Originally Posted by newbee
It's understandable that a lot of people are feeling the same way you are, but let me ask you this .... can you name a company or two that had so much cash in reserve that it actually created a "real" problem, other than in the shareholders eyes that thought that they were missing out on a dividend?
It's been said here before but I think it bears repeating. Apple is a GROWTH company, one of the better ones, in fact. That is the way that Apple investors reap a reward. One can very seldom "have it both ways".
You mentioned three choices for Apple .... I think there is a fourth one, and perhaps the most important one ..... save it for a "rainy day".
I know, I know .... it will be said ...."how much is necessary for a rainy day"? Who knows? Is there anyone out there who actually believes that the bad times are behind us? Let's face it .... we are in uncharted waters here. Governments all over the world are staring financial catastrophes in the face. The only time in recent years that the economy "performed well" was when everyone and their dog was borrowing on their credit so they could live "beyond their means". We could realistically be looking at a scenario that is worse than 2008 coming very soon. It might happen .... and if it did I would sure like to be a company that could ride out the storm, no matter how severe it got.
The part that a lot of people are not considering is that the tougher it gets .... the weaker that some of Apple's suppliers and or competition might get. There may be a lot of "opportunities" out there in the next few years and with 100 billion or so "in the bank" Apple will be able to dictate the terms of most M&As.
They say patience is a virtue. I think, in these times, it's a necessity. As a shareholder, I don't think we should let the stockpile of Apple $$$$ "burn a hole in our pocket".
I'll just state one situation. A very large cash reserve can be dangerous. Now, it's true that Apple is so large that the idea of another company buying them is likely out of the question, but it's never entirely. And with stock prices on the downward drift, that immunity lessens.
Companies with large cash reserves have been bought by smaller companies, because that cash is working against the company being bought. So if Apple ends up with $75 billion, and their valuation drops to $250 billion, if the market, and Apple keep dropping, then the acquiring company need only have $175 billion in cash and stock for a 100% buyout. The situation gets worse if we have a big drop due to current market conditions.
I'm not saying this will happen, but it's just one example of where a very large cash reserve works against them.
I'm certainly not saying that Apple should buy something big, and if you've paid any attention to what I've been saying, you would know that, so it's not an issue of Apple's cash burning a hole in their pockets. But there does come a time where more cash serves no purpose, and something must be done with some of it.
What if Apple does nothing with it this year? They'll end up with $80 billion. Then what if they do nothing next year, and end up with $120 billion? At what point would you say that it's enough? Heck, if they end up with enough, I'll buy them!