Apple has greatest cash pile among US businesses

Posted:
in AAPL Investors edited January 2014
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.
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Comments

  • Reply 1 of 44
    gatorguygatorguy Posts: 20,752member
    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.
  • Reply 2 of 44
    nomadmacnomadmac Posts: 95member
    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.
  • Reply 3 of 44
    cloudgazercloudgazer Posts: 2,161member
    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.
  • Reply 4 of 44
    kpluckkpluck Posts: 500member
    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
  • Reply 5 of 44
    sailorpaulsailorpaul Posts: 297member
    They made the profits -- now pay the taxes or leave it offshore forever
  • Reply 6 of 44
    solipsismsolipsism Posts: 25,726member
    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.
  • Reply 7 of 44
    paulmjohnsonpaulmjohnson Posts: 1,380member
    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.
  • Reply 8 of 44
    Swell!
  • Reply 9 of 44
    poochpooch Posts: 768member
    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.
  • Reply 10 of 44
    MacProMacPro Posts: 18,303member
    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?
  • Reply 11 of 44
    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.
  • Reply 12 of 44
    sheffsheff Posts: 1,407member
    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.
  • Reply 13 of 44
    cloudgazercloudgazer Posts: 2,161member
    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%.
  • Reply 14 of 44
    paulmjohnsonpaulmjohnson Posts: 1,380member
    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.
  • Reply 15 of 44
    mj1970mj1970 Posts: 9,002member
    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?
  • Reply 16 of 44
    solipsismsolipsism Posts: 25,726member
    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.
  • Reply 17 of 44
    cloudgazercloudgazer Posts: 2,161member
    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.
  • Reply 18 of 44
    mj1970mj1970 Posts: 9,002member
    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?
  • Reply 19 of 44
    anantksundaramanantksundaram Posts: 19,223member
    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.)
  • Reply 20 of 44
    mj1970mj1970 Posts: 9,002member
    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.
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