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Getting good returns from a 100 billion dollar investment is hard. Just as an idea of scale that's enough money to more than double world wide fusion research

Getting good returns from a 100 billion dollar investment is hard. Just as an idea of scale that's enough money to more than double world wide fusion research spending for the next 30 years. Suppose they started down that path and 20 years from now started building useful and highly profitable fusion reactors that beat coal power plants. Now what if that failed. Measuring the risk / benefit curve on such an investment is hard. But, Apple could afford to fund 5 other projects on that scale without touching their cash horde. IMO, Apple starting down the dividend path is simply the only reasonable course when faced with that sort of cash flow.

veyron 15y ago
> Getting good returns from a 100 billion dollar investment is hard. You don't play with 100B in the same way that you play with 100K. There are few times when a really compelling buyout opportunity emerges. And it is at those times that you want the warchest. Until then, you need to keep the dry powder. As an example, Buffett wouldn't be able to negotiate the really sweet deal with BofA last year (5B, paper profit ~ 2.8B at the onset) without the cash balance.
- qdog 15y ago
  I don't think this hits their warchest at all. The # I heard on NPR this morning was about 2.5B/Quarter, but their profit is about 13B/quarter. Even with a 10B stock buyback plan, that's not quite a quarter of profits. Disregarding the buyback, they should still be adding to their warchest. I believe it's only when they announce a special, one-time type of dividend that it signals they don't think they will have anything to do with the money. For example, Ford basically did that a few years ago (although in retrospect 10B in electric research or something might have been wiser).
beatle 15y ago
You're right. Apple has so much cash that the only thing that makes sense is to both pay out quarterly dividends AND buying back their stock. Even though AAPL is still considered a GROWTH stock. NOTE: Apple earned ~$13b profit last quarter and it's only going to grow. $15b x 4 quarters = $60b PROFIT PER YEAR. They can easily afford $45b over the next 3 years considering they have more money than God.

veyron 15y ago

> Getting good returns from a 100 billion dollar investment is hard. You don't play with 100B in the same way that you play with 100K. There are few times when a really compelling buyout opportunity emerges. And it is at those times that you want the warchest. Until then, you need to keep the dry powder. As an example, Buffett wouldn't be able to negotiate the really sweet deal with BofA last year (5B, paper profit ~ 2.8B at the onset) without the cash balance.

qdog 15y ago
I don't think this hits their warchest at all. The # I heard on NPR this morning was about 2.5B/Quarter, but their profit is about 13B/quarter. Even with a 10B stock buyback plan, that's not quite a quarter of profits. Disregarding the buyback, they should still be adding to their warchest. I believe it's only when they announce a special, one-time type of dividend that it signals they don't think they will have anything to do with the money. For example, Ford basically did that a few years ago (although in retrospect 10B in electric research or something might have been wiser).

beatle 15y ago

You're right. Apple has so much cash that the only thing that makes sense is to both pay out quarterly dividends AND buying back their stock. Even though AAPL is still considered a GROWTH stock. NOTE: Apple earned ~$13b profit last quarter and it's only going to grow. $15b x 4 quarters = $60b PROFIT PER YEAR. They can easily afford $45b over the next 3 years considering they have more money than God.