Apple's cash hoard grows to $81B with two-thirds of it offshore
Apple's huge sum of cash and investments continues to grow, reaching $81 billion during the company's fourth quarter of fiscal 2011, it was revealed on Tuesday.
Apple's cash pile would have been even larger were it not for two major expenditures last quarter: Apple's acquisition of Nortel patents, and a legal settlement and licensing agreement with Nokia.
The iPhone maker's cash and investments have continued to grow every quarter for the company. For example, two years ago, Apple had $31.1 billion in cash and investments.
During Apple's quarterly earnings conference call, Chief Financial Officer Peter Oppenheimer went out of his way to note that a majority of Apple's cash and investments -- about two-thirds -- are held overseas. His mention of it was particularly interesting because Apple has backed a proposed tax holiday that some U.S. corporations have lobbied the government to enact.
Apple is among a consortium of companies, including Cisco, Duke Energy, Oracle and Pfizer, who are pushing for a one-time tax break on an estimated $1 trillion held by corporations in overseas accounts. Those companies currently face a 35 percent tax on any profits they generate outside of the U.S.
Under the proposed plan, companies would benefit from a temporary tax break with a tax rate of just 5 percent in a one-year period. The companies have said they could justify the tax break by investing the funds in research, hiring and other domestic spending that could benefit the U.S. economy.
Analysts participating in Tuesday's call attempted to get an answer out of Chief Executive Officer Tim Cook on whether Apple would use the cash for a shareholder dividend or stock buyback. But Cook sidestepped those questions and instead stated that the company would continue to do what it felt was best for Apple with its cash.
Apple Chief Executive Tim Cook.
He noted that Apple has made a number of key acquisitions over the years, but that the company is typically frugal with its money. For example, it was Apple's acquisition of Siri in April 2010 that led to Siri voice technology in the iPhone 4S, while the purchase of Quattro Wireless in January 2010 helped lay the groundwork for Apple's iAd mobile advertising network for iOS devices.
However, Cook did note that he does not have a hard-and-fast rule that Apple should have great sums of cash and investments, or even any at all. He said that's unlike many other aspects of business, where he does have a strong opinion on what should be done.
Apple's cash pile would have been even larger were it not for two major expenditures last quarter: Apple's acquisition of Nortel patents, and a legal settlement and licensing agreement with Nokia.
The iPhone maker's cash and investments have continued to grow every quarter for the company. For example, two years ago, Apple had $31.1 billion in cash and investments.
During Apple's quarterly earnings conference call, Chief Financial Officer Peter Oppenheimer went out of his way to note that a majority of Apple's cash and investments -- about two-thirds -- are held overseas. His mention of it was particularly interesting because Apple has backed a proposed tax holiday that some U.S. corporations have lobbied the government to enact.
Apple is among a consortium of companies, including Cisco, Duke Energy, Oracle and Pfizer, who are pushing for a one-time tax break on an estimated $1 trillion held by corporations in overseas accounts. Those companies currently face a 35 percent tax on any profits they generate outside of the U.S.
Under the proposed plan, companies would benefit from a temporary tax break with a tax rate of just 5 percent in a one-year period. The companies have said they could justify the tax break by investing the funds in research, hiring and other domestic spending that could benefit the U.S. economy.
Analysts participating in Tuesday's call attempted to get an answer out of Chief Executive Officer Tim Cook on whether Apple would use the cash for a shareholder dividend or stock buyback. But Cook sidestepped those questions and instead stated that the company would continue to do what it felt was best for Apple with its cash.
Apple Chief Executive Tim Cook.
He noted that Apple has made a number of key acquisitions over the years, but that the company is typically frugal with its money. For example, it was Apple's acquisition of Siri in April 2010 that led to Siri voice technology in the iPhone 4S, while the purchase of Quattro Wireless in January 2010 helped lay the groundwork for Apple's iAd mobile advertising network for iOS devices.
However, Cook did note that he does not have a hard-and-fast rule that Apple should have great sums of cash and investments, or even any at all. He said that's unlike many other aspects of business, where he does have a strong opinion on what should be done.
Comments
I guess Apple has to acquire Wolfram Alpha and Yelp asap or it is going to be done by MS or Google.
Oh! That is a very interesting idea!
EDIT: Just did a google, looks like I dreamt it.
They would not need a tax holiday then since they can use that money as collateral for lending money.
This could be a cornerstone in Apples NFC/Ewallet efforts that will start with iPhone 5.
I would love an Apple branded band since I would trust them.
BTW. Why is Apple paying so much more tax then Google/MSFT?
24.7%
Google 22%
MSFT 7%
Apple is saving up to buy South Korea...
And give it to North Korea as revenge for Samsung/HTCs stealing.
I vote yes with my AAPL shares.
I anyone else sort of uncomfortable that corporations can horde money like this?
Nope.
BTW. Why is Apple paying so much more tax then Google/MSFT?
24.7%
Google 22%
MSFT 7%
That's a great question, and I am sure that poking around the respective companies' financials will provide the answer.
I am going to take a lazy approach and surmise (
I anyone else sort of uncomfortable that corporations can horde money like this?
Oh, the corporate hordes....
I would love an Apple branded band since I would trust them.
Already is one: The Beatles.
I anyone else sort of uncomfortable that corporations can horde money like this?
It's part and parcel of capitalism. What would you have them do with it?
I anyone else sort of uncomfortable that corporations can horde money like this?
No, they've earned it under the system they have been given to work in, so it's theirs to do what they wish with.
That said, I do believe one of the problems with the trickle down theory is that it allows situations whereby money can be held not doing anything (NB: I acknowledge that much of Apples money will be invested in something), which I'm not convinced is helpful to the economy overall.
I don't know how to fix it though (i.e. I'm not sure what would be better).
Now having said this it would not be a easy task as Foxconn knows Apple secrets and I heard its subsidiary is opening a bunch of Apple stores in China. Buying Foxconn is probably not a option either. One potential solution is a joint venture. Anyway that?s my thought. Buying patents is always good too.
The money needs to be HERE.
The factories that build their products need to be HERE.
There needs to be NO TAX BREAKS for companies putting their own interest over the country's.
See a pattern here?
I think the most practical thing would be to own their own manufacturing plant. Apple already create the software, manufacture the microchips and own a massive data center. Building a manufacturing plant would be another step of control and profit for them. It would also add another level of security and limit exposure to ethical work treatment issues. It also would cut their dependency on Foxconn. I'm sure they could get tremendous incentives from other Asian countries to open up shop there.
Now having said this it would not be a easy task as Foxconn knows Apple secrets and I heard its subsidiary is opening a bunch of Apple stores in China. Buying Foxconn is probably not a option either. One potential solution is a joint venture. Anyway that’s my thought. Buying patents is always good too.
Welcome to AppleInsider.
Apple got out of the manufacturing business a while ago (~2000?) and it has helped create tremendous profits for the company. The new CEO, Cook, was an important part of the move to, and success of, outsourcing manufacturing. It is very unlikely Apple will return to it anytime soon. However anything is possible for the most creative large company. Who would have expected a major PC maker to get into retail?????
Another issue is that the tools and facilities required to manufacture even Apple's huge quantities of components are hugely expensive (what is Samsung's 28 nm fab in Texas costing to build?) and will serve Apple's needs for only a few years. Thus it would be very difficult for Apple to recover the sunk costs in such a facility. For example, the fabs producing the 45 nm A4 chips (which has only been in production for ~20 months) may only have a year's worth of work left for Apple. Now, Samsung can use those older fabs to produce chips for low-cost Android phones and the like, but what would Apple possibly ever use them for? If Apple owned the fab they could lose a ton of money abandoning a very expensive facility that Apple can't use anymore.
Apple is saving up to buy South Korea...
Why is everyone supporting this?
The money needs to be HERE.
The factories that build their products need to be HERE.
There needs to be NO TAX BREAKS for companies putting their own interest over the country's.
See a pattern here?
The tax break is to bring the money TO the US so that they can create jobs.
BTW: Apple is a global company that have more sales outside US. Why should US have all the Jobs? At least Apple is an American company that pays 24.7% tax + create 40K jobs.
To many people support Google, Android and MSFT. Buying Samsung/HTC just export American jobs. MSFT pays only 7% tax.
Tell your Android friends to stop supporting those companies and support Apple.
BTW: If Apple bought South Korea and gave it to North Korea: US could withdraw all its troops from South Korea. US would save 10+ billion on this.
Apple should take some millions out of the many billions that they have and open up an awesome, world class Apple Museum, in some place important like NYC to start.
Especially since Steve Jobs is no longer here, it would preserve Apple's and Steve's legacy and an Apple museum would be the first of it's kind anywhere in the world! It would be huge, it would be state of the art and it would house every single product ever made by Apple!
It would also have a special section for unreleased prototypes and it could be located next to the Apple flagship store on Fifth Ave in NYC. This store is already one of the most photographed tourist attractions in New York. If there was an Apple Museum, it would be constantly be packed with people! I'd rather go and look at some secret old Apple prototypes that never got released instead of a bunch of dinosaur bones and other dead things, but that's just me.
Why is everyone supporting this?
The money needs to be HERE.
The factories that build their products need to be HERE.
There needs to be NO TAX BREAKS for companies putting their own interest over the country's.
See a pattern here?
Samsung's 28 nm fab in Texas, which certainly is costing billions to build, will reportedly manufacture the A6. Apple doesn't have to own the factory for the components to be Made in the USA.
Note that the highest value part in the iPhone/iPad will be made in the USA by people making good wages, and will be shipped to China for assembly at Foxcon by workers making $2/hr. I don't think we want those jobs.