When Tim Cook said Apple was "thinking very deeply" on what to do about its $98 billion cash position, I hope he was just being polite at the company's annual shareholders' meeting.
I believe Apple has much more important things to do, and therefore they should not even think about the cash position. Let's keep the record straight here: when someone is making a lot of money, why should he worry about spending or distributing his income? He should focus on making more money.
Here is a prioritized to-do-list for Apple's board and management. Of course I believe Cook and Company has a better version than mine:
1. Grow iPhone's market, especially in under-developed regions including China.
2. Update iPhone with more carriers (China Mobile?).
3. Grow iPad's market, currently more focused in the States. Continue on revamp directions like the education/publication.
4. Start iPad revision immediately afterward the release of iPad 3.
5. Develop iTV.
6. Update Mac and OS X.
7. Update iCloud and iOS.
8. Refine retail stores.
Where do you think "Do something about the cash position" should be? Is it priority No. 199?
If you still think Tim should deal with this low-priority item, please be reminded on his statement in a 2009 conference call with analysts. This was dubbed the "Cook Doctrine", and also included in Walter Isaacson's biography of "Steve Jobs" (p. 488):
"... We believe in saying no to thousands of projects, so that we can really focus on the few that are truly important and meaningful to us. ..."
More importantly, Apple should not base its business decision only on the fact that the cash position is sizeable. The business thinking should be: determine where and how much they should spend strategically, and then look at the available cash. Do not think backwards. Here are some good examples: lock up the supply chain of NAND for the next 2 to 3 years, and scoop up cutting-edge innovators like Siri in 2010 and Anobit in 2011. And by the way, we have a comfortable cash pile to support this spending.
It is nonsense and even dangerous to think backwards: when you have a big cash pile you have to do something about it. Also in this year's shareholders' meeting, a fellow investor suggested Apple use the cash to acquire media content, and Tim had to remind everyone that Apple "get profit from selling devices". The real danger here is that when things were not vetted well, any "clever" idea simply for spending cash would potentially drain a lot of energy and resource of the company. Before they realized it, the important and meaningful priorities would all be destroyed.
In summary: what to do about the cash position is not a priority for Apple, and Apple cannot base business reasoning only on the sizeable cash pile. So my fellow investors, ask not what Apple should do about its cash pile, ask what Apple should do to keep its income growing.
Please don't get me wrong on this topic: spending or distributing cash is not a taboo for investors. I just don't see Apple doing it only because its cash position is sizeable at this time. If Apple did take action on the cash, I would analyze its intention and consequences further. In other words, I would not immediately jump to a negative reaction if it happened.
Disclosure: I am long AAPL.