mutual funds which are prohibited from owning AAPL, since they are chartered to only buy dividend-paying stocks. Since many non-dividend restricted funds already hold the maximum percentage of AAPL that they are allowed by their own diversification rules, the number of large buyers is limited. (If the $30/share bump in the after market holds, some funds may be required to sell some AAPL tomorrow.)



    I am starting to be persuaded that the best source of potential increased buying pressure for AAPL, and thus increased share price, is among dividend stock funds.
  • sockrolidsockrolid Posts: 2,515member
    I used to think that Apple should buy (or build) their own hardware manufacturing facilities. Just to lower their component costs even further. For example, they're the largest consumer of flash memory in the world, and thus get the best deals. But buying or building memory manufacturing facilities would help them lower their costs even more.



    Then I realized that buying components on the open market puts price pressure on all smaller buyers. Apple buys the most flash memory, they get the best deals, and everyone else has to out-bid each other for the rest of the world's flash memory production. Apple can and will apply the same pressure with other components (touch screens, SoCs, batteries, etc.)



    So by paying just a little more for their components, and not manufacturing those components themselves, Apple benefits more than they would by trimming their costs by making their own components. According to game theory, if you can pay a small cost that forces your opponent(s) to pay a larger cost, you benefit and they lose.
  • bageljoeybageljoey Posts: 1,719member
    Quote:
    Originally Posted by kimgh View Post




    I think strategic acquisitions and part supply deals are much better uses for these funds than "instant gratification" of buybacks or dividends.



    Sure. Sounds good. Except, Apple is already doing that. And they still added $35 billion to their pile...



    I don't think some reasonable stock buy back (if share prices ever fall again) or dividend disbursement precludes them from also following your advice...



    Besides, whether you think it is fair or not, Apple's cash pile will become a political football if it grows like this for another year or two...
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