5 ms·

Is a company like Apple actually any good for world’s economy ? They seem to be hoarding too much cash without spending any significant portion of it. I dont c

Is a company like Apple actually any good for world’s economy ? They seem to be hoarding too much cash without spending any significant portion of it. I dont care about companies earning money however i care if they dont invest back.

Despegar 8y ago
They return their cash to shareholders via dividends and share buybacks, letting those investors allocate it to wherever they expect better returns. Apple doesn't need to become a conglomerate or start a corporate VC arm themselves.
- cwyers 8y ago
  No, they don't, apparently. According to the top post in the thread, they have $130 billion in cash on hand.
  - bunnycorn 8y ago
    That's nothing. They had a profit of $100 billion last fiscal year. It's the same as someone having 15.6 salaries in their bank account (not counting for the loans).
jldugger 8y ago
Do companies physically warehouse cash? No, they deposit it in the banking system, or buy treasuries with it, right? It's being invested in the world economy, just not directly.
- gumby 8y ago
  True, but what about cash in excess of what you need to keep for operations? You’ll want to put a reserve in something safe, like treasuries. You’ll want to invest some in somethingnhigher Heike for opportunistic needs, like an acquisition or, in Apple’s case, locking in pricing with suppliers (most companies can’t afford that). But if you have more than that? Might as well return to shareholders since they aren’t investing in you for your stock market prowess, but for your computer manufacturing and sales prowess. Apple had a problem for a while with that middle category: they were the fastest growing large cap stock so there wasn’t anything better than their own stock to buy. This is an interesting problem to have. Imho they still should have paid out more dividends, but what they did was probably more tax advantageous.
gr2020 8y ago
Don't understand this comment - seems to me Apple spends a _lot_. From their Q1 financial statement, cost of sales ("buying stuff and services") is $52.3B, and R&D and admin expenses are $8.7B. I think it's fair to say $61B is a "significant" amount they're spending during the quarter...
- bunnycorn 8y ago
  On top of that, they owe almost the same amount of money they have, and that's their target: cash neutral.
donarb 8y ago
Apple spent $60B in 2018 buying supplies and components from 9000 US companies. As for investing back, here's one Apple PR story about Finisar, in which Apple invested $390 million to produce VCSELs in Texas. https://www.apple.com/newsroom/2019/01/component-manufacturing-drives-apple-us-job-creation/ https://www.apple.com/newsroom/2019/01/component-manufacturi... Apple is not just sitting on its cash but making strategic purchases as it goes forward.

Despegar 8y ago

They return their cash to shareholders via dividends and share buybacks, letting those investors allocate it to wherever they expect better returns. Apple doesn't need to become a conglomerate or start a corporate VC arm themselves.

cwyers 8y ago
No, they don't, apparently. According to the top post in the thread, they have $130 billion in cash on hand.
- bunnycorn 8y ago
  That's nothing. They had a profit of $100 billion last fiscal year. It's the same as someone having 15.6 salaries in their bank account (not counting for the loans).

jldugger 8y ago

Do companies physically warehouse cash? No, they deposit it in the banking system, or buy treasuries with it, right? It's being invested in the world economy, just not directly.

gumby 8y ago
True, but what about cash in excess of what you need to keep for operations? You’ll want to put a reserve in something safe, like treasuries. You’ll want to invest some in somethingnhigher Heike for opportunistic needs, like an acquisition or, in Apple’s case, locking in pricing with suppliers (most companies can’t afford that). But if you have more than that? Might as well return to shareholders since they aren’t investing in you for your stock market prowess, but for your computer manufacturing and sales prowess. Apple had a problem for a while with that middle category: they were the fastest growing large cap stock so there wasn’t anything better than their own stock to buy. This is an interesting problem to have. Imho they still should have paid out more dividends, but what they did was probably more tax advantageous.

gr2020 8y ago

Don't understand this comment - seems to me Apple spends a _lot_. From their Q1 financial statement, cost of sales ("buying stuff and services") is $52.3B, and R&D and admin expenses are $8.7B. I think it's fair to say $61B is a "significant" amount they're spending during the quarter...

bunnycorn 8y ago
On top of that, they owe almost the same amount of money they have, and that's their target: cash neutral.

donarb 8y ago

Apple spent $60B in 2018 buying supplies and components from 9000 US companies. As for investing back, here's one Apple PR story about Finisar, in which Apple invested $390 million to produce VCSELs in Texas. https://www.apple.com/newsroom/2019/01/component-manufacturing-drives-apple-us-job-creation/ https://www.apple.com/newsroom/2019/01/component-manufacturi... Apple is not just sitting on its cash but making strategic purchases as it goes forward.