An almost comical article about Apple's cash flow woes. That's right folks -- they literally have more money than they know what to do with, and as mentioned in other threads, trading at a P/E of ~16.70 and doubling in value over 52 weeks, Tim Cook needs to figure out what he's going to do with all that jaz----err, cash.
The obvious solution would be to give cash back to shareholders, either via dividends or share buybacks. This is a surprisingly sensitive subject. Mr Jobs was obsessed with hoarding cash, not least because of Apple’s near-bankruptcy in the mid-1990s. Returning money to shareholders would mark a big departure from the revered founder’s philosophy. Another reason Mr Cook will want to tread carefully is that some pundits see a tech firm’s decision to start paying dividends as a signal that its glory days are behind it. One oft-cited example is Microsoft, whose growth slowed after it began returning cash to shareholders in 2003.
This author predicts AAPL will send cash back to shareholders later this year, which seems like a reasonable (albeit not bank-breaking) solution to the problem.
What do you guys think? Buybacks or dividends? What could be the benefits to AAPL of either of these options?
I'm hoping for a decent one-time dividend. If they found a way to put the cash to good use I'd be happy to pass up the dividend, but they obviously can't just find somewhere to store $100B and earn 10%.
I feel like lowering their prices is the last thing they want to do as their entire business model seems to be predicated on providing "premium" products. Lowering prices doesn't accomplish a whole lot -- people are still going to pay out the wazoo for Apple products (at least for the foreseeable future). Price competition isn't really the niche they want to fall into, as it's almost universally understood that they provide a better product than any competitor.
The last statement in the above is obviously rubbish, but hey, someone has been believing it for the past 5-6 years.
theoretically they could pull off a buyout of amazon. wow.
Not possible in real life, but theoretically they could buy Amazon and yahoo IN CASH
Neighbor, I agree that they should use the cash to improve operations where possible, but I'd assume they've been doing that. Also, there's no way they need $100B of operational optimization. I'd assume once they put 0.5% of that cash into operations they'd probably be facing diminishing ROI.
Lowering price is ridiculous. Why the hell would a company that faces stock outs on most products at launch lower price? If anything they could raise prices. Just because they have excess cash doesn't mean they shouldn't want more.
I haven't gone to look at their consolidated balance sheet but they really have 100B as cash and cash equivalents or just in liquid assets or what? That's incredible if so.
Nvm, just read the article. wow. Anyone know what the highest market cap is out there? 500 B seems like it would be top 10 for sure but I haven't researched in quite a while
apple is in theory the largest company in the world by market cap.
And to the above posters..wasn't saying lowering the prices was a good business strategy, i was simply saying that it would be nice for me :P
Not quite living under a rock but haven't actively traded in 2-3 years. On top of that, I haven't considered Apple as an investment in 3-4 years. Kinda kicking myself now though. I stick to focusing on smaller growth stocks. I figured most of apple's growth was behind them back then. Damn
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