×

Welcome to the Slashdot Beta site -- learn more here. Use the link in the footer or click here to return to the Classic version of Slashdot.

Thank you!

Before you choose to head back to the Classic look of the site, we'd appreciate it if you share your thoughts on the Beta; your feedback is what drives our ongoing development.

Beta is different and we value you taking the time to try it out. Please take a look at the changes we've made in Beta and  learn more about it. Thanks for reading, and for making the site better!

Apple Has Too Much Money

timothy posted more than 2 years ago | from the so-lucky-not-to-have-that-problem dept.

The Almighty Buck 570

Hugh Pickens writes "AP reports that last week during a question-and-answer session at the company's annual shareholders' meeting CEO Tim Cook said he believes Apple has more money than it needs and his next challenge is to figure out whether Apple should break from the cash-hoarding ways of his predecessor, the late Steve Jobs, and dip into its $98 billion bank account to pay shareholders a dividend this year. 'Frankly speaking, it's more than we need to run the company.' The question of how to handle Apple's cash stockpile is a touchy one, partly because company co-founder Jobs had steadfastly brushed aside suggestions that the company restore its quarterly dividend which Jobs suspended in 1995 when it was in such deep trouble that it needed to hold on to every cent to keep from going bankrupt. Marketwatch analyst Mark Hulbert writes that a compelling case can be made that a huge cash hoard actually represents grave danger for Apple. That's because too much cash often burns a hole in managers' pockets, and they end up doing a poor job of investing that cash—engaging instead in foolish pursuits like empire building. Hulbert adds that a good strategy for ensuring that Apple remains a hungry, growth-oriented entrepreneurial company might be for it to distribute much of its cash to shareholders."

cancel ×
This is a preview of your comment

No Comment Title Entered

Anonymous Coward 1 minute ago

No Comment Entered

570 comments

I sold my Apple stock in 2005 (5, Funny)

Average_Joe_Sixpack (534373) | more than 2 years ago | (#39163409)

I thought I was a genius for doubling my money.

Re:I sold my Apple stock in 2005 (5, Funny)

Alrescha (50745) | more than 2 years ago | (#39163559)

"I thought I was a genius for doubling my money."

Sigh. Me too. Instead I have a PowerMac that effectively cost me a quarter of a million dollars.

A.

Re:I sold my Apple stock in 2005 (5, Funny)

Lumpy (12016) | more than 2 years ago | (#39163627)

You bought ram from Apple when you ordered your mac too?

Re:I sold my Apple stock in 2005 (5, Insightful)

Oswald (235719) | more than 2 years ago | (#39163567)

Like I said to my sister in 1999, there's no way not to hate yourself if you invest in stocks. What are your options?

Buy a stock and it goes down, apparently forever. What a dope I am.
Buy a stock and it goes up. Sell, and it goes up further. Damn, I knew I got out too early.
Buy a stock and it goes up then back down. Shit! I got greedy and lost money.
Buy a stock and it goes up, you sell, then it goes down. I knew I had that stock figured out! Why the hell did I only buy 200 shares?

So sure, you can make money, or you can lose money, but there's really no way to be happy with the outcome. ;)

(Haters please note that this is intended as humor. I'm sure that, aside from the universally felt twinge at having left money on the table, parent poster is perfectly happy to have "only" doubled his/her money.

How to survive the bubble (1)

Jadware (1081293) | more than 2 years ago | (#39163419)

1. Float rumors of an absurd cash distribution to fuel stock speculation. 2. Insist that it is unrelated to recent bad PR about labor practices or upcoming bad PR about trademark infringement, timing is just coincidence. 3. Maintain RDF at all costs!

Re:How to survive the bubble (0, Insightful)

Anonymous Coward | more than 2 years ago | (#39163511)

hmm what bubble?
  - should i invest in company that tries to pay fair wages and make employees feel good/have nice life and earns just 25%/year profit
or
  - should i invest in company that takes as much advantage of its workers and uses them as slaves, uses child labour, with some of them even killing themselves as consequence, but earning 100%+ ROI per year?

easy to answer for me, and probably majority people investing money, what do i care about other poorer people and how they live, i will go with one earning me more money, no matter what

Re:How to survive the bubble (0)

Anonymous Coward | more than 2 years ago | (#39163673)

"easy to answer for me, and probably majority people investing money, what do i care about other poorer people and how they live, i will go with one earning me more money, no matter what"

Romney, is that you?

Re:How to survive the bubble (0)

Anonymous Coward | more than 2 years ago | (#39163753)

No, it's the manager of your mutual fund. Which makes you as evil a capitalist as anyone.

Some ideas (1, Interesting)

Anonymous Coward | more than 2 years ago | (#39163423)

Maybe Apple can buy Adobe and send Flash to the tomb, or maybe and even better buy Google and kill Android once and forever. I have also AMD or Intel in my mind, Microsoft also, but it's sure that Apple needs to make a move of this kind. It's bad for the company to keep all the money doing nothing.

Re:Some ideas (5, Insightful)

Junta (36770) | more than 2 years ago | (#39163503)

Well, multiple problems.

One, why in the hell would you want Apple to sink Google, AMD, Intel, or Microsoft? From a user perspective killing any is bad. Alternatively, why the hell would Apple care to sink AMD or Intel, neither of which compete with Apple? If your claim is to stop other computer vendors from using the same instruction set as OSX systems, Apple has a pretty tight grip on OSX without instruction set lock-in (yes there are hackintoshes, but exceptionally rare in the scheme of things.

Second, that would be a fast way to draw attention for anti-competitive moves. Both from a regulator standpoint and quickly making enemies of a lot of companies with a lot of resources. They have a pretty comfortable competitive landscape right now, and a drastic move represents some huge unknowns that could be pretty devastating.

Finally, they frankly can't afford to buy most of those companies. Market cap is generally a good relative indicator of theoretical buy-out requirements:
Google: 200 billion
Intel: 134 billion
Microsoft: 265 billion
I don't know what percentage of shares is realistically available or how sky-high the price would be driven if Apple attempted a hostile takeover, but even baseline the market cap is beyond their reach. If they do have 98 billion cash on hand, then AMD is the only one they'd likely be able to subsume, but with a huge question of 'why would they?'.

Re:Some ideas (5, Insightful)

TheRaven64 (641858) | more than 2 years ago | (#39163685)

The problem is, this kind of acquisition often doesn't make sense. For example, one proposal was that Apple would buy ARM. They could afford to without making a significant dent in their cash reserves, even if they paid double the current market cap. But would Samsung want to license CPU designs from Apple? Almost certainly not - they'd just drive the other mobile device makers to designs licensed from MIPS or even Intel. The net result would be that Apple would end up paying a much larger share of the R&D costs. This was one of the main reasons why they switched to Intel chips in Macs: they were IBM's only laptop / desktop CPU customer and so were paying for all of the R&D, while they only pay something like 5-10% of Intel's R&D costs. Buying other companies on their supply chain would have the same problems.

If I were in their position, I would do the same thing a number of other successful tech companies have done and set up an in-house VC program. If an employee has a cool idea that is not a market that Apple currently wants to be in, then Apple should front them the cash to set up their own company, own 50% of the shares, and let the employee go on sabbatical and return if the company fails.

Another fly on the wall heard from (2)

bdsesq (515351) | more than 2 years ago | (#39163427)

Apple is one of the most successful companies in the world -- right now.
But everyone with a soap box seems to think they know better than Apple management how the company should be run.
If they are really that smart go start your own company and beat Apple at it's own game.

Re:Another fly on the wall heard from (-1)

Anonymous Coward | more than 2 years ago | (#39163455)

I think you forgot about the part where the guy running apple said this is a problem. idiot.

Re:Another fly on the wall heard from (1, Insightful)

Junta (36770) | more than 2 years ago | (#39163551)

Well, to be fair, the guy who reigned over apple as it ascended to crazy success had this 'problem' as an explicit strategy. Tim Cook is questioning the wisdom of that decision.

So far, Tim Cook hasn't really done anything significant one way or another and has been kind of 'coasting' on the companies success. Now Tim Cook could start making decisions differently from what Jobs would have done. I do think 98 billion on hand is ludicrous, and if I were a significant shareholder or employee, I'd be kind of miffed about it, so I think he's right, but then again I didn't drive a company to nearly a half-trillion market cap..

Re:Another fly on the wall heard from (5, Interesting)

Hadlock (143607) | more than 2 years ago | (#39163659)

Didn't Tim Cook take over day to day operations of Apple in 2006? Steve Jobs was always the official CEO, but Steve had been grooming Tim Cook for almost half a decade when he finally stepped down. Most of the decisions made in the last six years have been, in part, made by Tim Cook.
 
I don't think you really know what you're talking about when you say things like "So far, Tim Cook hasn't really done anything significant one way or another and has been kind of 'coasting' on the companies success." when in actuality he has been running the company for 4+ years.

Re:Another fly on the wall heard from (2)

mjwalshe (1680392) | more than 2 years ago | (#39163697)

And ignoring sensible dividends and going hell for leather for growth is what did for the likes of Enron.

Re:Another fly on the wall heard from (-1)

Anonymous Coward | more than 2 years ago | (#39163529)

"Apple is one of the most successful companies in the world -- right now."

never thought being 46 in a any list would place anyone or anything at one of the most successful companies, i would say that sentence is reserved for the top 10

http://en.wikipedia.org/wiki/List_of_companies_by_revenue

Re:Another fly on the wall heard from (0)

Anonymous Coward | more than 2 years ago | (#39163629)

"Apple is one of the most successful companies in the world -- right now."

for certain valuations of success.

Better?

Re:Another fly on the wall heard from (3, Interesting)

Junta (36770) | more than 2 years ago | (#39163633)

That list is pretty terrible criteria for 'successful'.

One, its mostly data from over a year ago.

Two, the revenue numbers don't correlate well to each other as they represent different dates and different fiscal calendars with different companies being impacted by various degrees economic conditions changing over time.

Three, revenue is perhaps one of the weakest indicators of 'success'. If you get 1 trillion in revenue but had 1.1 trillion in expense, you are the worst company in the world practically speaking but would be number one in that list. By profit, Apple is likely easily in the top10 (data I could find put them at #8 in 2010, but a lot has changed since then). By Market cap, Apple is 487 billion, with Exxon at 413 billion, which is a strong indication of how valuable a company is perceived.

Re:Another fly on the wall heard from (-1)

Anonymous Coward | more than 2 years ago | (#39163603)

Apple is one of the most successful companies in the world -- right now.

Yeah and the Catholic Church has been one of the most successful companies in the world over the past two thousand years. The East India Company did rather well leveraging animate resources and other useful materials in Asia, too.

Apple is a modern church and slaver. Its adherents will as vehemently deny its true face today as followers of any institution or regime throughout history have done.

captcha: onanism.

Apple's management doesn't know either. (3, Interesting)

Anonymous Coward | more than 2 years ago | (#39163645)

But everyone with a soap box seems to think they know better than Apple management how the company should be run.
If they are really that smart go start your own company and beat Apple at it's own game.

They don't know either.

If Apple's management were such geniuses, then why don't they take that cash and start another business line that will make them even more successful?

Or for a bad idea, buy a company that will add to their business - like Intel? (Using cash for acquisitions almost always turns out to be a bad decision. )

Sitting on a load of cash is a sure sign that management doesn't have any good ideas in the pipeline to keep the business growing and the company is headed towards stagnation.

It happened to Microsoft.

Re:Apple's management doesn't know either. (1)

gnasher719 (869701) | more than 2 years ago | (#39163719)

If Apple's management were such geniuses, then why don't they take that cash and start another business line that will make them even more successful?

Because taking cash, starting another business line, and making it successful, takes an awful lot of work. Being a genius doesn't help. Cloning might help.

Re:Apple's management doesn't know either. (3, Funny)

Rational (1990) | more than 2 years ago | (#39163781)

You know, if you announce the end of the world every day for the next ten billion years or so, some day you're bound to be correct.

Or they could.. (3, Insightful)

Anonymous Coward | more than 2 years ago | (#39163441)

just start charging less for their wares? Ya know, give back to the suckers that made them rich in the first place?

Re:Or they could.. (4, Insightful)

Anonymous Coward | more than 2 years ago | (#39163467)

just pay more to the people who produce their wares? Ya know, give back to the suckers that made them rich in the first place?

There, fixed that for you,.

Re:Or they could.. (1)

Shavano (2541114) | more than 2 years ago | (#39163791)

You'll never get an idea like that past the board. Boards work for shareholders and management works for the BOD.

Apple is ripe for a shareholder revolt.

Re:Or they could.. (3, Insightful)

K. S. Kyosuke (729550) | more than 2 years ago | (#39163519)

Actually, the fact that the suckers made them filthy rich in the first place suggests that their price is just right. (I'm not an economist but the college intro course in economy they tried to instill in us techies did actually leave some marks in me, I hope.)

Dividends? Ridiculous. (0, Interesting)

Anonymous Coward | more than 2 years ago | (#39163443)

Dividends are just a marketing gimmick. The only winners are the brokers. I'm perfectly free to buy or sell the stock as I see fit. A dividend just lowers the value of the stock that I've already bought. So I'm forced to buy MORE stock and pay more commissions just to remain in the same place. Ridiculous.

Re:Dividends? Ridiculous. (0)

Anonymous Coward | more than 2 years ago | (#39163557)

That only makes sense if any cash that a company has is invested in projects which can generate the same kind of return that generated the excess cash to begin with. That's excessively optimistic and as the summary noted, if a company has too much cash on hand and the shareholders never ask for any of it back, that creates an incentive to invest in projects with a sketchier prospect of a solid return.

Re:Dividends? Ridiculous. (3, Insightful)

mjwalshe (1680392) | more than 2 years ago | (#39163723)

Complete bollocks dividends are the major part of the return from any portfolio of securitys - this is investing 101 its also real money you cant fake dividends via dodgy accounting practices.

Re:Dividends? Ridiculous. (5, Insightful)

swalve (1980968) | more than 2 years ago | (#39163763)

No, because you get to keep the dividend and use it to buy more stock if you prefer.

Re:Dividends? Ridiculous. (4, Insightful)

samkass (174571) | more than 2 years ago | (#39163809)

When you buy stock you own part of the company. Isn't it kind of silly to not take any of the profit out of the company you own once it's mature and has all the money it needs for operations into the indefinite future. Intentionally deciding not to get paid as the owner of a company seems silly.

Fund some partially Apple owned startups . . . (4, Insightful)

PolygamousRanchKid (1290638) | more than 2 years ago | (#39163447)

. . . pick some good staff and management to run them, let them come up with some good ideas. And just wait and see where they go. If nowhere, tough luck, but the mother ship's kids won't go hungry. On the other hand . . . maybe they might end up with a valuable subsidiary.

Giving cash to shareholders won't work. They will just use the cash to go out and buy yet again more Apple products.

So then Apple will be stuck with the money again, and not know what to do with it.

Re:Fund some partially Apple owned startups . . . (2)

Nerdfest (867930) | more than 2 years ago | (#39163497)

That doesn't (or didn't) sit well with their insistence on controlling everything. I'd also suggest maybe funding some causes that help humanity, or technology in general, rather than just the bottom line.

Re:Fund some partially Apple owned startups . . . (2, Insightful)

Anonymous Coward | more than 2 years ago | (#39163539)

Giving cash to shareholders won't work. They will just use the cash to go out and buy yet again more Apple products.

So then Apple will be stuck with the money again, and not know what to do with it.

The fact that Apple has so much cash is a failure of management. If they had some good ideas they would have used their cash long ago, before it became such huge a hoard. The question of what the shareholders will do with the money is irrelevant, they will do whatever they please; this is of no concern to management.

All to often the shareholders permit this kind of behavior on the part of management. They don't seem to realize that "management", in this case, is another word for servant.

Re:Fund some partially Apple owned startups . . . (1)

drinkypoo (153816) | more than 2 years ago | (#39163657)

Fund some wholly Apply owned startups makes more sense. They have the cash, and then they don't have to share any resulting toys.

Re:Fund some partially Apple owned startups . . . (2)

mjwalshe (1680392) | more than 2 years ago | (#39163745)

err the shareholders own the company and I am sure that as a share holder id rather a decent dividend that some doomed attempt to piss my monney up the wall competing in the TV market where the margins are razor thin

Pay the dividend (0)

Anonymous Coward | more than 2 years ago | (#39163453)

Its fine for Apple to keep billions in reserve for R&D, acquisitions, and even a rainy day that may come - but to horde that much cash without having a real plan for it is irresponsible. The shareholders own the company and should get dividends if management doesn't have a better use for the money.

Maybe distribute some money to customers... (0)

TeslaBoy (1593823) | more than 2 years ago | (#39163461)

by reducing prices a little. Apple make great products, but their prices are higher than most of their competitors'. Seems like a great way to stay competitive with Google and others, who seem to have lower profit margins per unit sold.

Re:Maybe distribute some money to customers... (3, Informative)

loufoque (1400831) | more than 2 years ago | (#39163577)

Prices are deduced by how much people value the products and are ready to pay for them, not by how much it costs to produce them.

Give half the money to the 3 big stakeholders (2)

CokeBear (16811) | more than 2 years ago | (#39163463)

Take half the money, divide it into 3 piles, for the 3 stakeholders:
1) Shareholders in the form of a one-time dividend.
2) Employees get a one time bonus
3) Customers get a gift card based on their purchases in the past quarter.

Apple is still left with 50 Billion, and keeps everyone happy.

When they hit $100B again, rinse & repeat.

Re:Give half the money to the 3 big stakeholders (1)

geekmux (1040042) | more than 2 years ago | (#39163565)

Take half the money, divide it into 3 piles, for the 3 stakeholders: 1) Shareholders in the form of a one-time dividend. 2) Employees get a one time bonus 3) Customers get a gift card based on their purchases in the past quarter.

Apple is still left with 50 Billion, and keeps everyone happy.

When they hit $100B again, rinse & repeat.

I like your idea, but group #3 statistics are going to be just slightly skewed if you include holiday sales from December. Those could have been one-time purchases of hundreds or thousands spent during Christmas. While they provided support to Apple in the form of purchases, it tends to dilute the true fanboi pool that I'm assuming you're attempting to target and reward.

Re:Give half the money to the 3 big stakeholders (0)

Anonymous Coward | more than 2 years ago | (#39163581)

Employees are not stakeholders. A business exists to enrich its owners. They do so by selling products or services to clients. So you could say that a business exists to benefit the owners and the clients.

I'm not saying that the employees should not get a bonus. What I'm saying is that they only should get the bonus if that will improve the bottom line.

Re:Give half the money to the 3 big stakeholders (1)

Junta (36770) | more than 2 years ago | (#39163681)

I think realistically the thinking would be making Apple a much more desirable employer. To that end, a 'one time bonus' would not be the best use even if they decided to 10 billion in employee bonuses. You'd fund a bonus fund that would pay out repeatedly over the next few years. Knowing that it is happening and will continue to happen would help employee retention and draw in top talent. Of course, their success seems to indicate they may not need to worry too much about this issue.

Re:Give half the money to the 3 big stakeholders (5, Insightful)

OnlineAlias (828288) | more than 2 years ago | (#39163703)

I'm glad you aren't running my company. None of these things have any basis in reality for even the most green in managerial finance. Having excess capital, while generally a good problem to have, is still a big problem. Companies can bleed it through stock buybacks, dividends, or by investing it, but they cannot give it away. What Apple needs to think about doing is buying or creating other companies, be it by horizontal or vertical integration. For example, they could buy or build a competitor to Foxconn (or buy Foxconn itself, this is one I would seriously look at). Or they could take a controlling interest in Facebook. Or invest in the million other smaller start ups that could bring new innovations to Apple. Apple is seriously at a crossroads right now. Without an innovative product pipeline (or Jobs) and a supply chain that is costing a ton in PR, Apple is going to have to start putting their big boy panties on and start acting like a big boy company.

if they give devident they will destroy the compan (0)

Anonymous Coward | more than 2 years ago | (#39163471)

If they ever to give dividend , they will destroy the company, beacuse the company is heading down hill , and it will need the money to last the many many years to come with no innovation.

They could use the money to be more innovative. if they are asking "in what" then apple is in a huge problem in the coming years.

/.-style summary (1)

Udo Schmitz (738216) | more than 2 years ago | (#39163477)

"... which Jobs suspended in 1995 ..."

Uhuh. Right ... when he was at Next ... That's not even in the linked articles. You made that up.

"... a good strategy for ensuring that Apple remains a hungry, growth-oriented entrepreneurial company might be for it to distribute much of its cash to shareholders."

LOL. Stay hungry, stay entrepreneurial, send me your money!

In fact Tim Cook didn't suggest any dividend, that's just wishful thinking. Why should Apple do that when the stock price is still rising? There are one or two chinese people they can some iStuff to ...

Re:/.-style summary (0)

turkeyfeathers (843622) | more than 2 years ago | (#39163521)

"... which Jobs suspended in 1995 ..."

Uhuh. Right ... when he was at Next ... That's not even in the linked articles. You made that up.

Jobs was always the CEO at Apple, ever since he founded it in a log cabin. We've always been at war with Eastasia.

Power Generation (1)

Haedrian (1676506) | more than 2 years ago | (#39163479)

Cash them in for 1 dollar notes.
Put them in a big pile
Set them on fire and use the heat to power the new data center.

Also helps reduce inflation.

Or just fill a swimming pool with them.

Re:Power Generation (1)

swalve (1980968) | more than 2 years ago | (#39163813)

You joke, but I think Apple's skills at stupid-ifying their products would combine well with investing in some kind of green technology. Buy up, or build up, some kind of solar+wind+geothermal company and use their UI skills to build and sell turnkey products.

Give it to me! (0)

Anonymous Coward | more than 2 years ago | (#39163485)

I'll give it a good home!

Why not just buy out every hardware vendor? (2)

sqldr (838964) | more than 2 years ago | (#39163487)

Here's an idea: buy up all patents on H.264 and make them freely usable. Then W3C would have no arguments not to use it in HTML5, google will have no excuse not to implement it, apple will have a head start on getting it implemented on all their devices, and we can have the fucking internet back.

Re:Why not just buy out every hardware vendor? (0)

Anonymous Coward | more than 2 years ago | (#39163517)

Nice thought but Apple didn't get to where it is by giving away stuff for free. It's not gonna happen

Re:Why not just buy out every hardware vendor? (1)

zyzko (6739) | more than 2 years ago | (#39163713)

Even *if* all the patent holders would sell (and the list include names like Sony, Dolby, Fujitsu, Hitatchi, Samsung, Microsoft...) how it would be a smart business-move? Burn a ton of money, lose your rights to licensing revenue (Apple is one of the patent holders in MPEG-LA patent pool) and give everyone else a free ride. Yes, it would be nice and all, but very, very stupid business-wise at this point. Google was able to do that with WebM because it involved only buying one company, not sitting in negotiations with 20 entities where everyone wants to cash out the jackpot and not getting just one to agree can ruin your whole deal.

Patent-wise game on h.264 is lost. You either agree to licensing terms and risks involved and be done with it, or you try to change the game (which Google is trying to do with WebM).

Build a fusion power plant (1)

Anonymous Coward | more than 2 years ago | (#39163509)

And solve the energy problems forever.

Um, what? (5, Insightful)

whisper_jeff (680366) | more than 2 years ago | (#39163513)

I couldn't read the linked article (I seriously need to log in to view an AP news article hosted by Google? That's rich!) but that's not at all what I have heard Cook discussed. He downplayed the likelihood of a dividend payout and made it sound much more likely that Apple would find other ways to invest the money. In fact, his quote (re dividend payouts) was "My message there is that the board and the management are thinking about this very deeply... and we will do what we think is in the best interest of shareholders." Call me crazy but that sounds an awful lot like "look, we're not going to outright say it, but we're NOT paying dividends. We're thinking of other ways to invest the money that are better for the company which is, in our opinion, better for the shareholders."

Look, I know investors _REALLY_ want a dividend payout because it amounts to free cash (and lately the trend is "Apple, you have tons of cash - GIVE ME SOME!!") but, face facts people, the company has a history of not paying dividends, they don't feel it's a good use of their money, and they feel there are better ways to invest the money. Just accept it and move on.

Want to get dividends? Invest in stocks that pay dividends.

Re:Um, what? (2)

DarkOx (621550) | more than 2 years ago | (#39163725)

Its not "free cash" its very direct ROI. Investors generally want dividends when they don't feel the cash a company is holding is being leveraged properly. The reason you invest is because you expect the asset will grow. If all a company you have stock in is doing is holding a bunch of cash in bank accounts well; shit you could do that; without the risks.

APPL needs to either needs to tell investors it has some plan to exercise that money or it should disperse it as dividends. Dividend disbursements are away to get strong hands to hold a stock; when you reach a plateau in share price valuation. Once a stock stops going up (somewhat predictably) over a time, either it sells off (I don't think anyone at Apple wants that), or becomes a volatile thing that gets day traded, which is tough place to be because judgment gets passed on management each and every day at those companies.

Google (0)

Anonymous Coward | more than 2 years ago | (#39163531)

That's because too much cash often burns a hole in managers' pockets, and they end up doing a poor job of investing that cashâ"engaging instead in foolish pursuits like empire building. Sounds like Google.

The stockholders can't afford a dividend (2, Interesting)

KYPackrat (52094) | more than 2 years ago | (#39163547)

Apple has $90 billion in actual cash value, but it couldn't offer most of it in a dividend.

Why? Most of that $90 billion is held offshore. To offer a dividend, Apple would have to repatriate that money, and that will kick in an automatic tax (about 30% off the top). Then, to issue the dividend, Apple pays another tax. Also, the income is taxable capital gains for its stockholders as well. By the time Apple stockholders take the dividend to the bank, they're down to somewhere around 20% of the original cash.

If Apple wants to reward stockholders, it could buy back shares overseas. Normally, I hate stock buyback plans, but this is one of the few times it would make sense.

Re:The stockholders can't afford a dividend (4, Informative)

Anonymous Coward | more than 2 years ago | (#39163679)

Sounds like more right-wing clap-trap about the underprivileged and under-appriciated 1%. Your going to have to do better than generalities to claim that 80% of the value of a dividend would be eaten in taxes. First my understanding is that Apple only pays the difference in corporate taxes from what it pays overseas and what the US tax if all the money had been made here. So that takes a good chunk out of your 30%. Secondly long-term cap gains is 15% but that shouldn't be added on to the cost of the dividend to the shareholder, since the shareholder gets that on any dividend. I never heard of this 35% tax (80 - 30 - 15 = 35) of which you refer to for simply issuing a dividend.

I would be leery too if I were them of issuing dividends, but not for tax reasons. The principle appears to have served them well. They are probably working on some sort of optimal ratio of cash to operational costs (or some other relevant factor) to aim for and then figure out a dividend that can glide to that ratio so they don't feel the need to yank it back later when the competition starts to tighten up again.

Dividend payments thought would also engender some good will towards them. Just like when Microsoft started paying dividends the effect was seen in personal income on a national levels, an Apple dividend would help spur the US economy.

Re:The stockholders can't afford a dividend (3, Interesting)

tomhath (637240) | more than 2 years ago | (#39163743)

I hate stock buyback plans, but this is one of the few times it would make sense

It's worse that that. The stock price is so high because investors expect the company to be profitable in the future; but if those profits are never distributed to the stockholders then where's the value? In order to be worth the current price the investment has to pay some return (ignoring the dot-com type of speculation that drives up the price of a company's stock before it comes crashing down as we saw in the 90's).

If Apple distributes the cash as dividends the stock price will (probably) drop in proportion to the amount of money that's distributed, unless stockholders think there's potential for even bigger profits and another dividend in the future.

Empire building (3, Funny)

confused one (671304) | more than 2 years ago | (#39163561)

Brain: We must prepare for tomorrow night

Pinky: Why, what are we doing tomorrow night?

Brain: We're going to go to Cupertino.

Pinky: What will we do when we get there?

Brain: The same thing we do every night, Pinky - try to take over the world!

They could buy NASA... (2)

K. S. Kyosuke (729550) | more than 2 years ago | (#39163571)

...and fly a man to Mars. :)

Re:They could buy NASA... (1)

confused one (671304) | more than 2 years ago | (#39163619)

Why buy Nasa? Just hire all the engineers; a lot of them are looking for jobs right now anyway. If you want to get a jump start on the hardware, buy SpaceX and/or Orbital Sciences. You could theoretically go for broke and buy Boeing and Lockheed -- $100 Billion might be just enough to grab them both; but, they probably would not be a good fit for the Apple corporate culture.

Poor timing (3, Insightful)

Patch86 (1465427) | more than 2 years ago | (#39163575)

Abysmal timing to announce "we have more money than we actually know what to do with" so hot on the heels of the negative stories about workers rights in the factories making Apple (and other) components. Perhaps they wouldn't have the "problem" of having such a colossal cash mountain if all workers in the supply chain were paid a fair wage?

And depressing that the best suggestion for dealing with the cash mountain is to distribute it to investors (to keep already highly valued share prices inflated), rather than any one of a hundred other uses- from increased pay, smaller profit margins on sale prices, increased R&D to come up with some truly innovative technology, or even just good old fashioned philanthropy.

Re:Poor timing (3, Insightful)

roman_mir (125474) | more than 2 years ago | (#39163609)

That's retarded. They already covered their costs, Apple is not a charity, they bought labour at fair wages (market value, as opposed to what you want obviously). Companies EXIST to make money for their INVESTORS, nobody else. All the wealth (products, services) and all the wages and taxes they pay are completely incidental to their goal (which is why free market the best tool for creating wealth in the first place).

They need to do one thing for sure though - diversify out US denominated assets (though they already have their production capacity in Asia and other places), but they need to look at moving money out of US dollars and probably into other businesses, unrelated to tech - energy, mining, agriculture, whatever - just not in socialist 'paradise'. Paying out dividends to their investors is a completely reasonable suggestion, in fact they should do that too.

the labor market in china is not a free market (5, Insightful)

decora (1710862) | more than 2 years ago | (#39163695)

i dont understand why people who believe in the free market keep looking to China as some kind of model on a hill. China is run by the Communist Party, and the corporations over there are part owned by the same party.

There are no labor unions, there are no workers rights laws, there are no environmental laws. There are mines and factories that are run on prison labor - 'criminals' being people who speak things the government doesnt like. Criminals being people who mention forming a union. That is not a 'free market' upon which wages were decided. That is a captive market, not a free competitive market.

In case you have forgotten, slavery was what the Republican Party was founded to eliminate from the face of the Earth. Not to make a profit off of it by claiming it was 'fair'.

The idea that someone should not have to inhale N-Hexane on an assembly line to save 1% on the cost of a product has nothing to do with 'socialism'. It is about basic human decency, basic morality, basic common sense. It is about the difference between a civilized society and lawless barbarism.

Re:Poor timing (1)

Junta (36770) | more than 2 years ago | (#39163737)

It's not retarded. As a society we should as much as possible keep the big picture in mind. If Apple practices can be popularly considered unethical, then the consumer market might punish them out of a sense of guilt (misplaced or otherwise). Even putting that aside, a more selfish consumer base thinking bigger picture may punish them for hiring overseas workers instead of domestic.

The wealth/wages/taxes aren't completely incidental, how consumers perceive the way those are managed factors in to the ability to sell. It's not the only thing by far, but I think there is a measurable impact of people refraining from Apple products because of the press on labor practices, even if they are just taking their money to worse, but more obscure companies.

Re:Poor timing (4, Informative)

UnknowingFool (672806) | more than 2 years ago | (#39163611)

Perhaps they wouldn't have the "problem" of having such a colossal cash mountain if all workers in the supply chain were paid a fair wage?

Do you know what is a fair wage in China is? Most people only look at the wage in US dollars and immediately claim to be unfair without ever looking at what people are paid relatively in China. The wages at Foxconn plants are slightly better than average for factory workers in China. Apple pays those that work on their products more than competitors do at Foxconn.

how much could i pay you to justify (4, Insightful)

decora (1710862) | more than 2 years ago | (#39163665)

making you work 80 hours a week, making you live in a tiny room with 20 other people, make you use dangerous chemicals that damage your brain, threaten you with prison for even talking about a union, etc?

Re:Poor timing (4, Insightful)

rgbrenner (317308) | more than 2 years ago | (#39163689)

They are paid so terribly, that thousands of Chinese line up and wait for hours for a chance to work at Foxconn. And the job ad even says the starting wage is $261:
http://micgadget.com/21420/thousands-line-up-for-foxconns-jobs-in-zhengzhou/ [micgadget.com]

Re:Poor timing (1)

Junta (36770) | more than 2 years ago | (#39163811)

Having thousands line up for a chance to work means that the general prospects are sufficiently poor that by comparison Foxconn is able to do pretty well by the local populace.

Apple is of course being exploitive, but I think the local population would rather be exploited than nothing. If Apple funded a wage that wouldn't repulse a United States Citizen, then they'd probably be paying US citizens for an even bigger PR boost of 'made in america'' and those 'lucky' Foxconn employees would then get nothing.

Re:Poor timing (5, Informative)

Anonymous Coward | more than 2 years ago | (#39163675)

to keep already highly valued share prices inflated.

By P/E ratio Apple is valued less than Google, Amazon, Verizon, ATT, Oracle, LinkedIn, NetFlix. It is one of the CHEAPEST tech stocks in the markets it competes in (devices, media, mobile), even though it continues to see phenomenal growth.

Diversify (-1)

roman_mir (125474) | more than 2 years ago | (#39163587)

Apple has too many US DOLLARS, that's its problem. With 15% inflation it is insane to keep savings in that currency, they need to come up with a diversification strategy. However paying dividends to shareholders is also a very reasonable suggestion.

Too many eggs in one basket, I'd look at completely different businesses (agriculture, mining, but obviously not in US, it's too dangerous, there will be more nationalisation and more taxes and more inflation and other types of theft by government).

They definitely need to diversify out of their own bonds, which are dollar denominated though. Again - buying up some mining businesses, joint venture into energy, metals, agriculture.

Re:Diversify (0)

Anonymous Coward | more than 2 years ago | (#39163683)

Pay a dividend, and let your investors decide how to diversify.

Are you seriously suggesting that Apple start running some mines? Absurd. No one at Apple has any idea how to do that.

Re:Diversify (1)

roman_mir (125474) | more than 2 years ago | (#39163707)

No, they don't know how to do that. Yes, paying a dividend out is a perfectly fine, totally reasonable idea (and in fact that's what investing is about - getting some cash flow). But they are not go8ing to do more than 25% payment on an earned dollar (that's rare), the real distributed tax in US is HUGE, it's 64% (of-course Apple isn't paying all of that, it's has enough accountants and lawyers to make sure), if the money isn't paid out though, it can be reinvested, and it doesn't have to be Apple's people, they can diversify by buying shares in mining companies, agriculture, etc., they don't need to know how to run those, they just need to evaluate the potential investment and always keep eyes on them.

Does it make sense? Well, one thing is for sure - Apple is not going to be on top of this hardware game forever. Saudi Arabia is diversifying out of their oil business, because they know oil won't last forever, so they build infrastructure, new islands, buildings, parks, whatever they do - it's aimed at long term preservation of cash flow.

Don't they still have a spaceship to build? (0)

Anonymous Coward | more than 2 years ago | (#39163617)

That can't be cheap, unless they skip on the FTL travel.

time to rob the company and sell it off (2, Insightful)

decora (1710862) | more than 2 years ago | (#39163655)

congratulations, capitalism. after Jobs passed away, it took less than a month for the hedge funders to begin the pillaging of the organization for their own personal aggrandizement.

apple will soon become 'the next HP', a gutted wretch whose main business is screwing people out of toner ink. bravo.

Re:time to rob the company and sell it off (1)

rgbrenner (317308) | more than 2 years ago | (#39163729)

You obviously don't know how a company works. The shareholders own the company. They elect a board to manage it. The board hires a CEO.

Steve Jobs was an employee of Apple. When he died, Apple hired a new employee to replace him.

No hedge fund is involved. Apple was not sold. The same people who owned it before own it now.

eh (3, Interesting)

buddyglass (925859) | more than 2 years ago | (#39163663)

I know they get criticized for it, but until there's a shareholder revolt and/or people stop buying the stock (fat chance), I don't see the "need" to pay out a dividend. Apple could instead do one or more of the following:

1. Lower its profit margins and steal even more market share from its competitors. Tons of people already buy Apple products; imagine if they were that much cheaper.

2. Hire an even more talented workforce by offering "way above market" pay. Establish a threshold like 10%. Fire the lowest performing 10% of Apple employees. Technical, design, sales, the whole nine yards. Then give everybody who's left a 25% raise. Then fill the vacant positions with "superstar" caliber replacements. (Note: it shouldn't do this unless it's confident it can accurately gauge employee performance.)

3. Get into a market it doesn't yet play in and dominate it. This with the understanding it will incur a short-term financial loss. Prior to the iPhone's release, who would have ever thought the most popular phone in 2012 would be from Apple? Not me.

Greece would love some of the money (0)

Anonymous Coward | more than 2 years ago | (#39163671)

Apparently Greece would love some of that money...

Real Servers? (2)

Thad Zurich (1376269) | more than 2 years ago | (#39163701)

How about Apple invests in a server business that corporations can actually use? Buy Windows client and AD licenses for all Macs ... no, all Apple devices. Build a better AD than Microsoft, own the corporate environment, give big customers real choices. Interoperate better with Linux. Extend SAMBA and support FOSS projects... (who am I kidding, right?)

Insourcing should now be an option (2)

daniel.baker (1002642) | more than 2 years ago | (#39163705)

Good on Apple for being extraordinarily profitable. While it would eat in to that profit, Apple should seriously considering bringing their manufacturing to the states. $98B would go a long way toward building a [financially] sustainable infrastructure for US manufacturing. Do it now!

Jobs wanted to go "Thermonuclear" on Android (2)

mschaffer (97223) | more than 2 years ago | (#39163733)

Now, Jobs is gone. So, unless the current board has plans to go "Thermonuclear" on someone, it's time for some dividends.

Charity (0)

Anonymous Coward | more than 2 years ago | (#39163735)

Schools and hospitals etc...

Oh who am i kidding.
It's not like there are people starving on this ever so filthy planet.

Stop patent litigations (1)

Anonymous Coward | more than 2 years ago | (#39163741)

If they have so much money that they don't know what to do with it, they could stop suing the world around patents.

cure cancer (2, Interesting)

backslashdot (95548) | more than 2 years ago | (#39163787)

They could spend 50 billion of it on curing cancer. You know, I wondered why Steve Jobs didn't do that .. I kept putting off writing to him to tell him to do that -- I now regret that. All he had to do was get all the world's top cancer scientists together to work on the problem in a focused way. He did that with computer animation and it worked. He did that with smartphones and it worked. Why can't it work for cancer or for regenerative medicine (growing new body parts)?

And yes, it would be massively profitable .. they can charge the equivalent of 1 or 2 years of chemotherapy for the cure. The insurance companies would gladly pay for it (it'll be cheaper than paying for 3-5 years of various expensive chemotherapy drugs and tests that the average cancer patient needs).

They would get their invested money back within months.

Pay the people WHO MAKE THEIR SHIT real money (1, Troll)

Ralph Spoilsport (673134) | more than 2 years ago | (#39163797)

You know - all those poor bastards jumping from windows in China making iPads and iPhones other assorted pieces of iJunk? How about giving the working class their value back?

Obviously, they do a pretty good job - how about giving them 5x or 10x as much money and a 40 hour work week? Now THERE'S a great idea.

The value of a stock (5, Insightful)

LeoXIII (888066) | more than 2 years ago | (#39163803)

The fundamental value of a stock is the sum of future payouts in the form of dividends, spinoffs or liquidation. For companies with finite resources, such as a mining company, this is easier to compute than for a technology company like Apple. But if Apple would never pay a dividend or spin off parts, the value of the stock is zero. The discussion above shows a remarkable lack of understanding of the basics of capitalism. The only reason not to pay a dividend is that the money is better invested in the company now so that it will generate even higher profits for the owners in the future.
Load More Comments
Slashdot Account

Need an Account?

Forgot your password?

Don't worry, we never post anything without your permission.

Submission Text Formatting Tips

We support a small subset of HTML, namely these tags:

  • b
  • i
  • p
  • br
  • a
  • ol
  • ul
  • li
  • dl
  • dt
  • dd
  • em
  • strong
  • tt
  • blockquote
  • div
  • quote
  • ecode

"ecode" can be used for code snippets, for example:

<ecode>    while(1) { do_something(); } </ecode>
Sign up for Slashdot Newsletters
Create a Slashdot Account

Loading...