Apple's $165 Billion Cash Hoard Creates Mergers and Acquisitions Mirages (bloomberg.com) 55
Apple's slowing growth and cash-rich balance sheet are again fueling speculation that the world's most valuable company should make a big acquisition. From a report: Entertainment giant Disney recently joined a long list of potential acquisition targets that over the years has grown to include Netflix, Tesla, Peloton and Sonos. They all have one thing in common: Anyone betting that Apple would buy them has so far been sorely disappointed. "You're probably missing the value of the business if you think the key catalyst for investment is a major acquisition," said Kevin Walkush, portfolio manager at Jensen Investment Management. "It's a low-probability bet." Apple is famous for eschewing splashy acquisitions in contrast with peers like Microsoft and Amazon, which have continued to make deals despite increasing scrutiny by regulators. Instead, Apple favors buying small startups to augment its home-grown pushes into new markets even if those efforts take many years to bear fruit.
People want paid out (Score:4, Interesting)
It's a "Badge" . . . (Score:3)
. . . "rumored to be a takeover target by Apple!"
A name-dropping salesman once tossed out while chatting with me that Apple was "interested" in them.
He wore it like a Badge of Pride:
"Approached by Apple, decided to stay independent . . . for the moment."
. . . um, . . . OK . . . like, yeah.
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I used to work for start-up, and when I pointed out that a feature may create longer-term concerns, the team leader said, "Don't tell anyone I told you, but we really want to get bought by a big fish. Long term is not a priority."
Re:People want paid out (Score:4, Insightful)
and exist to trick
I don't think you know what this word means. Starting a business is always a risk, buying a business is always a risk. Start-ups aren't tricking anyone. Investors do due diligence and then buy based on that assumption.
I think you are under the impressions that companies are some infallible genius investors and therefore get "tricked". The reality is they are just as dumb as any other investor, they see a unicorn think they can make lots of money with it and throw cash at it. That's not being tricked. That's being stupid.
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They buy startups because they know it’s easier for a startup to innovate than a massive corporation.
Apple's acquisition history (Score:4, Interesting)
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What Apple has tended to do is pick up tiny companies with a vision but limited reach, to uplift the ideas... Think FingerWorks, who once upon a time was a tiny Slashdot darling for their TouchStream input devices but not reaching much commercial success. Apple snapped them up and worked their gesture tech into their devices, and pretty much launched multitouch gestures into the mainstream.
Or things like EMagic (the creator of Logic Pro) and Macromedia's desktop division's KeyGrip (which became Final Cut).
dividends (Score:3)
or a special dividend to shareholders.
No corporate should be holding so much money. Its not theirs, its the shareholders anyway. Give it back and let the shareholders invest it in whatever company they think will do well, or spend it on hookers 'n coke if they think that's a better purchase these days.
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Agreed. They're screwing their shareholders here.
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I get dividends from Apple, but I make far more money when the stock price rises.
Re:dividends (Score:4, Informative)
I get dividends from Apple, but I make far more money when the stock price rises.
Indeed. That's why stock buybacks are almost always better than dividends. There are tax benefits since a rising stock price is a capital gain while dividends are ordinary income.
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Agreed. They're screwing their shareholders here.
No they aren't. Companies are under no obligation to pay money to their shareholders. They don't even need to pay dividends. Shareholders invest with a view on value and little more. Stable dividend payment is a bonus. But there is zero expectation that any shareholder is entitled to cash on hand.
Re:dividends (Score:4)
If they're hoarding money, that means they're not putting it to work. In that case, they damn well better pay a dividend. Anything less ought to be criminal.
No they aren't. Companies are under no obligation to pay money to their shareholders.
You're confusing what is legal for what is ethical. They are not the same thing. A moderate cash reserve is prudent, a massive cash hoard is a gross misuse use of the companies assets.
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Well, don't buy their stock if you don't like what they're doing. It isn't as if having a large pile of cash hasn't been Apple's policy for a long time. Steve Jobs even bragged about how big the balance sheet was. If you buy their stock, you should do due diligence and know what you're getting into. And anyway, is a cash pile 5-10% of the value of the company all that big?
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They believe the meme that the company is legally required do whatever will make the shareholders an extra penny no matter how inhuman and unethical, they have to do it or the CEO will go to jail or get sued or his face will get downgraded to ugly.
Stupid. That fable is for when they’ve gutted all employment opportunities from a small town that’s supported them for generations. Not for like when you’re an actual shareholder. They don’t actually have to do much for you and they all
modern money management (Score:5, Insightful)
Apple's slowing growth and cash-rich balance sheet are again fueling speculation that the world's most valuable company should make a big acquisition.
Just because you HAVE money does not mean you should spend it. This way of thinking is why so many have no savings, but have shiny trinkets.
Apple has more than a rainy-day savings, so they COULD make a major acquisition at any time... but there is no need for them to spend it.
Re: modern money management (Score:2)
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Their market capitalization is around $2.6 trillion. It's not likely that anyone would (or could) buy up a controlling share of that just to get their hands in $165 billion.
That was a thing once. A company down on its luck would have their capitalization drop down near (or below) their cash plus other asset values. Vulture capitalists would take them private, strip them of cash and assets and then dump them back on the market. Often with a load of debt and still in trouble. And so they died.
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Money, theoretically, should constantly be moving. The more of it you're sitting on, the more harm you're doing to the greater economy. Money and assets sitting in the bank doing nothing isn't beneficial to anyone - including yourself. Any money earned by a company that isn't being reinvested into the company's products or employees is wasted money, unless you are specifically planning on saving up to a specific value for a larger than normal purchase. If your, or a company's, goal is to just bank more and
Re:modern money management (Score:5, Insightful)
Wrong.
First, money in a bank account is not "sitting in the bank doing nothing". It is lent out by the bank (actually due to fractional reserve banking the bank lends out many times over what you deposited) to other individuals and businesses.
Second, saying that Apple has "failed to understand basic business principals and should give up" because they have too much money is hilariously stupid.
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money in a bank account is not "sitting in the bank doing nothing". It is lent out by the bank (actually due to fractional reserve banking the bank lends out many times over what you deposited) to other individuals and businesses.
Except businesses are avoiding borrowing money right now because of the interest rates, and people are already indebted to the max.
saying that Apple has "failed to understand basic business principals and should give up" because they have too much money is hilariously stupid.
The idea they should give up is stupid, but Apple's shareholders should be demanding they pay that money out to the shareholders. It's their money! If Apple doesn't have ideas for making more money with it, they are obligated to pay it out! The excess part they couldn't spend in years if they tried, at least.
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First, money in a bank account is not "sitting in the bank doing nothing". It is lent out by the bank (actually due to fractional reserve banking the bank lends out many times over what you deposited) to other individuals and businesses.
I knew someone would reply with that. First of all, I was implying that it is doing nothing for "you" - the owner of said money. Private, for-profit banks using your money as lending for themselves is a completely separate level of stupidity.
Second, saying that Apple has "failed to understand basic business principals and should give up" because they have too much money is hilariously stupid.
Actually, it's not. No one at Apple understands basic business principals. They don't need to understand them either, because their customer base is stupider than they are, so they make money regardless.
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No one at Apple understands basic business principals.
The principals at Apple understand basic business principles just fine. Sell for more than your costs, never tell the truth. What they don't understand is how to come up with a new compelling product. If they did, they'd be spending money on it.
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Sell for more than cost is one of the principals and the only one they actually know. Never telling the truth isn't a business principal - lies may net more money but makes business, and trust, worse.
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Companies don't save for retirement. They don't get old and live off their savings. Cash on hand is completely dead weight that would be better invested somewhere, either within the company, to generate growth, or to prop up shareholder value via share buybacks.
This is not a rainy day fund. This is comically large amounts of money for a company like Apple. A rainy day fund would be more like $20bn for Apple.
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Also, it's not like Apple has a Scrooge-McDuckian vault somewhere so that Tim Cook go swimming in cash and gold coins. That money is going to be in various banks, bonds, and investments... earning interest... in an era when interest rates are rising. I have a plain old savings account that's up to 3.75% now. If that's all the return they're getting (And no WAY do they not have a finance team that can do better than 3.75.) that's another $6.2 billion a year basically for doing nothing.
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Just because you HAVE money does not mean you should spend it. This way of thinking is why so many have no savings, but have shiny trinkets.
The part I like most about this post is his use of the words shiny trinkets it really drives home that the poster is a cousin fucking hick who thinks accounting is basically like when you fill out the little slips in the back of your check book. Which he still does because credit cards are for people who dye their hair blue and drive subcompact cars.
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They could buy Twitter for a song and a dance in about six months to a year. On the other hand, what would it really cost to duplicate the code if they wanted to?
Buy Twitter (Score:2, Funny)
Apple could buy it from Elon and make it overpriced, oversimplified, shiny. And shit.
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Apple doesn't want to play in the muck. Big social networks generate controversy and negative political attention. Tim Cook would need truck-loads of Pepto-Bismol. Apple wants to be mild classical music, not punk rock. Snobby but milquetoast.
Re: Buy Twitter (Score:2)
Spend it on Supply chain ! (Score:2)
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Apple needs to diversify its supply chain urgently. The way the world is going right now, being so reliant on China is a Huge risk, they need to spend the money getting out of China for manufacturing. If supply chain risk is realised, the destruction of shareholder value will more than exceed the cash pile they have right now.
Apple is actively diversifying their supply chain. However, the reality is that it takes time (a lot of time) to unwind from existing suppliers, as Apple has encountered ramp up issues (both quality and capacity) with some alternative suppliers in different countries. And don't forget the existing TSMC plants (still a necessary core supplier until alternative fabs start to come online later this decade) are vulnerable to an "incident".
Re:Spend it on Supply chain ! (Score:4, Insightful)
Apple needs to diversify its supply chain urgently. The way the world is going right now, being so reliant on China is a Huge risk, they need to spend the money getting out of China for manufacturing. If supply chain risk is realised, the destruction of shareholder value will more than exceed the cash pile they have right now.
Yup. If I were Apple looking for something to buy, I'd buy as much semiconductor fab hardware as I could get from TSMC. I would start building U.S. manufacturing plants somewhere in the middle of nowhere, where land is cheap, but within easy reach of rail (and ideally barge) transportation. I would buy a small robotics company, and have their workers design custom robots so that the entire plant could be 100% automated from beginning to end. I would work with companies like Panasonic to build shared capacitor and battery manufacturing plants nearby, resistor manufacturers to build chip resistors, etc., with the goal of owning or having a controlling interest in the entire supply chain from top to bottom, with the possible exception of the raw materials mining.
Lucid or rivian (Score:3)
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No! Car manufacture is too far from their core biz. GM used to drift from its core, and usually failed. However, Apple could focus on EV UI's (that integrate with Apple products), teaming up with manufactures. It would also mean manufactures could focus on hardware & engineering instead of UI's.
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Even though phone mirroring is one of the most popular tech features in today's cars, GM said it will eliminate Apple CarPlay from its electric vehicles.
The 2024 Chevrolet Blazer EV will be the first to get this downgrade, but other EV models will follow. GM will not remove CarPlay from any of its gasoline-powered models, which it only plans to build until 2035.
GM said the change is needed to keep future EVs as integrated and connected as possible. The automaker will rely on a system co-dev
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Disney-Apple would be even worse for copyright (Score:4, Interesting)
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Disney-Apple is a logical choice because Apple wants to sell content and Disney is a perfectly vertically integrated media company.
They’re both already heavily marketed to children. Not letting people watch Frozen unless their device supports HLS and FairPlay DRM would be a move so anti-consumer I could probably induce boners all around if you said such in the right conference room.
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That's 8B profit just from interest alone (Score:4, Interesting)
Taxem! (Score:5, Insightful)
Conservatives say tax-cuts are needed so co's have enough money to invest in expansion and R&D. But a good many big co's don't, sitting on cash instead or do stock buybacks. The bottleneck to expansion is usually consumer demand and NOT due to insufficient funds for expansion and R&D.
In short, we need more trickle up.
What is "cash"? (Score:2)
It would be bad if Apple ate something big (Score:2)
as that would create something very much bigger that would reduce competition ... eventually leading to less choice & higher prices.
The large corporates are too big already, we do not want to make it worse. Long term the result would be bad. This is where governments need to step in and stop it; unfortunately a few large brown envelopes ... errm, sorry, campaign research contributions will see this just sail straight through.
If only there was another OpenAI to invest in (Score:1)
Correction (Score:3)
Apple is the world's most overvalued company. They do not have $165B in liquid cash. Cash equivalents and marketable assets are not cash and are not guaranteed to hold their estimated values if sold off en masse. So, they have an estimated $165B combined if they were to sell off every equivalent and asset at the current estimated value. However, that's not a real figure, because I guarantee if they started a mass selloff of those assets, the value would plumet.
Apple is no longer a tech company. They are a designer fashion brand that dabbles in tech. And designer fashion brands are always the worst possible versions of something to own.
Mirages (Score:2)
Does anybody fly them these days?
The French airforce and navy fly Rafales
Not my words but I like them (Score:1)
Divest? (Score:1)
Apple Silicon could become even bigger than its parent company as a separate entity.
If the preceding story about running Linux on M2 is indicative, why wouldn't Apple shareholders want to see Qualcomm and the Intel/AMD duopoly being smashed?
Android/Chrome OS/Windows on ARM would fly on M2 if benchmarks are to be believed.
Disney was a long time ago (Score:4, Funny)
Apple was obviously going to buy Disney back when Power Mac G3 came out, as shown by the hidden Mickey [mattjfuller.com] on the side of the computer.
(Hint: Rotate the the image 270 degrees)
How did they get so much cash? (Score:2)
And don't forget the monopolistic policies that destroy competition and make the profits even more unearned.
It might even be closer to the truth to describe Apple (and a lot of other companies) as mostly criminal organizations that do some legit business on the side.
Think big (Score:2)
But - nice try - if Apple really wants my investment advice, they're going to have to pay me for it