6 ms·

Ultimately what is Apple going to do with that 230 billion? Sitting on a hoard of cash is no benefit to the company or investors.

dv_dt 11y ago
It isn't generating cashflow, but it can still be benefiting the company as a risk buffer. Cash to live through downturns, or purchasing new companies, or financing capital outlays for the production logistics which would be impossible for other companies. That last one can be huge - if none else can build certain components for the same cost/volume as Apple then that's a key competitive advantage.
- petra 11y ago
  I wonder what would happen if Apple opened a public venture capital company, that also offers help. Wouldn't any company in the relevant areas prefer to come to them first ?
calgoo 11y ago
Is there interest they could earn on that cash?
- pg_is_a_butt 11y ago
  you'll be able to read all about the numerous off shore companies they use in the next panama papers release.
brandonmenc 11y ago
> Ultimately what is Apple going to do with that 230 billion? Break into a capital intensive industry.
- JustSomeNobody 11y ago
  Apple bank.
  - Corrado 11y ago
    I think this is more likely to happen than not. With all of their cards on Apple Pay I can see them turning the banking industry on its head, which wouldn't be a bad thing. Have you been to a "real" bank lately? My local PNC branch generally has 2 tellers and a 3rd "greeter", even when the line is 10 people deep. Then there are things like charging for deposit slips and other necessary forms, and their online presence is terrible. I can't pay bills between 2AM - 7AM because: the system is down, or my loan balance is $0, or isn't in US funds anymore. WFT?! And the security is laughable (at least for a bank). When will they incorporate MFA? I think this is where Apple could really shake up the world, just like they did with cell phones and GUI computers before then.
- ridgeguy 11y ago
  Making cars is a capital intensive industry.
  - wklauss 11y ago
    Not necessarily. Some part of car manufacturing is capital intensive but electric vehicles are far easier to make than gas ones and a lot of the parts that go into any car, no matter what brand, are usually bought to third party suppliers.
uptown 11y ago
Go private.
- gozur88 11y ago
  That makes no sense. Apple management is going to buy out stockholders with their own money? When you take a company private you have to bring in money from the outside, either using investor groups or borrowing.
  - brisance 11y ago
    Why not? If Apple's management and investors believe that the market is not pricing AAPL fairly, it makes perfect sense to go private.
    - gozur88 11y ago
      Yes, but they can't do it with money that belongs to Apple, because the shareholders, i.e. the people that need to be bought out, already own that money.
      - dazmax 11y ago
        They could just do buybacks until no one else has any shares left? http://seekingalpha.com/article/1725412-buyback-apple-could-go-private-by-2020 http://seekingalpha.com/article/1725412-buyback-apple-could-...
      - brisance 11y ago
        Not true. A company can definitely take itself private by using its own money. It's already happening when a company is buying back its shares. i.e. reduction in equity by using cash, one on each side of the balance sheet. The shares are then entered on the books as treasury shares.
        gozur88 11y ago
        So the last guy to own a share owns the company?
gnoway 11y ago
Charlie Stross submitted[0] a link to a post on his blog[1] touching on this last month. [0] https://news.ycombinator.com/item?id=11373605 https://news.ycombinator.com/item?id=11373605 [1] http://www.antipope.org/charlie/blog-static/2016/03/follow-the-money-apple-vs-the-.html http://www.antipope.org/charlie/blog-static/2016/03/follow-t...
Analemma_ 11y ago
Despite their current dominance, Apple knows that downward swings of fate come fast and hard in the tech industry. Consider that 10 years ago, the biggest names in mobile were Palm, Nokia and Blackberry, and now they're either gone or hollow shells. You can think farther back and find plenty more examples of unassailable kings who went bust in a hurry. Then compare that to e.g. Microsoft, who at one point looked doomed but managed to get relevant again by using their huge cash pile to break into a capital-intensive business, which they wouldn't've been able to do without it. I imagine in this sector more than most there's a strong temptation to amass a huge safety net so you can ride out getting "disrupted". As a leftist Keynesian I don't particularly like it-- seeing all that money sitting there doing nothing drives me crazy-- but I understand the motivation.
- apr 11y ago
  In the big scheme of things all that money are not "sitting there doing nothing". They are probably invested in some short term bonds and therefore they make some other capital expenditures possible somewhere in the overall economy.
- EGreg 11y ago
  Where exactly is it sitting? Most money which is "saved" finds way back into the economy via fractional reserve lending by banks where it is stored. It's very hard to just make money "sit" somewhere these days when financial institutions all compete to lend and invest money. Seems like Apple's money is invested in a diverse portfolio of equity markets: http://www.zerohedge.com/news/2012-09-30/presenting-worlds-biggest-hedge-fund-you-have-never-heard http://www.zerohedge.com/news/2012-09-30/presenting-worlds-b...
- raverbashing 11y ago
  > so you can ride out getting "disrupted" They do get disrupted. By themselves If Apple manages to continue to do that, then they will go on
iQuercus 11y ago
Why do you save money?

dv_dt 11y ago

It isn't generating cashflow, but it can still be benefiting the company as a risk buffer. Cash to live through downturns, or purchasing new companies, or financing capital outlays for the production logistics which would be impossible for other companies. That last one can be huge - if none else can build certain components for the same cost/volume as Apple then that's a key competitive advantage.

petra 11y ago
I wonder what would happen if Apple opened a public venture capital company, that also offers help. Wouldn't any company in the relevant areas prefer to come to them first ?

calgoo 11y ago

Is there interest they could earn on that cash?

pg_is_a_butt 11y ago
you'll be able to read all about the numerous off shore companies they use in the next panama papers release.

brandonmenc 11y ago

> Ultimately what is Apple going to do with that 230 billion? Break into a capital intensive industry.

JustSomeNobody 11y ago
Apple bank.
- Corrado 11y ago
  I think this is more likely to happen than not. With all of their cards on Apple Pay I can see them turning the banking industry on its head, which wouldn't be a bad thing. Have you been to a "real" bank lately? My local PNC branch generally has 2 tellers and a 3rd "greeter", even when the line is 10 people deep. Then there are things like charging for deposit slips and other necessary forms, and their online presence is terrible. I can't pay bills between 2AM - 7AM because: the system is down, or my loan balance is $0, or isn't in US funds anymore. WFT?! And the security is laughable (at least for a bank). When will they incorporate MFA? I think this is where Apple could really shake up the world, just like they did with cell phones and GUI computers before then.
ridgeguy 11y ago
Making cars is a capital intensive industry.
- wklauss 11y ago
  Not necessarily. Some part of car manufacturing is capital intensive but electric vehicles are far easier to make than gas ones and a lot of the parts that go into any car, no matter what brand, are usually bought to third party suppliers.

uptown 11y ago

Go private.

gozur88 11y ago
That makes no sense. Apple management is going to buy out stockholders with their own money? When you take a company private you have to bring in money from the outside, either using investor groups or borrowing.
- brisance 11y ago
  Why not? If Apple's management and investors believe that the market is not pricing AAPL fairly, it makes perfect sense to go private.
  - gozur88 11y ago
    Yes, but they can't do it with money that belongs to Apple, because the shareholders, i.e. the people that need to be bought out, already own that money.
    - dazmax 11y ago
      They could just do buybacks until no one else has any shares left? http://seekingalpha.com/article/1725412-buyback-apple-could-go-private-by-2020 http://seekingalpha.com/article/1725412-buyback-apple-could-...
    - brisance 11y ago
      Not true. A company can definitely take itself private by using its own money. It's already happening when a company is buying back its shares. i.e. reduction in equity by using cash, one on each side of the balance sheet. The shares are then entered on the books as treasury shares.
      - gozur88 11y ago
        So the last guy to own a share owns the company?

gnoway 11y ago

Charlie Stross submitted[0] a link to a post on his blog[1] touching on this last month. [0] https://news.ycombinator.com/item?id=11373605 https://news.ycombinator.com/item?id=11373605 [1] http://www.antipope.org/charlie/blog-static/2016/03/follow-the-money-apple-vs-the-.html http://www.antipope.org/charlie/blog-static/2016/03/follow-t...

Analemma_ 11y ago

Despite their current dominance, Apple knows that downward swings of fate come fast and hard in the tech industry. Consider that 10 years ago, the biggest names in mobile were Palm, Nokia and Blackberry, and now they're either gone or hollow shells. You can think farther back and find plenty more examples of unassailable kings who went bust in a hurry. Then compare that to e.g. Microsoft, who at one point looked doomed but managed to get relevant again by using their huge cash pile to break into a capital-intensive business, which they wouldn't've been able to do without it. I imagine in this sector more than most there's a strong temptation to amass a huge safety net so you can ride out getting "disrupted". As a leftist Keynesian I don't particularly like it-- seeing all that money sitting there doing nothing drives me crazy-- but I understand the motivation.

apr 11y ago
In the big scheme of things all that money are not "sitting there doing nothing". They are probably invested in some short term bonds and therefore they make some other capital expenditures possible somewhere in the overall economy.
EGreg 11y ago
Where exactly is it sitting? Most money which is "saved" finds way back into the economy via fractional reserve lending by banks where it is stored. It's very hard to just make money "sit" somewhere these days when financial institutions all compete to lend and invest money. Seems like Apple's money is invested in a diverse portfolio of equity markets: http://www.zerohedge.com/news/2012-09-30/presenting-worlds-biggest-hedge-fund-you-have-never-heard http://www.zerohedge.com/news/2012-09-30/presenting-worlds-b...
raverbashing 11y ago
> so you can ride out getting "disrupted" They do get disrupted. By themselves If Apple manages to continue to do that, then they will go on

iQuercus 11y ago

Why do you save money?