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Actually Apple's Net Cash Hasn't Grown In Two Years
Perhaps the one chart that is most praised following every Apple's quarterly earnings report is the one showing the company's gargantuan cash trove, and sure enough, this quarter was no exception for good reason: AAPL's total cash and equivalents, including its short and long-term investments just rose to a record $164.5 billion, as shown below.
There is one problem with this chart: it includes the contribution of AAPL's debt, because while pundits are quick to praise AAPL's cash, they forget that starting in Q3 2013 AAPL also started loading up on debt, first $17 billion, and as of this quarter, the debt has now grown to $29 billion.
Why? For the simple reason that the bulk of AAPL's cash hoard has been held offshore since 2009, and only $18.4 billion, or the least since September 2010, was on the domestic books as of the March 31 quarter (the June 30 update won't be available until the 10-Q is filed).
Clearly, AAPL doesn't want to pay cash taxes on its repatriated cash, so for the past year it has been issuing debt instead to fund dividends and buybacks. Which also means that one has to net out the debt when looking at the firm's net cash level.
It is this - Apple's cash net of its debt - which is shown on the chart below. Contrary to the chart at the top, it shows that Apple's cash has actually not increased at all in the past 7 quarters, and at June 30 was $135 billion, below the $137 billion AAPL had in December 2012 when it launched its aggressive "shareholder friendly" strategy in the form of massive dividends and stock buybacks.
The good news is that for now, courtesy of its massive cash cushion, any incremental debt is merely a blip, but what was $0 less than two years ago has promptly grown to $29 billion, a far faster pace of growth than AAPL's own organice cash creation. At this rate, in a year or two, even S&P may start asking if AAPL's AA+ rated debt is truly worth the same rating as the US itself.
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And Steve Jobs is gone.
I remember Apple's heyday when he was there and Apple was threatening Microsoft.
Then Apple dumped Steve Jobs and brought in John Sculley from PepsiCo who gradually drove Apple to the brink of insolvency.
Then they brought Jobs back he and revitalized the company and brought in the iPod, the iPhone, the iPad.
Jobs is gone now, and not much has changed for the better since Job's passing. Tim Cook is not Steve Jobs, and neither is anyone else.
If I were an Apple shareholder I'd be terrified that the company will gradually decline, taken over by M.B.A.'s and being bled like so many great American companies.
Let me chime in with the local perspective and tell you all that Apple is expanding like a motherfucker. They've bought out all the office space in Cupertino, built a giant Mac Cafe (or something like that), are in the process of building the mothership. In any direction you go from headquarters in a 10 mile radius is at least one Apple building somewhere.
They're planning for something big (including doubling their Cupertino staff by the time the mothership is done), success or failure.
Thanks for the perspective Skateboarder.
No doubt they are expanding. What they have going is the brand. If they can't maintain the quality and innovation in hardware and software - and the brand becomes tarnished a la 1990-99 - the shareholders will get slaughtered.
IMHO Steve Jobs was the driving force behind innovation and quality.
If I had Apple shares I'd sell them.
It's aways different this time... Apparently GOOG and APPL think they're sovereign entities?
Ask Bill "tool time" Gates about that one... Enjoy > ? The Vapors - Turning Japanese - YouTube
Yes, the giant Apple campus donut is under construction. From my experience in real estate, every company that embarks on building a monument to itself in the form of an iconic structure has peaked. There are many examples. Usually happens when they've run out of good uses for the money. The Apple spaceship will cost an un-godly amount of money to construct.
Please insert #IBM chart
The bears continue to bleed. None of this crap matters. There are people I know with 4 or 5 I-Phones, and they can’t wait for the next one. Their entire f ---ing family has a shopping bag full of I-Phones. There will be people camping overnight just to be first in line at the local Apple store. Then, after they have their new toys it’s straight to Chipotle for a $12 lunch and try out their newest toy. People all over the world can’t get enough I-Toys. They sell 35 f - - -ing million a quarter! And unless you run over it with a truck, they will last for years, so they just want the newest model. Sure, it’s a mania, but so what? AT&T says just throw away your I-Phone and get a new one every year…I-phone rental. Perpetual debt slaves with EBT cards.
These same perma-bears keep screaming about Ponzi schemes. Who cares, the market has been a “Ponzi scheme” since day one. Does it matter? If the Fed bank keeps handing out Trillions of dollars and says “Buy stocks”, the last biggest fool might not show up for five or ten years. Potential wars? Great for defense stocks. And ask Bill A. about shorting a sure Ponzi scheme. Talk about having a sore butt.
The Fed has given implicit, and now explicit guarantees, they will support the markets. There is nothing more important and no input into their model given more weight, than the equity markets. They are 100% certain if the pump the markets up long enough, and hold rates at zero, it is to the moon! Millions don’t give a s --- about the Ponzi scheme talk, they see their 401K’s soar week after week and they are euphoric. Keep buying inverse ETFs and short selling companies because they used stock buybacks with cheap Fed dollars to help the numbers, and you will be broke. Yes, interest rates will likely be near zero for decades and the Fed can and will print to infinity, if needed.
Welcome to the board. You'll make lots of enemies here talking like that. But I won't be one of them.
"The few who understand the system, will either be so interested from it's profits or so dependant on it's favors, that there will be no opposition from that class." — Rothschild Brothers of London, 1863
Sounds good! Let's get on board with the financial rape and pillaging. What could possibly go wrong?
^^Correct.
TT...... Nothing to worry about then. Thanks. I was getting worried.
Truer words never spoken.
that's OK - put it down on the balance sheet as "expected value" and 30x rehypothecate that fucker
It's called dividends and share buy back.
"From August 2012 through March 2014, Apple has spent $66 billion in cash on its capital return program."
Apple's 'dance with the devil' may come back to haunt them.... 29 billion times over and growing.
It's not always up and to the right.
Before everyone was bitching they had too much cash. And now they aren't hoarding enough cash? They also haven't released a new iPhone worth upgrading to in two years, which I'm sure has hindered their cash growth since the iPhone is the main source of their massive cash flow.
Cash creation will increase again with the iPhone 6 upgrade cycle, and then everyone can go back to complaining about them having too much. Obviously the debt issuance was done to avoid taxes on repatriating foreign cash to pay for the buybacks and dividends, and that is a "shareholder friendly" policy as long as they can service their debt, pay their dividend, raise EPS, and maintain their cash position. They're waiting for a cash repatriation gift from congress because they know the government will fold eventually. Until that day, Appl will finance the dividend and buybacks at low rates.
Money has become so cheap to borrow that many people are now arguing that you must take it even if you don't know what to do with it. It is hard to imagine how much this is distorting the economy, markets, and reality in general. A total disconnect between life on main street and the financial world is occurring and it is putting the economy in a very dangerous place.
It is often hard to determine what is true, but a report on Bloomberg that 32 Trillion dollars in funds were held in offshore accounts around the world made me shutter. How safe is this money, and what exactly is it doing? Can you say Cyprus? More on this subject in the article below.
http://brucewilds.blogspot.com/2013/05/cheap-money-more-and-more-and-mor...
The bulk of the article below appeared on MarketWatch in the middle 0f 2012. It is titled "The ten things Apple Won't Tell You" and was penned by Quentin Fottrell who writes for SmartMoney.com. I thought it had a lot of merit. You can chase the article down but this will give you the general idea of its message.
http://brucewilds.blogspot.com/2012/09/10-things-apple-wont-tell-you.html
Desperate attempts to build 80 million new larger iPhones.
next question: Who gives a shit?
aapl has a solid business plan that it is executing globally... from schools to business to medicine and apps and entertainment... they are totally aware of political and market changes and adapting quite well. dont like it sell it or shun it. dividends will increase and that's aok. going horizontal for awhile is fine followed by continuing growth. the china market and india markets will kick in and growth resumes... doesn't get the p/e it deserves... fearmongers bail...