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It's astonishing how much capital Apple is just doing nothing with. What a colossal waste.

WalterBright 12y ago
I'm sure Apple has 100% of their "cash" invested. No businessman stores money in Scrooge McDuck cash vault. In order for a business to invest that "cash" in their own business, it needs to be a better investment than whatever else it had been invested in.
- maxmcd 12y ago
  I'm sure w1ntermute knows this. The common complaint about apple is that they're not expanding/diversifying their business more with their available capital. Not that they're doing nothing with a literal pile of cash.
- TheCoelacanth 12y ago
  Obviously, most of it is not literally cash, but it is in highly liquid investments like t-bills, that have a near zero rate of return, so it is not very productively invested.
  - WalterBright 12y ago
    Why would Apple make unproductive investments of its cash? With that amount of money, Apple is going to have a high level executive whose job is to productively invest it. He'll likely be investing it in securities like stocks that provide a good return and are highly liquid. This return rate is termed "opportunity cost", i.e. if Apple were to invest it in Apple's business it needs to return a higher rate than the opportunity cost. http://en.wikipedia.org/wiki/Opportunity_cost http://en.wikipedia.org/wiki/Opportunity_cost
    - TheCoelacanth 12y ago
      As of last quarter they had almost $13 billion in cash and cash equivalents[1]. Unless they are defrauding their shareholders, that money cannot be invested in stocks. [1] http://finance.yahoo.com/q/bs?s=AAPL http://finance.yahoo.com/q/bs?s=AAPL
      - WalterBright 12y ago
        "Cash equivalents" include "marketable securities": http://en.wikipedia.org/wiki/Cash_and_cash_equivalents http://en.wikipedia.org/wiki/Cash_and_cash_equivalents which include "equities" which include common stocks: http://en.wikipedia.org/wiki/Security_(finance) http://en.wikipedia.org/wiki/Security_(finance) So, it may very well and likely is invested in stocks. It is hardly sitting idle.
        TheCoelacanth 12y ago
        > Another important condition a cash equivalent needs to satisfy is that the investment should have insignificant risk of change in value; thus, common stock cannot be considered a cash equivalent "Marketable securities" is an extremely broad category. Some marketable securities are cash equivalents, but common stocks are not. Their value is too volatile to be considered a cash equivalent. To qualify as a cash equivalent, an asset must have very little chance of decreasing in value. Such assets tend to have very low return on investment.
        WalterBright 12y ago
        Yet the Wikipedia article says they are cash equivalent - that a cash equivalent is one where the investment is quickly convertible to cash. Common stocks qualify, and are explicitly listed in the article as qualifying. I find it extremely improbable that a sophisticated company like Apple would let $13 billion sit around in an unproductive investment. If you can quote an accounting rule that says "cash equivalents" cannot be common stock, I'd like to see it.
        TheCoelacanth 12y ago
aikah 12y ago
they are waiting for a tax amnesty.
boynamedsue 12y ago
That's precisely why Apple is executing an aggressive share buyback.
- w1ntermute 12y ago
  No, that means that they have no idea what to do with the money.
  - robszumski 12y ago
    I think it shows their restraint and focus as a company. They only want to do things extremely well and in a way that gives them total control over that market segment. If you haven't found your next target, and the stuff you do have is selling like crazy, might as well pile up the money while you search for the next thing. Spending money stabbing in the dark at every market doesn't fit their model and tarnishes the brand.

I'm sure Apple has 100% of their "cash" invested. No businessman stores money in Scrooge McDuck cash vault. In order for a business to invest that "cash" in their own business, it needs to be a better investment than whatever else it had been invested in.

maxmcd 12y ago
I'm sure w1ntermute knows this. The common complaint about apple is that they're not expanding/diversifying their business more with their available capital. Not that they're doing nothing with a literal pile of cash.
TheCoelacanth 12y ago
Obviously, most of it is not literally cash, but it is in highly liquid investments like t-bills, that have a near zero rate of return, so it is not very productively invested.
- WalterBright 12y ago
  Why would Apple make unproductive investments of its cash? With that amount of money, Apple is going to have a high level executive whose job is to productively invest it. He'll likely be investing it in securities like stocks that provide a good return and are highly liquid. This return rate is termed "opportunity cost", i.e. if Apple were to invest it in Apple's business it needs to return a higher rate than the opportunity cost. http://en.wikipedia.org/wiki/Opportunity_cost http://en.wikipedia.org/wiki/Opportunity_cost
  - TheCoelacanth 12y ago
    As of last quarter they had almost $13 billion in cash and cash equivalents[1]. Unless they are defrauding their shareholders, that money cannot be invested in stocks. [1] http://finance.yahoo.com/q/bs?s=AAPL http://finance.yahoo.com/q/bs?s=AAPL
    - WalterBright 12y ago
      "Cash equivalents" include "marketable securities": http://en.wikipedia.org/wiki/Cash_and_cash_equivalents http://en.wikipedia.org/wiki/Cash_and_cash_equivalents which include "equities" which include common stocks: http://en.wikipedia.org/wiki/Security_(finance) http://en.wikipedia.org/wiki/Security_(finance) So, it may very well and likely is invested in stocks. It is hardly sitting idle.
      - TheCoelacanth 12y ago
        > Another important condition a cash equivalent needs to satisfy is that the investment should have insignificant risk of change in value; thus, common stock cannot be considered a cash equivalent "Marketable securities" is an extremely broad category. Some marketable securities are cash equivalents, but common stocks are not. Their value is too volatile to be considered a cash equivalent. To qualify as a cash equivalent, an asset must have very little chance of decreasing in value. Such assets tend to have very low return on investment.
        WalterBright 12y ago
        Yet the Wikipedia article says they are cash equivalent - that a cash equivalent is one where the investment is quickly convertible to cash. Common stocks qualify, and are explicitly listed in the article as qualifying. I find it extremely improbable that a sophisticated company like Apple would let $13 billion sit around in an unproductive investment. If you can quote an accounting rule that says "cash equivalents" cannot be common stock, I'd like to see it.
        TheCoelacanth 12y ago

aikah 12y ago

they are waiting for a tax amnesty.

boynamedsue 12y ago

That's precisely why Apple is executing an aggressive share buyback.

w1ntermute 12y ago
No, that means that they have no idea what to do with the money.
- robszumski 12y ago
  I think it shows their restraint and focus as a company. They only want to do things extremely well and in a way that gives them total control over that market segment. If you haven't found your next target, and the stuff you do have is selling like crazy, might as well pile up the money while you search for the next thing. Spending money stabbing in the dark at every market doesn't fit their model and tarnishes the brand.