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Apple could survive on current cash alone until 2018

by Steven Sande Apr 27th 2011 at 3:00PM

During the 2Q 2011 Apple Results Call last Wednesday, we listened with rapt attention as the number for "Cash and Cash Equivalents" figure was announced. The number, as you may recall, was US$65.8 billion. One question that many of us always ask is "What could Apple do with that money?"

Asymco analyst Horace Dediu always provides fascinating insights, and in a post yesterday he not only did a breakdown of the sources of that cash, but did some comparisons just to show how huge the cash stash is. The pile of simoleons is made of "only" $15 billion in cash, about $14 billion in short-term marketable securities, and the rest -- about $37 billion -- in long-term marketable securities.

Dediu's comparisons are staggering:

  • If Apple's revenue stream was cut off today, the company could sustain operations (research and development, sales, general and administrative expenses) for seven years
  • Apple's folding money is worth half of Google's enterprise value
  • Those funds place Apple's CFO office into the top 100 of fund managers in the world, bigger than any hedge fund manager
  • The cash growth in the last quarter was higher than the market capitalization of many companies.

What's really amazing is that the rate of growth of Apple's hoarded lettuce appears to be increasing. What do you think Apple should do with all of that cash? Leave us your ideas in the comments.

[via The Apple Investor]



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During the 2Q 2011 Apple Results Call last Wednesday, we listened with rapt attention as the number for "Cash and Cash Equivalents"...
 

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24 Comments

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glad

Apple's got more cash in the bank than our govt has in the UK and much more than Iceland!!! can we have a loan Mr jobs

April 27 2011 at 9:21 PM Report abuse rate up rate down Reply
HighFive

All that cash is doing nothing for Apple's share price no matter how large the cash hoard is. The larger the cash hoard, the weaker the stock becomes. Investors don't buy stocks from companies that hoard cash. I think the cash is being used wisely by forming deals with component suppliers for future use. In fact, it's likely to give greater rewards to Apple's growth than dividends or buybacks. However, Wall Street doesn't see it that way and neither do potential investors. Apple appears to the investor as a tight-fisted company that is not willing to share any of its wealth to non-employees. Even though Apple will manage to hoard about $80 billion in cash or so by year's end, the share price will either stay around $350 or go lower which will be seen as a disaster for long shareholders for a company that is making so much money internally. I'd like to see Apple make a large acquisition that could help boost the share price, but I've no idea what sort of purchase could help.

Hopefully, Apple does have some grand plan to take over the media content distribution business, but I'm not sure that will boost the share price either.

April 27 2011 at 9:09 PM Report abuse rate up rate down Reply
Shunnabunich

Create strategically placed supply stockpiles for the zombie iPocalypse.

April 27 2011 at 7:34 PM Report abuse rate up rate down Reply
cinnamonaldehyde

Buy a billions of dollars of voting stock in Goggle.

April 27 2011 at 7:21 PM Report abuse rate up rate down Reply
1 reply to cinnamonaldehyde's comment
cinnamonaldehyde

To be clear, I say this as an Apple Stock holder.

April 27 2011 at 7:26 PM Report abuse rate up rate down Reply
Jonathan

The Apple Car.

April 27 2011 at 5:53 PM Report abuse rate up rate down Reply
Lindsey Kemp

Simple, give it to me... :)

April 27 2011 at 5:36 PM Report abuse rate up rate down Reply
NerdyLibery

Support the arts.

April 27 2011 at 4:54 PM Report abuse rate up rate down Reply
MikeC

Mills,

I read quite a bit. You should improve your literacy.

I never said we only windfall tax oil companies. (the whole concept of windfall tax is ridiculous anyway.)

And yes, we subsidize many, many different industries, including technology.

It was a joke. Next time I will put the emoticons in there to make it clear for the satirically challenged.

April 27 2011 at 4:32 PM Report abuse rate up rate down Reply
1 reply to MikeC's comment
mills

actually, my undergraduate degree is in lit, so i'm okay on that front.

and if you think you employed satire, your logic is faulty, as well; go back and read what you wrote.

April 28 2011 at 11:38 AM Report abuse rate up rate down Reply
fractured

They should buy more of the tech that they license. Then they pay themselves for it and other companies pay royalties to Apple. Doesn't Apple license Google's Maps and Search functions for iOS? They'd then have iOS for their own devices and license Android to other handset manufacturers.

April 27 2011 at 4:18 PM Report abuse rate up rate down Reply
Erk

pay some dividends.

why i will never buy apple stock

April 27 2011 at 4:07 PM Report abuse rate up rate down Reply
1 reply to Erk's comment
Tony

Interesting strategy.

So, let's say you bought 250 shares of Apple 5 years ago. Let's call it January, 2006. The stock price at that time was $80/share. So, your investment would have been $20,000.

Today, that investment would be worth approximately $87,500.

Now, if instead you had purchased shares of a dividend paying stock, for example - Coca Cola, at $41/share. You'd have about 487 shares. Today, the stock would be worth about $32, 142. But, it also pays a dividend. Using historical data (http://www.dividend.com/historical/stock.php?symbol=KO), you would have made an additional $3,662 in dividends (assuming you didn't re-invest the dividends, in which case your total stock value would be slightly more, but would take too long for me to look up all the historical prices and calculate.)

So, as of today, an investment 5 years ago in Apple would be worth an additional $67,00, while an investment in Coca-Cola, a dividend paying stock, would be worth an additional $15,804.

I'm not saying owning dividend paying stocks is bad, I own several, but not paying dividends as the reason to "never" own Apple stock is just short-sighted.

April 27 2011 at 4:39 PM Report abuse rate up rate down Reply
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