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The Almighty Buck Businesses Apple News

Apple Has Too Much Money 570

Posted by timothy
from the so-lucky-not-to-have-that-problem dept.
Hugh Pickens writes "AP reports that last week during a question-and-answer session at the company's annual shareholders' meeting CEO Tim Cook said he believes Apple has more money than it needs and his next challenge is to figure out whether Apple should break from the cash-hoarding ways of his predecessor, the late Steve Jobs, and dip into its $98 billion bank account to pay shareholders a dividend this year. 'Frankly speaking, it's more than we need to run the company.' The question of how to handle Apple's cash stockpile is a touchy one, partly because company co-founder Jobs had steadfastly brushed aside suggestions that the company restore its quarterly dividend which Jobs suspended in 1995 when it was in such deep trouble that it needed to hold on to every cent to keep from going bankrupt. Marketwatch analyst Mark Hulbert writes that a compelling case can be made that a huge cash hoard actually represents grave danger for Apple. That's because too much cash often burns a hole in managers' pockets, and they end up doing a poor job of investing that cash—engaging instead in foolish pursuits like empire building. Hulbert adds that a good strategy for ensuring that Apple remains a hungry, growth-oriented entrepreneurial company might be for it to distribute much of its cash to shareholders."
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Apple Has Too Much Money

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  • by Average_Joe_Sixpack (534373) on Sunday February 26, 2012 @09:38AM (#39163409)

    I thought I was a genius for doubling my money.

    • by Alrescha (50745) on Sunday February 26, 2012 @10:04AM (#39163559)

      "I thought I was a genius for doubling my money."

      Sigh. Me too. Instead I have a PowerMac that effectively cost me a quarter of a million dollars.

      A.

    • by Oswald (235719) on Sunday February 26, 2012 @10:06AM (#39163567)

      Like I said to my sister in 1999, there's no way not to hate yourself if you invest in stocks. What are your options?

      Buy a stock and it goes down, apparently forever. What a dope I am.
      Buy a stock and it goes up. Sell, and it goes up further. Damn, I knew I got out too early.
      Buy a stock and it goes up then back down. Shit! I got greedy and lost money.
      Buy a stock and it goes up, you sell, then it goes down. I knew I had that stock figured out! Why the hell did I only buy 200 shares?

      So sure, you can make money, or you can lose money, but there's really no way to be happy with the outcome. ;)

      (Haters please note that this is intended as humor. I'm sure that, aside from the universally felt twinge at having left money on the table, parent poster is perfectly happy to have "only" doubled his/her money.

      • Greater fool (Score:5, Insightful)

        by gr8_phk (621180) on Sunday February 26, 2012 @11:10AM (#39163989)
        The problem is you're playing the greater fool game. If you intend to make money by selling a stock at a later date, then what you're saying is that you think you can find someone willing to buy AFTER you got the value out of it. Your buying strategy is also then based on inside information, "intuition" or some other divine insight, otherwise people would have already known and driven the price up. Another downside is that you have to actually SELL your assets to get any money from them.

        The old school way which is now gaining popularity again is to buy companies that pay dividends. This gives you a return without finding a fool to sell to or cashing out. It's how it's supposed to work. If the stock goes down, it's not even relevant unless they cut the dividend (there is eventually a correlation there). Now a few words about yield. A company can only pay (long term, at most) a dividend of 1/PE where PE is the price/earnings ratio. So a PE of 20 means they can potentially pay a 5% dividend if they pay out all the earnings. A PE of 10 is potentially "undervalued" in this regard. Apple with a PE around 15 isn't actually bad, they should probably just start paying a dividend based on earnings and keep the pile of cash for a rainy day. Then the dividend could be kept up during tough times.
        • Re:Greater fool (Score:5, Insightful)

          by fafaforza (248976) on Sunday February 26, 2012 @11:22AM (#39164057)

          But you don't have to find a "fool" because market makers are always there to facilitate liquidity. And if there's a good amount of volume, you won't have trouble selling at the price you want.

          • Re: (Score:3, Insightful)

            by cforciea (1926392)
            Nope, they provide fake liquidity. There still has to be a fool on the other end, the "market makers" just take a cut between when I sell it and the other chump buys it.
        • Re:Greater fool (Score:5, Interesting)

          by Anthony Mouse (1927662) on Sunday February 26, 2012 @12:38PM (#39164427)

          The problem is you're playing the greater fool game. If you intend to make money by selling a stock at a later date, then what you're saying is that you think you can find someone willing to buy AFTER you got the value out of it. Your buying strategy is also then based on inside information, "intuition" or some other divine insight, otherwise people would have already known and driven the price up. Another downside is that you have to actually SELL your assets to get any money from them.

          That's not how it works. The stock price of a company has at least some relationship to the value of the company -- certainly it will almost never fall substantially below the liquidation value, because if it ever falls below it, there are plenty of vultures who will swoop in and buy it for just under that amount and then liquidate the assets at a profit.

          So if you buy a stock for $100 and it goes up to $120, that is usually because the company is now worth more money. They might have more money in the bank, or their products might be more popular in the market and the expected future profits are higher, etc. The person who buys it is not (necessarily) a sucker -- they're buying something ostensibly worth $120 for $120.

          What you're probably referring to is the efficient market hypothesis, which basically says that the risk-adjusted return for any stock is the same, because if it wasn't then market participants would sell stocks with lower risk-adjusted returns (thus lowering their price) and buy stocks with higher ones (thus raising their price), until the risk-adjusted return for both stocks is the same. (The ironic thing about the efficient market hypothesis is that it only works if market participants assume it isn't true -- because if people assume it's true it encourages people to be lazy in evaluating bargains and then it ceases to be true; but since they generally don't assume it's true, it tends to be true. Another way of saying this is "people who trade stocks on the basis of the efficient market hypothesis are suckers.")

          But that doesn't have anything to do with whether someone who buys at a higher price is getting a better or worse deal. Stocks with higher volatility (like a lot of tech stocks, because fortunes change overnight in this industry) tend to have higher returns when they're doing well, because the probability is higher that you'll see losses than you will if you buy e.g. Walmart. In other words, the returns can be higher with Apple because the risk is higher which makes the risk-adjusted expected returns the same for both Apple and Walmart (and, if you buy the efficient market hypothesis, all other securities). There is no reason to expect that you'll do better buying Apple vs. Walmart, regardless of their past performance or anything of that nature ("past performance is no guarantee of future results"), because if there was any reason to expect that then the respective prices of those stocks would almost immediately change to reflect it and it would case to be the case.

          The point being that if you buy a stock and then later sell it for a higher price, neither you nor the buyer are necessarily suckers. You just have different valuations of the value of the stock -- and the difference may be very small. If you think it isn't worth more than $100 and someone else thinks it's worth $100.20, you aren't having some great existential disagreement about the future of the company. You're disagreeing about whether the future risk-adjusted returns will be two tenths of a percent higher or lower and comparing that favorably or disfavorably with the risk-adjusted returns for other investments (which will be in the same range).

          The old school way which is now gaining popularity again is to buy companies that pay dividends. This gives you a return without finding a fool to sell to or cashing out. It's how it's supposed to work. If the stock goes down, it's not even relevant unless they cut the dividend (there is eventually a c

          • Re: (Score:3, Insightful)

            by pepty (1976012)

            Apple is neither an investment bank nor a venture capital firm. That is not their field of expertise, and it's likely that they won't make the most optimal decisions with the money. (It also creates a principal-agent problem where company executives have the incentive to invest in what they know and understand rather than what is most economically efficient.)

            Anyone with 98 billion dollars can afford better expertise than they can get from hiring investment banks or VC firms, which come with their own principal-agent and conflict of interest problems. They can afford to buy Goldman Sachs outright (Twofer: Apple's lobbyists would become largely redundant) or to partner up 50:50 with, well, most of the VC firms. They'd still have plenty left over for a massive stock buyback.

            I think the only way dividends will become popular again is if:

            1. legislation passes

      • Missing option.

        Buy shares. It goes up. It goes down. Market crashes, it goes down more. Buy more at fire sale prices. It goes up slowly.

        Remember, buy low, sell high. You may have to wait for the high and resist selling in a panic.

        When people were getting out of the market, I got in.

        • by dkf (304284) <donal.k.fellows@manchester.ac.uk> on Sunday February 26, 2012 @11:27AM (#39164079) Homepage

          Remember, buy low, sell high. You may have to wait for the high and resist selling in a panic.

          Yes, but markets can be irrational for much longer than you have the money to keep up.

          • by TubeSteak (669689)

            Yes, but markets can be irrational for much longer than you have the money to keep up.

            Standard investment advice is that as you get older, you pull money out of the stock market for exactly that reason.
            But if you're 30~40 years old, you can wait the decade or two it takes for even the most fucked market to bounce back.

          • by superwiz (655733)
            Which is why you buy stocks which pay dividends. So that the money keeps coming.
        • by VortexCortex (1117377) <VortexCortex@ p ... r e trograde.com> on Sunday February 26, 2012 @11:51AM (#39164215)

          Missing option.

          Another missing option: Don't gamble, or try to make money from literally nothing. -- What, pray tell, social benefit does moving numbers around actually do? You shift them around smartly and the numbers get bigger? Oh I see...

          It gives companies something to borrow against when people think highly of them at the cost of having the rug ripped out from under them (and their shareholders) at any given moment by mere rumors... Companies that don't borrow against their stock price can survive even terrible market conditions by PROVIDING BENEFIT to their customers alone.

          Don't get me wrong, I understand investments. It's just that the stock market isn't the only way to invest. When I invest in something, it's because I actually believe in the company based on something more than just erratic market trends. The value of my investment doesn't fluctuate with the moronic whims of a fickle market -- My returns actually reflect the company's profits. If they don't seem to be performing well, then that's my fault for not doing my research, or just bad luck. "Shit Happens."(tm)

          Now if I can sell my failing investment to someone else, then I've just made some poor fool a sucker. The stock market is full to the brim with suckers... I may have dodged that bullet, but I actually don't do this unless absolutely necessary -- Instead I try to see if there's some way to fix the issue instead of bailing out at the first sign of trouble (unlike a stock marketeer). I sleep better at night, and make better investments, because I have a vested interest in actual, not momentary, success and don't play in the stock cesspool.

  • by bdsesq (515351) on Sunday February 26, 2012 @09:42AM (#39163427)

    Apple is one of the most successful companies in the world -- right now.
    But everyone with a soap box seems to think they know better than Apple management how the company should be run.
    If they are really that smart go start your own company and beat Apple at it's own game.

    • by Anonymous Coward

      But everyone with a soap box seems to think they know better than Apple management how the company should be run.
      If they are really that smart go start your own company and beat Apple at it's own game.

      They don't know either.

      If Apple's management were such geniuses, then why don't they take that cash and start another business line that will make them even more successful?

      Or for a bad idea, buy a company that will add to their business - like Intel? (Using cash for acquisitions almost always turns out to be a bad decision. )

      Sitting on a load of cash is a sure sign that management doesn't have any good ideas in the pipeline to keep the business growing and the company is headed towards stagnation.

      It happen

      • Re: (Score:3, Funny)

        by Rational (1990)
        You know, if you announce the end of the world every day for the next ten billion years or so, some day you're bound to be correct.
      • by thesandtiger (819476) on Sunday February 26, 2012 @05:30PM (#39166587)

        "If Apple's management were such geniuses, then why don't they take that cash and start another business line that will make them even more successful?"

        By and large that's actually what Apple has been doing. To wit:

        - They were a computer/software maker and started making money doing that thanks to the iMac. So, they:
        - Started up the iPod business selling music players that were pretty easy to use and fill up. So they:
        - Started up the iPhone business, selling phones that were pretty neat along with apps that can be used to fill 'em up. So they:
        - Started up the iPad business, selling tablets that were pretty neat compared to anything out at the time, along with even more apps that can be used to fill 'em up.

        The problem for them is figuring out what the next "So they" should be. In my opinion, unless they have some really amazing stuff hidden (like AR glasses or something similar), I don't see them having an easy time bringing out yet another class of "must have" gadget.

        But I could see them essentially buying up huge chunks of content - music, movies, television catalogs - in a way that gives them complete and total control over how they are able to run the content part of iTunes.

        I could see them trying to set up their own cell/data provider, starting with the most advanced networks they could.

        The problem with those would be that, given the way Apple has historically handled negotiating with the content providers and their network carriers, Apple made the lion's share of the profits and had the relatively easy part while the providers and networks made money but had to deal with the more difficult parts (like provide service).

        I could see them doing something like taking a lot of that money and starting up their own idea incubator - they have a LOT of very smart people working for them and wanting to work for them - and just basically being a venture capital group. That's been done before, of course, but I could see Apple trying to do it again, but this time "right" since that's one thing they tend to do well.

        As for what such a load of cash is a sign of - I think in Apple's case it's more a sign that they REALLY didn't anticipate the level of success that they had. Usually in business it's a very good idea to plan for as many failure modes as you can think of as well as how to build on successes, but most people don't go, "Gee, and if we sell 20x as much as we think we could we should buy everyone ponies and have free ice cream day!"

        If they were completely out of ideas, I don't think we'd see Tim Cook walking around saying "We're trying to think of the best way to handle this" - I think he'd be flat-out lying and saying "We have amazing things in store for these funds" while trying desperately to see if there's anything "magical" they can pull out of their asses.

  • Or they could.. (Score:3, Insightful)

    by Anonymous Coward on Sunday February 26, 2012 @09:44AM (#39163441)

    just start charging less for their wares? Ya know, give back to the suckers that made them rich in the first place?

  • by PolygamousRanchKid (1290638) on Sunday February 26, 2012 @09:44AM (#39163447)

    . . . pick some good staff and management to run them, let them come up with some good ideas. And just wait and see where they go. If nowhere, tough luck, but the mother ship's kids won't go hungry. On the other hand . . . maybe they might end up with a valuable subsidiary.

    Giving cash to shareholders won't work. They will just use the cash to go out and buy yet again more Apple products.

    So then Apple will be stuck with the money again, and not know what to do with it.

    • by Nerdfest (867930)

      That doesn't (or didn't) sit well with their insistence on controlling everything. I'd also suggest maybe funding some causes that help humanity, or technology in general, rather than just the bottom line.

    • by mjwalshe (1680392)
      err the shareholders own the company and I am sure that as a share holder id rather a decent dividend that some doomed attempt to piss my monney up the wall competing in the TV market where the margins are razor thin
  • by CokeBear (16811) on Sunday February 26, 2012 @09:49AM (#39163463) Journal

    Take half the money, divide it into 3 piles, for the 3 stakeholders:
    1) Shareholders in the form of a one-time dividend.
    2) Employees get a one time bonus
    3) Customers get a gift card based on their purchases in the past quarter.

    Apple is still left with 50 Billion, and keeps everyone happy.

    When they hit $100B again, rinse & repeat.

    • by OnlineAlias (828288) on Sunday February 26, 2012 @10:30AM (#39163703)
      I'm glad you aren't running my company. None of these things have any basis in reality for even the most green in managerial finance. Having excess capital, while generally a good problem to have, is still a big problem. Companies can bleed it through stock buybacks, dividends, or by investing it, but they cannot give it away. What Apple needs to think about doing is buying or creating other companies, be it by horizontal or vertical integration. For example, they could buy or build a competitor to Foxconn (or buy Foxconn itself, this is one I would seriously look at). Or they could take a controlling interest in Facebook. Or invest in the million other smaller start ups that could bring new innovations to Apple. Apple is seriously at a crossroads right now. Without an innovative product pipeline (or Jobs) and a supply chain that is costing a ton in PR, Apple is going to have to start putting their big boy panties on and start acting like a big boy company.
  • 1995? (Score:5, Insightful)

    by mfnickster (182520) on Sunday February 26, 2012 @09:49AM (#39163465)

    How did jobs manage to suspend Apple's dividend in 1995 when he was still working at NeXT??

  • by sqldr (838964) on Sunday February 26, 2012 @09:54AM (#39163487)

    Here's an idea: buy up all patents on H.264 and make them freely usable. Then W3C would have no arguments not to use it in HTML5, google will have no excuse not to implement it, apple will have a head start on getting it implemented on all their devices, and we can have the fucking internet back.

  • Um, what? (Score:5, Insightful)

    by whisper_jeff (680366) on Sunday February 26, 2012 @09:58AM (#39163513)

    I couldn't read the linked article (I seriously need to log in to view an AP news article hosted by Google? That's rich!) but that's not at all what I have heard Cook discussed. He downplayed the likelihood of a dividend payout and made it sound much more likely that Apple would find other ways to invest the money. In fact, his quote (re dividend payouts) was "My message there is that the board and the management are thinking about this very deeply... and we will do what we think is in the best interest of shareholders." Call me crazy but that sounds an awful lot like "look, we're not going to outright say it, but we're NOT paying dividends. We're thinking of other ways to invest the money that are better for the company which is, in our opinion, better for the shareholders."

    Look, I know investors _REALLY_ want a dividend payout because it amounts to free cash (and lately the trend is "Apple, you have tons of cash - GIVE ME SOME!!") but, face facts people, the company has a history of not paying dividends, they don't feel it's a good use of their money, and they feel there are better ways to invest the money. Just accept it and move on.

    Want to get dividends? Invest in stocks that pay dividends.

    • by DarkOx (621550)

      Its not "free cash" its very direct ROI. Investors generally want dividends when they don't feel the cash a company is holding is being leveraged properly. The reason you invest is because you expect the asset will grow. If all a company you have stock in is doing is holding a bunch of cash in bank accounts well; shit you could do that; without the risks.

      APPL needs to either needs to tell investors it has some plan to exercise that money or it should disperse it as dividends. Dividend disbursements are

    • ...as an incentive to either pay out dividends or to put the capital to work.

      And not that businesses shouldn't have the ability to build cash reserves, but US corporations are sitting on something like $2 trillion in assets. Some have so much cash that banks are charging steep fees to handle it.

      At some multiple of earnings, these cash hoards are actually a drag on the economy. For one, they represent underutilized capital -- generally a firm's cash is tucked into short-term securities for liquidity, mean

  • by confused one (671304) on Sunday February 26, 2012 @10:04AM (#39163561)

    Brain: We must prepare for tomorrow night

    Pinky: Why, what are we doing tomorrow night?

    Brain: We're going to go to Cupertino.

    Pinky: What will we do when we get there?

    Brain: The same thing we do every night, Pinky - try to take over the world!

  • by K. S. Kyosuke (729550) on Sunday February 26, 2012 @10:07AM (#39163571)
    ...and fly a man to Mars. :)
  • Poor timing (Score:3, Insightful)

    by Patch86 (1465427) on Sunday February 26, 2012 @10:09AM (#39163575)

    Abysmal timing to announce "we have more money than we actually know what to do with" so hot on the heels of the negative stories about workers rights in the factories making Apple (and other) components. Perhaps they wouldn't have the "problem" of having such a colossal cash mountain if all workers in the supply chain were paid a fair wage?

    And depressing that the best suggestion for dealing with the cash mountain is to distribute it to investors (to keep already highly valued share prices inflated), rather than any one of a hundred other uses- from increased pay, smaller profit margins on sale prices, increased R&D to come up with some truly innovative technology, or even just good old fashioned philanthropy.

    • Re:Poor timing (Score:4, Insightful)

      by roman_mir (125474) on Sunday February 26, 2012 @10:16AM (#39163609) Homepage Journal

      That's retarded. They already covered their costs, Apple is not a charity, they bought labour at fair wages (market value, as opposed to what you want obviously). Companies EXIST to make money for their INVESTORS, nobody else. All the wealth (products, services) and all the wages and taxes they pay are completely incidental to their goal (which is why free market the best tool for creating wealth in the first place).

      They need to do one thing for sure though - diversify out US denominated assets (though they already have their production capacity in Asia and other places), but they need to look at moving money out of US dollars and probably into other businesses, unrelated to tech - energy, mining, agriculture, whatever - just not in socialist 'paradise'. Paying out dividends to their investors is a completely reasonable suggestion, in fact they should do that too.

      • by decora (1710862) on Sunday February 26, 2012 @10:28AM (#39163695) Journal

        i dont understand why people who believe in the free market keep looking to China as some kind of model on a hill. China is run by the Communist Party, and the corporations over there are part owned by the same party.

        There are no labor unions, there are no workers rights laws, there are no environmental laws. There are mines and factories that are run on prison labor - 'criminals' being people who speak things the government doesnt like. Criminals being people who mention forming a union. That is not a 'free market' upon which wages were decided. That is a captive market, not a free competitive market.

        In case you have forgotten, slavery was what the Republican Party was founded to eliminate from the face of the Earth. Not to make a profit off of it by claiming it was 'fair'.

        The idea that someone should not have to inhale N-Hexane on an assembly line to save 1% on the cost of a product has nothing to do with 'socialism'. It is about basic human decency, basic morality, basic common sense. It is about the difference between a civilized society and lawless barbarism.

    • Re:Poor timing (Score:5, Informative)

      by UnknowingFool (672806) on Sunday February 26, 2012 @10:16AM (#39163611)

      Perhaps they wouldn't have the "problem" of having such a colossal cash mountain if all workers in the supply chain were paid a fair wage?

      Do you know what is a fair wage in China is? Most people only look at the wage in US dollars and immediately claim to be unfair without ever looking at what people are paid relatively in China. The wages at Foxconn plants are slightly better than average for factory workers in China. Apple pays those that work on their products more than competitors do at Foxconn.

      • by decora (1710862) on Sunday February 26, 2012 @10:24AM (#39163665) Journal

        making you work 80 hours a week, making you live in a tiny room with 20 other people, make you use dangerous chemicals that damage your brain, threaten you with prison for even talking about a union, etc?

        • by gnasher719 (869701) on Sunday February 26, 2012 @10:43AM (#39163817)

          making you work 80 hours a week, making you live in a tiny room with 20 other people, make you use dangerous chemicals that damage your brain, threaten you with prison for even talking about a union, etc?

          1. I'd like to see evidence of working 80 hours at week. Plus Foxconn actually pays overtime for every additional hour worked; many companies in the USA don't pay anything for overtime.

          2. Foxconn doesn't make anyone live in a tiny room with 20 other people. They offer accomodation in dormitories with 8 people per room, at a cost of less than 10 hours salary per month. Perfect for someone who wants to work for 3, 6 or 12 months, save as much money as possible, and return to their home village with a big pile of cash. These people are free to find other accomodation, which will cost them more.

          3. There are no dangerous chemicals in use anywhere in the USA. Not anywhere. Never. Ever. Do you believe that? Shit happens, and responsible companies like Apple act when shit happens.

          4. Chinese employees are free to join a union. The company even has to pay for the majority of union fees. Now it is true that you can't start a union other than the state union, but you _can_ join a union.

          • by UnknowingFool (672806) on Sunday February 26, 2012 @11:09AM (#39163979)
            In regards to #2, some of these factories are in the middle of nowhere because the land was cheap. If the companies didn't build dormitories, their workers would have had no housing as the factories were built so quickly that the local area has not been able to keep up with residential construction. This is the same reason some of the factories are mini-cities. There really isn't any place for the worker to eat or shop. Cars are not the norm in China so most workers can't just get in their car and drive to the nearest town for supplies and housing. Now if you don't build these amenities, your competition is ready to do so and get workers and the contracts you wanted.
      • Re:Poor timing (Score:5, Insightful)

        by rgbrenner (317308) on Sunday February 26, 2012 @10:26AM (#39163689)

        They are paid so terribly, that thousands of Chinese line up and wait for hours for a chance to work at Foxconn. And the job ad even says the starting wage is $261:
        http://micgadget.com/21420/thousands-line-up-for-foxconns-jobs-in-zhengzhou/ [micgadget.com]

    • Re:Poor timing (Score:5, Informative)

      by Anonymous Coward on Sunday February 26, 2012 @10:25AM (#39163675)

      to keep already highly valued share prices inflated.

      By P/E ratio Apple is valued less than Google, Amazon, Verizon, ATT, Oracle, LinkedIn, NetFlix. It is one of the CHEAPEST tech stocks in the markets it competes in (devices, media, mobile), even though it continues to see phenomenal growth.

  • by decora (1710862) on Sunday February 26, 2012 @10:22AM (#39163655) Journal

    congratulations, capitalism. after Jobs passed away, it took less than a month for the hedge funders to begin the pillaging of the organization for their own personal aggrandizement.

    apple will soon become 'the next HP', a gutted wretch whose main business is screwing people out of toner ink. bravo.

  • eh (Score:4, Interesting)

    by buddyglass (925859) on Sunday February 26, 2012 @10:23AM (#39163663)

    I know they get criticized for it, but until there's a shareholder revolt and/or people stop buying the stock (fat chance), I don't see the "need" to pay out a dividend. Apple could instead do one or more of the following:

    1. Lower its profit margins and steal even more market share from its competitors. Tons of people already buy Apple products; imagine if they were that much cheaper.

    2. Hire an even more talented workforce by offering "way above market" pay. Establish a threshold like 10%. Fire the lowest performing 10% of Apple employees. Technical, design, sales, the whole nine yards. Then give everybody who's left a 25% raise. Then fill the vacant positions with "superstar" caliber replacements. (Note: it shouldn't do this unless it's confident it can accurately gauge employee performance.)

    3. Get into a market it doesn't yet play in and dominate it. This with the understanding it will incur a short-term financial loss. Prior to the iPhone's release, who would have ever thought the most popular phone in 2012 would be from Apple? Not me.

  • by mschaffer (97223) on Sunday February 26, 2012 @10:33AM (#39163733)

    Now, Jobs is gone. So, unless the current board has plans to go "Thermonuclear" on someone, it's time for some dividends.

  • cure cancer (Score:3, Interesting)

    by backslashdot (95548) on Sunday February 26, 2012 @10:40AM (#39163787)

    They could spend 50 billion of it on curing cancer. You know, I wondered why Steve Jobs didn't do that .. I kept putting off writing to him to tell him to do that -- I now regret that. All he had to do was get all the world's top cancer scientists together to work on the problem in a focused way. He did that with computer animation and it worked. He did that with smartphones and it worked. Why can't it work for cancer or for regenerative medicine (growing new body parts)?

    And yes, it would be massively profitable .. they can charge the equivalent of 1 or 2 years of chemotherapy for the cure. The insurance companies would gladly pay for it (it'll be cheaper than paying for 3-5 years of various expensive chemotherapy drugs and tests that the average cancer patient needs).

    They would get their invested money back within months.

    • Re:cure cancer (Score:4, Insightful)

      by the_humeister (922869) on Sunday February 26, 2012 @12:49PM (#39164499)

      I guess you don't know this but cancer is a collection of heterogeneous diseases whereby cells grow out of control. They range from the benign (eg basal cell carcinoma) to the guaranteed death sentence (eg grade 4 astrocytoma). And they all have different genetic causes. So being able to identify the cause, preventing it, and then curing one particular cancer may not help for other types (eg just cut out basal cell carcinoma and you're cured, but there is no true cure for chronic melogenous leukemia other than stem cell transplant or gene therapy to correct the genetic mutation).

      Anyway, finding a "cure for cancer" leads to the question: which one?

  • by LeoXIII (888066) on Sunday February 26, 2012 @10:42AM (#39163803)
    The fundamental value of a stock is the sum of future payouts in the form of dividends, spinoffs or liquidation. For companies with finite resources, such as a mining company, this is easier to compute than for a technology company like Apple. But if Apple would never pay a dividend or spin off parts, the value of the stock is zero. The discussion above shows a remarkable lack of understanding of the basics of capitalism. The only reason not to pay a dividend is that the money is better invested in the company now so that it will generate even higher profits for the owners in the future.
  • by erroneus (253617) on Sunday February 26, 2012 @10:46AM (#39163831) Homepage

    All those starving lawyers out there and all that cash laying around... obscene amounts of cash... private army amounts of cash... could buy a dozen small to medium sized nations for that amount of cash.

    Apple could buy every politician on the planet for just about that amount of cash. They could sustain legal aggression against competitors indefinitely for that amount of cash.

    But don't even THINK about bringing manufacuring and support back to the US... Apple doesn't owe anyone anything.

  • by Phoenix666 (184391) on Sunday February 26, 2012 @11:13AM (#39164013)

    Through last summer I hemmed and hawed about whether to hold or sell; my Apple shares had gone up 500% and were hovering around that point. Then Jobs passed, and I kicked myself for not having pulled the trigger before then. The share price dipped, of course, and the temptation to join those heading for the exits was strong.

    But it was reading Slashdot that kept me on board. I had not been aware that Tim Cook had already been running the company for quite a while, that he had been thoroughly groomed by Jobs, and that Jobs had left a roadmap for several years of products.

    Flash forward to February 2012 and the share price is up 700% from where I bought it, and they're mulling a dividend. Thanks, Slashdot!

  • by wisebabo (638845) on Sunday February 26, 2012 @11:13AM (#39164017) Journal

    Ok, here's something that I'm sure will piss off a lot of people, (maybe even myself if I think about it!) but why doesn't the US enact a law that mandates a majority of Apple products SOLD in the US be MADE in the US? (not just designed)

    I know this would suck for consumers (and the corporate planners at Apple which would have to deal with the havoc this would cause their supply chains) but it would bring back manufacturing jobs to the US (now we'd just have to keep those pesky migrants from taking them!). I mean, this wouldn't be illegal by international trade rules would it? (Brazil has a similar policy and it's still a member of the WTO). Also the auto industry has something like this in place, lots of foreign car companies manufacture cars in the US.

    Like I said, this is not going to be popular with lots of people, even me a (very) happy Apple shareholder. However, as a committed well-off Democrat, I'm used to advocating positions that might not be good for my own self-interest IN THE SHORT RUN in support of the common good. Maybe I should be committed! ;)

  • They should not, under any circumstance, reduce cash reserves at this point. Re-establishing a dividend might make sense, but not an excessive one, and not as a means of managing capital.

    Do you know why it took a year for competitors to bring out a real iPad competitor? It wasn't because Apple had much better tech, or because the others didn't have the prototypes - it was because no one could order parts. Before Apple launched the iPad, they bought up so much of the manufacturing capacity for key components - screens, especially - there was no way that Samsung could contract enough suppliers to bring a competitor to market.

    Doing this takes a lot of capital. If they're talking about reducing operating capital, that tells me they don't have a "Next Big Thing" that they're planning on launching like they did the iPhone and iPad. That means drastically lower long-term growth.

  • by StripedCow (776465) on Sunday February 26, 2012 @11:46AM (#39164187)

    I hope they use that money to further stifle innovation. All these technological novelties and the accompanying technobabble are growing over my head.

  • by arthurpaliden (939626) on Sunday February 26, 2012 @12:22PM (#39164349)
    Donate a billion or so to NASA to keep deep space exploration going.
  • by milkmage (795746) on Sunday February 26, 2012 @01:07PM (#39164653)

    "That's because too much cash often burns a hole in managers' pockets, and they end up doing a poor job of investing that cash—engaging instead in foolish pursuits like empire building."

    Siri, PA Semi... appear to have been wise purchases. All of these (purchases/acquisitions since 2008) seem to have, for the most part, worked out well. (not counting the last 3 since it's too early). 2-3 billion.. of almost 100 in the bank. they could have bought those companies with the interest.

    April 24, 2008 P.A. Semi Semiconductors United States US$278,000,000 [31] Apple A4, A5 (SoC)
    July 7, 2009 Placebase Maps United States — [32] Maps
    December 6, 2009 Lala.com Music streaming United States US$17,000,000 [33] iCloud, iTunes Match
    January 5, 2010 Quattro Wireless Mobile advertising United States US$275,000,000 [34] iAds
    April 27, 2010 Intrinsity Semiconductors United States US$121,000,000 [35] Apple A5 (SoC)
    April 27, 2010 Siri Software United States — [36] Siri
    July 14, 2010 Poly9 Web-based mapping Canada — [37] Maps
    September 20, 2010 Polar Rose Face-Recognition Sweden US$29,000,000 [38] iPhone software (camera)
    September 14, 2010 IMSense High Dynamic Range Photography United Kingdom — [39] iPhone software (camera)
    August 1, 2011 C3 Technologies 3D Mapping Sweden US$267,000,000 [40] Maps
    December 20, 2011 Anobit Flash Memory Israel US$390,000,000 [41] iPhones and iPads
    February 23, 2012 Chomp App-search software United States US$50,000,000 [42]

    I'll bet a significant chunk of that money would be well spent tooling OTHER manufacturers facilities to make Apple parts. Spend the money to upgrade a factory to make the seamless glass panes they used in the NYC store (for example) and they get really good prices on that glass for another construction project.. the new HQ.. which apparently has all glass exterior walls (and no right angles).

    spend the money to upgrade the CNC machines to tool unibody chassis, and no other vendor can use that facility (because Apple bought exclusivity). OR they bought all the machines (since it literally takes HOURS to cut a chasis out of a billet http://plasticsnews.com/china/english/chinablog/2011/12/apple_turns_to_new_materials.html [plasticsnews.com])

    Corning shelved Gorilla glass because they couldn't find a market for it. along comes Jobs... next thing you know, Corning is making Gorilla glass screens for everyone. I don't think Apple paid to re-tool... but probably gauranteed a shit ton of units ordered to get them to start making Gorilla glass in mass.

    you can complain all you want about their marketing, their products, whatever. but you CANNOT, in any way, argue that their business model isn't ROCK SOLID.

    as the saying goes.. if it ain't broke....

  • by Compaqt (1758360) on Sunday February 26, 2012 @03:18PM (#39165723) Homepage

    Can anybody who's a real lawyer say anything about perpetuities?

    I thought I read about a case where a huge sum of money was to keep accruing interest forever.

    The state disallowed it because they didn't want to allow the creation of a monster.

    Aside from legal aspects, if Apple wanted, couldn't it create a fund which would eventually dwarf all other financial entities on Earth? And even own everything? I mean, if they don't give out a dividend, that's where it's going eventually anyway.

  • by uvajed_ekil (914487) on Sunday February 26, 2012 @08:39PM (#39167867)
    If they have amassed too much money why doesn't Apple pay its employees? You know, the ones who built all of their products for wages well below the US minimum? They made all that money by way of exploitation - outsourcing jobs so they could pay workers less. Obviously that strategy worked very, very well.

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