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Apple has greatest cash pile among US businesses

post #1 of 45
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A report by debt rating service Moody's noted Apple held the most cash among non-financial companies in the US last year, even as businesses across the board have increased their cash holdings by about 11 percent.

At the end of 2010, Apple was sitting on $60 billion, putting it ahead of second place Microsoft ($41 billion) and third place Cisco (with $40.3 billion), according to a report by Silicon Valley Business Journal

Despite a general increase in capital improvements, mergers and acquisitions and dividend payments, Moody's said businesses' cash stashes continued to grow and their debt-to-cash ratios continue to fall, hitting 3.06 at the end of 2010, the lowest point in the last five years.

Apple doesn't pay dividends to shareholders and has avoided making lavish acquisitions in the style of Microsoft, Google and other large tech firms. This year, Apple's cash pile has swelled above $76 billion on strong sales of iPhones, iPads and Macs, as a sharp increase since 2005 as noted in a report by Asymco.



With more than half of the company's business now occurring outside the US, a large portion of Apple's cash reserves are now held in offshore accounts, mirroring the fact that $600 billion of the $1.24 trillion in cash held by US businesses in general is also sitting overseas.

That fact has prompted plans to offer US companies a "tax holiday" to encourage them to bring their foreign cash reserves back to the US, with the goal of triggering economic activity and creating jobs. Apple has joined a consortium of companies lobbying for the tax holiday.
post #2 of 45
Quote:
Originally Posted by AppleInsider View Post

A report by debt rating service Moody's noted Apple held the most cash among non-financial companies in the US last year, even as businesses across the board have increased their cash holdings by about 11 percent.

At the end of 2010, Apple was sitting on $60 billion, putting it ahead of second place Microsoft ($41 billion) and third place Cisco (with $40.3 billion), according to a report by Silicon Valley Business Journal

Despite a general increase in capital improvements, mergers and acquisitions and dividend payments, Moody's said businesses' cash stashes continued to grow and their debt-to-cash ratios continue to fall, hitting 3.06 at the end of 2010, the lowest point in the last five years.

Apple doesn't pay dividends to shareholders and has avoided making lavish acquisitions in the style of Microsoft, Google and other large tech firms. This year, Apple's cash pile has swelled above $76 billion on strong sales of iPhones, iPads and Macs, as a sharp increase since 2005 as noted in a report by Asymco.



With more than half of the company's business now occurring outside the US, a large portion of Apple's cash reserves are now held in offshore accounts, mirroring the fact that $600 billion of the $1.24 trillion in cash held by US businesses in general is also sitting overseas.

That fact has prompted plans to offer US companies a "tax holiday" to encourage them to bring their foreign cash reserves back to the US, with the goal of triggering economic activity and creating jobs. Apple has joined a consortium of companies lobbying for the tax holiday.

Oh, these guys with cash would use it to create US jobs!?? Sure they would.
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post #3 of 45
Quote:
Originally Posted by Gatorguy View Post

Oh, these guys with cash would use it to create US jobs!?? Sure they would.

The biggest American export to China is our middle class.

Apple doesn't even pay a living wage in its stores. Apple isn't going to bring back manufacturing to Elk Grove.
post #4 of 45
Quote:
Originally Posted by Gatorguy View Post

Oh, these guys with cash would use it to create US jobs!?? Sure they would.

Completely offtopic (boring topic anyway ) but did you see this yet? http://www.netmarketshare.com/2011/0...-s-Competition

Seems that either G-Tabs sold even worse than we thought, or at best Samsung was forced to off-load them in developing markets.
post #5 of 45
Quote:
Originally Posted by Gatorguy View Post

Oh, these guys with cash would use it to create US jobs!?? Sure they would.

The companies aren't asking that the foreign profits be tax free, they are asking that the tax be reduced from 35% to perhaps as low as 5% for a limited time. So even if no jobs were created, the government would get tax revenue from the incoming funds.

The amount of money that would be brought into the US under this plan could be as much as 1 trillion dollars.

Lets see, do you think it would be better for the government to get 35% of zero dollars, or 5% of 1 trillion dollars? And despite your skepticism, at least some portion of that money, if not the bulk of it, would end up helping create jobs here in the US.

-kpluck

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post #6 of 45
They made the profits -- now pay the taxes or leave it offshore forever
post #7 of 45
The more I read about those Nortel patents the more I think Apple just exchanged a pawn for a queen in this game. I wonder how much Qualcomm would go for in a hostile takeover.


Quote:
Originally Posted by cloudgazer View Post

Completely offtopic (boring topic anyway ) but did you see this yet? http://www.netmarketshare.com/2011/0...-s-Competition

Seems that either G-Tabs sold even worse than we thought, or at best Samsung was forced to off-load them in developing markets.

That makes their take 18 months after the iPad launched (and 3 decades after tablets launched) even more of a dominating factor than the iPod was to the PMP market after 1.5 years. Someone better have a completive business model soon or Apple will have the tablet market (read: iPad market ) cinched up for the foreseeable future.
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post #8 of 45
Quote:
Originally Posted by kpluck View Post

Lets see, do you think it would be better for the government to get 35% of zero dollars, or 5% of 1 trillion dollars? And despite your skepticism, at least some portion of that money, if not the bulk of it, would end up helping create jobs here in the US.

-kpluck

I agree that it would be better to let them bring the cash back, assuming they are then planning on spending it. If it is just going to sit in a bank in the US instead of in China, it doesn't make that much difference.

I have no problem with the trickle down theory, assuming the trickle down happens. If the "haves" just sit on the money, it doesn't work.
post #9 of 45
Swell!
post #10 of 45
Quote:
Originally Posted by kpluck View Post

And despite your skepticism, at least some portion of that money, if not the bulk of it, would end up helping create jobs here in the US.

-kpluck

it didn't create jobs during the last tax holiday, and it won't create jobs during another tax holiday. it didn't spur further investment during the last tax holiday, and it won't spur investment during another tax holiday. it didn't bolster the economy during the last tax holiday, and it won't bolster the economy during another tax holiday.
post #11 of 45
Quote:
Originally Posted by kpluck View Post

The companies aren't asking that the foreign profits be tax free, they are asking that the tax be reduced from 35% to perhaps as low as 5% for a limited time. So even if no jobs were created, the government would get tax revenue from the incoming funds.

The amount of money that would be brought into the US under this plan could be as much as 1 trillion dollars.

Lets see, do you think it would be better for the government to get 35% of zero dollars, or 5% of 1 trillion dollars? And despite your skepticism, at least some portion of that money, if not the bulk of it, would end up helping create jobs here in the US.

-kpluck

How about 17.5% to show support for the USA?
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post #12 of 45
Quote:
Originally Posted by Pooch View Post

it didn't create jobs during the last tax holiday, and it won't create jobs during another tax holiday. it didn't spur further investment during the last tax holiday, and it won't spur investment during another tax holiday. it didn't bolster the economy during the last tax holiday, and it won't bolster the economy during another tax holiday.

All true. I'm actually getting more and more hesitant to buy stuff from a company with all this cash in the bank that still ships all of its production offshore, and then looks for a tax break on repatriating its profits.
post #13 of 45
Quote:
Originally Posted by Gatorguy View Post

Oh, these guys with cash would use it to create US jobs!?? Sure they would.

Well theoretically that money has to earn interest and in oder for that to happen it has to be invested. If it sits in a foreeeign bank it would be invested outside the us. If it sits in a us bank it will likely not be invested in the us because us economy is not growing and we are on the brink of default.

Therefore no matter which bank the money sits on it will be invested in asia because that is where innovation and growth is.

However if the money goes to us government it will go to the middle east and earn no retuhrn at all and will create zero jobs. So its better if that moeney just stays outside the country and keeps at least some americans better off.
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post #14 of 45
Quote:
Originally Posted by digitalclips View Post

How about 17.5% to show support for the USA?

Apple's average tax provision is about 22%, so that would push them up to 40%.
post #15 of 45
Quote:
Originally Posted by cloudgazer View Post

Apple's average tax provision is about 22%, so that would push them up to 40%.

I think ultimately the whole tax system needs to be re-balanced. If at all possible, corporation tax needs to be as low as possible, but individual tax needs to be made more fair.

Much though I admire him and all he has achieved, the fact that Steve Jobs will pay a low personal rate of tax because his salary is only $1 and the rest comes in stock just doesn't seem right to me.

Sure, it's important that those who work hard and achieve amazing things are extremely well rewarded, but the balance seems off to me at the moment.
post #16 of 45
Quote:
Originally Posted by PaulMJohnson View Post

I agree that it would be better to let them bring the cash back, assuming they are then planning on spending it. If it is just going to sit in a bank in the US instead of in China, it doesn't make that much difference.

I have no problem with the trickle down theory, assuming the trickle down happens. If the "haves" just sit on the money, it doesn't work.

What do you think is happening with that money they are just "sitting on"...Hint: it's not stuffed in mattresses or the crawlspace...it is in a bank...what do you think is happening with that money?

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post #17 of 45
Quote:
Originally Posted by cloudgazer View Post

Apple's average tax provision is about 22%, so that would push them up to 40%.

With Apple paying that much they don't need to spend money on lobbyists the way Google does.
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post #18 of 45
Quote:
Originally Posted by solipsism View Post

That makes their take 18 months after the iPad launched (and 3 decades after tablets launched) even more of a dominating factor than the iPod was to the PMP market after 1.5 years. Someone better have a completive business model soon or Apple will have the tablet market (read: iPad market ) since up for the foreseeable future.

Yes, but it get's better I just found this and it blew me away

http://www.comscoredatamine.com/2011...pad-in-europe/

I think I'd seen this data presented as %s before but I hadn't really looked at this index.
post #19 of 45
Quote:
Originally Posted by Gatorguy View Post

Oh, these guys with cash would use it to create US jobs!?? Sure they would.

What do you think they would do with it?

The state is nothing more than a criminal gang writ large.

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post #20 of 45
Quote:
Originally Posted by SailorPaul View Post

They made the profits -- now pay the taxes or leave it offshore forever

The US will be waiting a long time.

Companies like Apple can put it to very good use abroad, at post-tax rates much lower than the US, giving them more spending power. (Witness, for instance, Microsoft's acquisition of Skype: all paid for with their foreign cash holdings.)
post #21 of 45
Quote:
Originally Posted by anantksundaram View Post

The US will be waiting a long time.

Companies like Apple can put it to very good use abroad, at post-tax rates much lower than the US, giving them more spending power. (Witness, for instance, Microsoft's acquisition of Skype: all paid for with their foreign cash holdings.)

You're exactly right. You also correctly mention that Apple has already paid taxes on these profits...just not US taxes. The US wants its pound of flesh.

The state is nothing more than a criminal gang writ large.

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post #22 of 45
Quote:
Originally Posted by digitalclips View Post

How about 17.5% to show support for the USA?

As a shareholder, I prefer 5%. It's higher than 0% which is what it currently is.

The issue with corporate taxes (that most people don't realize, in the case of companies like Apple who have greater market power than a commodity product) is, almost all of it is passed-through to the consumer. In other words, the extra 12.5% you want the US to charge will largely come from you and me as consumers.
post #23 of 45
Quote:
Originally Posted by anantksundaram View Post

As a shareholder, I prefer 5%. It's higher than 0% which is what it currently is.

The issue with corporate taxes (that most people don't realize, in the case of companies like Apple who have greater market power than a commodity product) is, almost all of it is passed-through to the consumer. In other words, the extra 12.5% you want the US to charge will largely come from you and me as consumers.

Actually...all of it is passed onto the consumers in one way or another. This is the bugger of it all...the customers of corporations pay these taxes...the corporations just "collect" it. It's merely the method of accounting that makes it look like the corporations are paying it.

The state is nothing more than a criminal gang writ large.

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The state is nothing more than a criminal gang writ large.

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post #24 of 45
I should've bought AAPL, I should've bought AAPL, I should've bought AAPL,
(repeat)
post #25 of 45
Quote:
Originally Posted by CU10 View Post

I should've bought AAPL, I should've bought AAPL, I should've bought AAPL,
(repeat)

If you buy now, a year, or two, or three years from now, you can say, "I'm glad I bought AAPL."

If you don't buy AAPL now, you can keep saying what you've been saying for a long time.

You had better hurry. This could be the last time to buy AAPL under $400 per share.
post #26 of 45
Quote:
Originally Posted by MJ1970 View Post

Actually...all of it is passed onto the consumers in one way or another. This is the bugger of it all...the customers of corporations pay these taxes...the corporations just "collect" it. It's merely the method of accounting that makes it look like the corporations are paying it.

Not quite.

Depending on competitive conditions, the ability to pass-through is not always 100%. All it needs is one undifferentiated competitor who can, say, parlay some temporary advantage to try and gain share by lowering prices, and everyone has to follow suit (or the protagonist gains dramatic share which will come at their expense).

The incentive to do this? The lower price times higher volume (from the higher market share) can produce a higher aggregate profit than before for the firm that is able to parlay such an advantage.

Of course, the shareholders of the affected firms - not their consumers - ultimately bear that cost.
post #27 of 45
Think greed
post #28 of 45
Quote:
Originally Posted by anantksundaram View Post

Not quite.

Depending on competitive conditions, the ability to pass-through is not always 100%. All it needs is one undifferentiated competitor who can, say, parlay some temporary advantage to try and gain share by lowering prices, and everyone has to follow suit (or the protagonist gains dramatic share which will come at their expense).

The incentive to do this? The lower price times higher volume (from the higher market share) can produce a higher aggregate profit than before for the firm that is able to parlay such an advantage.

Of course, the shareholders of the affected firms - not their consumers - ultimately bear that cost.

We appear to be talking about different issues here. The taxes paid by corporations are ultimately all paid by the customers of that corporation.

The state is nothing more than a criminal gang writ large.

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The state is nothing more than a criminal gang writ large.

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post #29 of 45
Quote:
Originally Posted by sternapples53 View Post

Think greed

The state is nothing more than a criminal gang writ large.

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The state is nothing more than a criminal gang writ large.

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post #30 of 45
Quote:
Originally Posted by CU10 View Post

I should've bought AAPL, I should've bought AAPL, I should've bought AAPL,
(repeat)

Yeah...

I've tried a few times over the last decade but it is not so easy if you are in another country. It is quite frustrating.
you only have freedom in choice when you know you have no choice
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post #31 of 45
GE has $120 billion in the bank, mostly overseas.
post #32 of 45
Quote:
Originally Posted by IronTed View Post

GE has $120 billion in the bank, mostly overseas.

Yes, but GE also has 300BN of bonds outstanding. Apple has by far the largest net cash position.
post #33 of 45
Quote:
Originally Posted by MJ1970 View Post

We appear to be talking about different issues here. The taxes paid by corporations are ultimately all paid by the customers of that corporation.

We are talking about the same thing.

I am suggesting that the second sentence of yours is not necessarily true!
post #34 of 45
Quote:
Originally Posted by cloudgazer View Post

Yes, but GE also has 300BN of bonds outstanding. Apple has by far the largest net cash position.

That's correct.
post #35 of 45
Quote:
Originally Posted by anantksundaram View Post

We are talking about the same thing.

I am suggesting that the second sentence of yours is not necessarily true!

I'm sorry but I don't see how, and I'm not seeing how your previous explanation makes things any clearer.

The state is nothing more than a criminal gang writ large.

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The state is nothing more than a criminal gang writ large.

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post #36 of 45
Quote:
Originally Posted by IronTed View Post

GE has $120 billion in the bank, mostly overseas.

GE would not qualify as a non-financial company.
post #37 of 45
"With more than half of the company's business now occurring outside the US, a large portion of Apple's cash reserves are now held in OFFSHORE accounts, mirroring the fact that $600 billion of the $1.24 trillion in cash held by US businesses in general is also sitting overseas."

[There is a difference between holding cash in overseas banks and securities and holding cash in offshore accounts.
The one is after paying tax and the other is to avoid it. Seeing that Apple pays about 25% tax on income it is more likely that Apple is not hoarding cash in offshore accounts.
post #38 of 45
Use the money Apple.

Buy AMD: 6 billion. Great graphics. Great server processors. OK desktop processors.

Buy American Express. With NFC E-wallet on your iPhone they could give us a whole new way of banking. iTunes of banking. Finally easy to pay bills, secure, elegant.

Put billions into how to clone Steve Jobs. Make 3000 and send him out to different companies for 10% commission. Save US economy and make the world better.
post #39 of 45
Quote:
Originally Posted by cloudgazer View Post

Apple's average tax provision is about 22%, so that would push them up to 40%.

I meant for the tax holiday in general, not Apple specifically. 5% seems a tad low given the state the US is in.
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post #40 of 45
Quote:
Originally Posted by DCJ001 View Post

If you buy now, a year, or two, or three years from now, you can say, "I'm glad I bought AAPL."

If you don't buy AAPL now, you can keep saying what you've been saying for a long time.

You had better hurry. This could be the last time to buy AAPL under $400 per share.

I agree. All you hear is I should have bought AAPL at any price level. Given reports it is still way undervalued and the massive room for growth what's wrong with now? I have trenches bought at many levels, they all go up.
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