Filed under: Analysis / Opinion, Odds and ends, Apple Financial, Steve Jobs, Apple
Apple's $18 billion stash
Where's all that cash that Apple made from the iPhone and all those iPods, Macs, and iTunes downloads last year going? Why, right into Apple's mattress. According to the Financial Times, Apple currently has $18 billion sitting on their balance sheet, doing nothing much at all. And they're OK with that -- Apple CFO Peter Oppenheimer recently said in the Q1 conference call that they like having that "flexibility." And after all, you never know when you might need to drop $18 billion on something important.All that money doing nothing isn't so great for Apple's investors though, some of whom apparently want a piece of the pie. They might like to see dividends, stock buybacks, or even actual spending come out of that on Apple's part (later in the piece, I'm surprised to see that Apple only spends 3% of their sales on R&D, while Microsoft spends 14%). But no -- Apple is flush with cash from all their big sales numbers, and they want to apparently stay that way.
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Reader Comments (Page 1 of 1)
Victor Agreda Jr said 7:43PM on 2-25-2008
IIRC stockholders have been wanting a piece of that pie for a while now (remember when they were sitting on a *mere* $6billion?). But that'd be stupid. Apple's shift to consumer electronics necessitates a big war chest. They are bumping up against Sony, Samsung and even Microsoft still, in all sorts of wacky ways. While the short-run stock daytrader guy (we call him a "moron" around my house) may want his money nownownow, a wise investor realizes that Apple really needs to hold on to the cash for a multitude of reasons (aside from competition there's this R-word people keep saying).
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blinkcowz182 said 7:47PM on 2-25-2008
Also, Apple is one of very few companies that has hit rockbottom and risen from the ashes. They may be holding on to most of that money to weather any kind of storms they may encounters. I'm sure someone who went bankrupt and then got a decent amount of money back would be a little more cautious with their money.
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Galley said 7:59PM on 2-25-2008
Imagine how much interest they are earning on that $18B!
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JKT said 8:21PM on 2-25-2008
Victor, daytraders would not ever get their hands on dividends, as they would not be holding AAPL long enough to be the owners of record of those shares. Also, anyone buying AAPL who doesn't know that AAPL does not pay a dividend, didn't know enough to be buying it in the first place. This is why I avoid AAPL--I refuse to buy stocks that pay no dividends. I figure I am part owner of the company when I buy a stock--that's the whole point. For a part owner to not get part of the profit is obnoxious. So I shop elsewhere.
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Ben Lawson said 8:23PM on 2-25-2008
Seems like a lot of cash, but Microsoft probably wishes that they had another 15 billion in ready money at the moment!
The thing that surprised me was the apparent 1:10 ratio of Apple's R&D spending to Microsoft's (3% of 26B revenue vs 14% of 58B). It's incredible that Microsoft is getting so much less for their obviously considerable efforts.
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Russell said 8:24PM on 2-25-2008
Thats funny, I was led to believe that Apple spent nearly all of the iPhone's 60% profit margins on R&D.
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GK said 8:57PM on 2-25-2008
I am not savvy enough about buybacks etc., but sometimes I suspect that there SWIFTBOATING vs. AAPL, ala politics. Then Apple has a choice to respond and make it into a bigger thing, or ignore it, and do its thing. Sometimes I wish they had a PR Czar... It seems like any "analyst" or not can opine, and then other articles quote each other, and it snowballs! The AAPL gets beaten down, and someone ends up buying it cheaper! If only I had CASH now to buy more AAPL:)! But, I already shot my load... 168, 131... This reminds me of the 87-50 drop, so 202-114 is almost the same? WE SHALL OVERCOME!
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Matt Sayler said 8:29AM on 2-26-2008
"I'm surprised to see that Apple only spends 3% of their sales on R&D, while Microsoft spends 14%)"
Are you kidding? Microsoft has a huge R&D department that is likely one of the largest corporate publishers of CS research..
Not that that makes them cool, but they do spend money on R&D.
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Brett said 10:48PM on 2-25-2008
I'm wondering if Microsoft puts a larger percent of its sales into R&D because their core software business is 99% gross profit vs. 60% or whatever profit apple makes on it's more hardware based lineup.
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Shawn said 11:45PM on 2-25-2008
Dude, I'm telling you, they're planning to buy microsoft :)
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artifex said 11:41PM on 2-25-2008
Great picture, Mike :)
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jrizzle said 12:44AM on 2-26-2008
theyre saving it to buy up the soon to be sold band of radio waves
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mabhatter said 2:56AM on 2-26-2008
nobody was ever upset when Bill kept 40+ billion for microsoft's war chest... where do you think the money for Yahoo is coming from? Apple is no where close to having the kind of cash power microsoft does.
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Chris said 4:36AM on 2-26-2008
They're saving this money to pay for all the iPhones they have to replace. Look at the forums and see the people who are having to return their phones because the screens are bubbling.
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Paul D said 9:41AM on 2-26-2008
I just hope they're not keeping that $18 billion in US dollars, because if they are, it's lost billions of dollars of actual value over the past few years.
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Billy K said 9:43AM on 2-26-2008
If you had gone from founding one of the premier computer makers in the world to having the company stolen from you and driven nearly to bankruptcy, then forced to grovel in front of Bill Gates, you might sock away a few pessnies, too.
Steve says, "never again...."
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PINE said 10:31AM on 2-26-2008
The iTunes store is a loss-leader for Apple. They actually lose money on it. It's an investment for them to get people to buy iPods which they actually make money on.
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