What Should Apple do with Its $15B in Cash?

Apple (AAPL) has $15.4 billion in cash lying around and folks are wondering what it should do with it. Technology companies–at least the good ones–traditionally hoard cash and eventually shareholders want something (dividend, mergers and the like).

Fortune tosses out the idea that Apple should go on a spending spree. Buy Tivo! Peter Kafka at Silicon Alley Insider notes that perhaps Apple (see Apple Core blog) should buy a music label or movie studio.

Here’s a thought: Do nothing.

Cash stockpiles only become an issue when the growth slows down. And at last check growth is the least of Apple’s worries. Why distract yourself with acquisitions? And why would Apple want to enter the music business? The way things are going a big band could sign a deal with Apple anyway. Ask Madonna and LiveNation. Ask the Eagles and Wal-Mart. It makes no sense for Apple to buy a business that’s irrelevant in the first place.

Sometimes the best moves are the ones you don’t make. And there’s no reason for Apple to do much with its $15.4 billion. I suppose it could do something crazy and try and develop an alternative to coal-generated power, but it’s out of character.

The demands on Apple to give up some of its dough will rise again. But these questions won’t be a big deal until Apple’s growth slows–and I don’t see much on the horizon to make that happen. Investors will gladly let Apple keep its $15.4 billion as long as it keeps up the growth–in the fourth quarter the company’s revenue was up 29 percent from a year ago.

Thoughts or suggestions on what Apple should do with its money are appreciated.

Comments

[Webster]

PAY SOME DAMN STOCK DIVIDENDS!! This GREEDY Company, run by the biggest Limousine Liberal (Stevie Gods) has NEVER paid a single stinky cent of Dividends to their stock holders since Gil Amellio did ONCE back in the early 90's!

Yet Stevie and his Exec crew of greedy Ba$tards take illegal Stock Options at values a FRACTION of the actual street prices and Apple BUYS Stevie a FREE 80 Million Dollar PRIVATE CARBON POLLUTING JET!

Reputable companies, the gold standards of Wall Street - like HP, IBM, Sony, Cisco, etc - PAY DIVIDENDS to their stock investors! But GREEDY Apple doesn't even with the BIGGEST CASH reserves in the market sector!

Apple is a disgusting company, that has outsourced ALL their manufacturing to pacific rim countries since the 80's, that employ sweatshop manufacturing standards like Red China. Yet the Apple Hacks in the Media NEVER seem to report any of these FACTS!

[mike2948]

I think Apple should buy back $5 billion in stock, and declare a 2/1 stock split effective immediately.

[mike2948]

RE:Webster

I doubt that you even own any stock in Apple.

[Happy]

I don't have too many Apple shares. It would be very nice if this greedy company declared a 3/1 stock split and start giving dividends.

[Thomas A, Gaughan]

Let the money ride, Steve Jobs is doing a good job.

Thomas A. Gaughan

[RPK]

Apple has never done a major acquisition and likely will destroy value if it makes the attempt. Apple is very good at making trendy products that are simple and easy to use. It should not change its strategy. A large stock buyback at this time is probably unwise as Apple’s shares are trading at a premium. The reason to hold cash is its rating and to deal with any future downturn. For those that remember Apple was growth stock in the early and mid-80s, followed by a long period poor financial performance and declining market share.

[WM]

If it ain't broke, don't fix it. I like the 110 points of profit I have. Any dividend would be trivial compared to this. Maybe they should spend some of it on some R&D for the next great thing that they don't make yet so they stay ahead of the curve. However, I think they're already good at knowing when to do that.

[bigjohn]

Double the minimum amount of memory in all their new computers without any increase in price! Probably a bad idea - they would just make an extra billion.

[europeaninvest]

keep doing a fabulous job, Steve. there is a cache to having a stock keep rising without splits. as the company becomes bigger, the amount of cash that it keeps as a % of market cap goes down. keep the cash and keep up the great job

[User 128874]

It should buy Visa and use that acquisition to pioneer credit card payments via mobile technology.

[Webster]

re. mike2948

For your info Mr. Know-it-all-NOT, I've owned well over a thousand shares of Apple of a 15 year period, but I never keep it long, only to make a quick buck as the vast majority of "institutional buyers" do. And that's because Apple is TOO RISKY in the long term, their year to year chart looks like a Cooney Island Roller Coast AND BECAUSE they don't pay a stinking penny of dividends, CPA's and Financial Planners NEVER recommend Apple (or Dell) as a good long term investment.

Right now, I own a 100 shares and the next time it tanks 25 points like it did a couple months ago, I take my big profit while selling it short to some dope Apple Kool Aid Drinker like YOU. Bwah ha ha ha!

[Jimk7]

Apple should invest back into the country that made it great. I'm sick of all these Americans making billions here and then giving it all away or investing it out of the country. Apple should invest in the infrastructure here in America. Build a light-rail system in California along the 101 or something. We are being left out as these companies make billions here and invest it all overseas.

[mike2948]

re:Webster

You are an idiot.
For one thing, Cisco does not have a dividend. You need to look up the definition of a growth stock.
The stocks you listed in your previous post have not increased nearly as much as Apple.
Do me and Jobs a favor - stay away from Apple. We don't need jerks like you.
Go hang out at the jerk store.

[humble investor]

i trust steve. period.

but if anyone cares what i want them to do with their 15 billion... how about they create a product that captures my favorite tv shows and wirelessly transfers them back to my computer for synching onto my ipod. (buy tivo and merge it with appletv? cut out the cable and satellite companies with an appletv that comes with its own digital antenna?) also, please give me a way to wirelessly play my ipod audio content over my car stereo, but without requiring extra products or installations. basically aggregate all my digital entertainment content and make it available anytime anywhere. $15 billion should be able to do that, right? because if it can, $15 billion will turn into $150 billion very fast.

[Webster]

re. mike2948

It's Jerks like you who prove that the Apple Kool Aid Drinkers are the Jerks that you are .. its rhetorical (jerks = Apple Kool Aid Drinkers.)

See you moron "AKADs" are always the first to start flinging insults and name calling, instead of answering the accusations with any facts. It's like the school yard juveniles. So Cisco doesn't pay dividends, my ONE bad, but YOU are wrong about IBM's growth because IBM has grown 147.28% since 2002 with three stock splits, while Apple has had ONLY ONE and only grown 50% in value .... temporarily until the next 25 point stock crash (as IS typical of AAPL).

Morons like you should invest in marbles instead of stock, apparently you need to collect them for the lack of any in your head.

[mentone]

Apple is ok.Jobs is ok. But Webster is illmannered and Mike is taking his bait.Jobs' genius goes back to his invention of the mouse;his development of MacOS and lately the Iphone. Who else has done as much? And has made as many millionaires along the way?....Mike Dell perhaps?

[nikontraveler]

As a stockholder I would like to see some kind of an Apple store credit sent to stockholders to be used at an Apple Store to purchase Apple products. The amount of the credit would be determined by how long and how many shares owned by the stockholder. I would think that it would go to anyone that has owned the stock for 12 month or more. A thank you for making a commitment to Apple Inc. Maybe this can be done once a year for all stockholders that continues to own Apple stock. I think this is better than a dividend as it is also a great way for Apple to get more products in the hands of consumers. I believe that people who own Apple products are the best sales people that Apple could ever have. When stockholders receive a store credit they may also bring in other people into the Apple Store to redeem the store credit. Thus introducing more people to the wonderful world of Apple products. A store credit would serve a dual purpose. First, to thank the stockholder and second, as a promotional path to get more people into the store. I imagine there are a lot of people that own Apple stock and do not own any Apple products. This is the best way to get those that do not own any Apple products into the store to see the great product that they have invested in. Apple has always been on the cutting edge of new ideas. I have never owned a PC as I think they are pretty mundane and not innovative at all. So If Apple would send out store credits, Apple again would be an innovator in the stock market industry. I don't think that the SEC would have a problem with this concept as I see it as a way to pay dividends. Yes, the amount of the store credit would have to be submitted to the IRS. But here is the way that should be. The amount tendered in the credit would be reported to the IRS. Meaning that if a stockholder were to receive a store credit and not use it, then it would not be reported to IRS. As soon as it is cashed at an Apple store (These can only be used in Apple Stores or mailed in for an on line purchase from Apple Store) then it is reported to IRS as dividend income. There is a database of stockholders as I get the Annual Report in the mail every year. Good or Bad Idea?

[Dave N]

One area where I think Apple could make an impact with a successful product is by producing a truly intuitive and nicely interfaced (with complimentary software) universal remote. The current market for a universal remote is undersaturated with robust, high value, intuitive controllers. Sure, there's some IP landscape to navigate, but Apple could introduce a product so much better than Logitech's best and compete on price with Pronto and similar high-end devices. Apple has already captured a piece of the entertainment industry and a device that links between slick software (could be an extension of iTunes) and the home entertainment system is a logical next step and compliment to their product suite.