Apple's $165 Billion Cash Hoard Creates Mergers and Acquisitions Mirages - Slash...
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Apple's $165 Billion Cash Hoard Creates Mergers and Acquisitions Mirages
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Most startups lose money and exist to trick someone bigger into buying them.
Many big companies have imploded doing this, being tricked over and over.
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. . . "rumored to be a takeover target by Apple!"
A name-dropping salesman once tossed out while chatting with me that Apple was "interested" in them.
He wore it like a Badge of Pride:
"Approached by Apple, decided to stay independent . . . for the moment."
. . . um, . . . OK . . . like, yeah.
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I used to work for start-up, and when I pointed out that a feature may create longer-term concerns, the team leader said, "Don't tell anyone I told you, but we really want to get bought by a big fish. Long term is not a priority."
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I don't think you know what this word means. Starting a business is always a risk, buying a business is always a risk. Start-ups aren't tricking anyone. Investors do due diligence and then buy based on that assumption.
I think you are under the impressions that companies are some infallible genius investors and therefore get "tricked". The reality is they are just as dumb as any other investor, they see a unicorn think they can make lots of money with it and throw cash at it. That's not being tricked. That's
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What Apple has tended to do is pick up tiny companies with a vision but limited reach, to uplift the ideas... Think FingerWorks, who once upon a time was a tiny Slashdot darling for their TouchStream input devices but not reaching much commercial success. Apple snapped them up and worked their gesture tech into their devices, and pretty much launched multitouch gestures into the mainstream.
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Or things like EMagic (the creator of Logic Pro) and Macromedia's desktop division's KeyGrip (which became Final Cut).
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or a special dividend to shareholders.
No corporate should be holding so much money. Its not theirs, its the shareholders anyway. Give it back and let the shareholders invest it in whatever company they think will do well, or spend it on hookers 'n coke if they think that's a better purchase these days.
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Agreed. They're screwing their shareholders here.
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I get dividends from Apple, but I make far more money when the stock price rises.
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Indeed. That's why stock buybacks are almost always better than dividends. There are tax benefits since a rising stock price is a capital gain while dividends are ordinary income.
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No they aren't. Companies are under no obligation to pay money to their shareholders. They don't even need to pay dividends. Shareholders invest with a view on value and little more. Stable dividend payment is a bonus. But there is zero expectation that any shareholder is entitled to cash on hand.
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If they're hoarding money, that means they're not putting it to work. In that case, they damn well better pay a dividend. Anything less ought to be criminal.
You're confusing what is legal for what is ethical. They are not the same thing. A moderate cash reserve is prudent, a massive cash hoard is a gross misuse use of the companies assets.
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Apple's slowing growth and cash-rich balance sheet are again fueling speculation that the world's most valuable company should make a big acquisition.
Just because you HAVE money does not mean you should spend it. This way of thinking is why so many have no savings, but have shiny trinkets.
Apple has more than a rainy-day savings, so they COULD make a major acquisition at any time... but there is no need for them to spend it.
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Too much money makes them a target.
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Their market capitalization is around $2.6 trillion. It's not likely that anyone would (or could) buy up a controlling share of that just to get their hands in $165 billion.
That was a thing once. A company down on its luck would have their capitalization drop down near (or below) their cash plus other asset values. Vulture capitalists would take them private, strip them of cash and assets and then dump them back on the market. Often with a load of debt and still in trouble. And so they died.
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Money, theoretically, should constantly be moving. The more of it you're sitting on, the more harm you're doing to the greater economy. Money and assets sitting in the bank doing nothing isn't beneficial to anyone - including yourself. Any money earned by a company that isn't being reinvested into the company's products or employees is wasted money, unless you are specifically planning on saving up to a specific value for a larger than normal purchase. If your, or a company's, goal is to just bank more and
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Wrong.
First, money in a bank account is not "sitting in the bank doing nothing". It is lent out by the bank (actually due to fractional reserve banking the bank lends out many times over what you deposited) to other individuals and businesses.
Second, saying that Apple has "failed to understand basic business principals and should give up" because they have too much money is hilariously stupid.
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Except businesses are avoiding borrowing money right now because of the interest rates, and people are already indebted to the max.
The idea they should give up is stupid, but Apple's shareholders should be demanding they pay that money out to the shareholders. It's their money! If Apple doesn't have ideas for making more money with it, they are obligated to pay it out! The excess part they couldn't spend in years if they tried, at least.
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Companies don't save for retirement. They don't get old and live off their savings. Cash on hand is completely dead weight that would be better invested somewhere, either within the company, to generate growth, or to prop up shareholder value via share buybacks.
This is not a rainy day fund. This is comically large amounts of money for a company like Apple. A rainy day fund would be more like $20bn for Apple.
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Also, it's not like Apple has a Scrooge-McDuckian vault somewhere so that Tim Cook go swimming in cash and gold coins. That money is going to be in various banks, bonds, and investments... earning interest... in an era when interest rates are rising. I have a plain old savings account that's up to 3.75% now. If that's all the return they're getting (And no WAY do they not have a finance team that can do better than 3.75.) that's another $6.2 billion a year basically for doing nothing.
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Twitter is shit.
Apple could buy it from Elon and make it overpriced, oversimplified, shiny. And shit.-
Apple doesn't want to play in the muck. Big social networks generate controversy and negative political attention. Tim Cook would need truck-loads of Pepto-Bismol. Apple wants to be mild classical music, not punk rock. Snobby but milquetoast.
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Apple needs to diversify its supply chain urgently. The way the world is going right now, being so reliant on China is a Huge risk, they need to spend the money getting out of China for manufacturing. If supply chain risk is realised, the destruction of shareholder value will more than exceed the cash pile they have right now.
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Yup. If I were Apple looking for something to buy, I'd buy as much semiconductor fab hardware as I could get from TSMC. I would start building U.S. manufacturing plants somewhere in the middle of nowhere, where land is cheap, but within easy reach of rail (and ideally barge) transportation. I would buy a small robotics company, and have their workers design custom robots so that the entire plant could be 100% automated from beginning to end. I would work with companies like Panasonic to build shared cap
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If apple is going to jump on EVs, they would be smart to pick up 1 of these 2. Personally, I would consider lucid better bang for the buck.
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No! Car manufacture is too far from their core biz. GM used to drift from its core, and usually failed. However, Apple could focus on EV UI's (that integrate with Apple products), teaming up with manufactures. It would also mean manufactures could focus on hardware & engineering instead of UI's.
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The two of the most notorious copyright abusers merging would heavily damage media freedom. Apple TV+ would inevitably merge with Disney+ causing more consolidation of streaming rights screwing over actors and open source users.
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Jesus, if they do nothing they can just get 5% interest and make 8B a year. That's more profit than most companies in s&p500.
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Conservatives say tax-cuts are needed so co's have enough money to invest in expansion and R&D. But a good many big co's don't, sitting on cash instead or do stock buybacks. The bottleneck to expansion is usually consumer demand and NOT due to insufficient funds for expansion and R&D.
In short, we need more trickle up.
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Does it mean they literally have it in some non interest-bearing instrument, like bales of $100 bills [cnbc.com]? (Surely not.)
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as that would create something very much bigger that would reduce competition... eventually leading to less choice & higher prices.
The large corporates are too big already, we do not want to make it worse. Long term the result would be bad. This is where governments need to step in and stop it; unfortunately a few large brown envelopes... errm, sorry, campaign research contributions will see this just sail straight through.
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Apple is a bit behind, everyone is playing catch-up to OpenAI... Microsoft did the sensible thing and invested early. It's all moving so fast now and nobody can predict the future, only that AI is surely going to change the playing field forever.
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Apple is the world's most overvalued company. They do not have $165B in liquid cash. Cash equivalents and marketable assets are not cash and are not guaranteed to hold their estimated values if sold off en masse. So, they have an estimated $165B combined if they were to sell off every equivalent and asset at the current estimated value. However, that's not a real figure, because I guarantee if they started a mass selloff of those assets, the value would plumet.
Apple is no longer a tech company. They are a designer fashion brand that dabbles in tech. And designer fashion brands are always the worst possible versions of something to own.
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Does anybody fly them these days?
The French airforce and navy fly Rafales -
"Unless there’s an obvious necessity for them, stock buybacks are a signal that the board is out of ideas to utilize capital and layoffs are a signal that the CEO doesn’t have any ideas to utilize employees. Both are failures of leadership."
I'd like to think that Apple won't just rebuy stock - indicating it's out of ideas - but will use it wisely.
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Apple was obviously going to buy Disney back when Power Mac G3 came out, as shown by the hidden Mickey [mattjfuller.com] on the side of the computer.
(Hint: Rotate the the image 270 degrees)
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We know a big part of the answer: not paying taxes, aka tax cheating, aka being corporate parasites, also shady business practices and bribing/buying off politicians You know, common behavior for Really Big Business.
And don't forget the monopolistic policies that destroy competition and make the profits even more unearned.
It might even be closer to the truth to describe Apple (and a lot of other companies) as mostly criminal organizations that do some legit business on the side.
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