
Apple has a record $250B in the bank - DoritosMan
https://arstechnica.com/apple/2017/05/apple-has-a-record-250-billion-in-the-bank/
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AndrewKemendo
The St. Louis FED did a story on this last year [1] that basically said there
are two main reasons why you would stockpile cash if you're a regular company
(non-finance, non-utility): precautionary motive and repatriation taxes.

With respect to the first it comes down to uncertainty and credit constraints.
Since the credit issue is basically zero for thees companies then it likely
comes down to uncertainty in the market.

They want to be shielded in the case of a huge crippling depression or global
catastrophe. Apple's "burn rate" is about 33BN a year, which means that 250BN
would give them ~5-6 years to find a new market in the event of a nuclear
holocaust if they kept spending the same with ZERO income.

At the same time, just like Venture Investors, they are all waiting for the
next transistor level market shift to happen - whether they can make it or
otherwise. So they are plinking away with small investments on projects that
are high risk to try and flush them out.

Pick your poison:

Nuclear

Biotech/Genetics

Artificial Intelligence

Augmented Reality

Space Mining

Etc...

It's really about making sure that APPL will be around in the year 2200
irrespective of everything else.

[1][https://www.stlouisfed.org/publications/regional-
economist/j...](https://www.stlouisfed.org/publications/regional-
economist/january-2013/why-are-corporations-holding-so-much-cash)

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valuearb
No, it's all the massive taxes on repatriated profits. Apple doesn't even have
$250B because it borrowed $78B to pay out as dividends.

When the 12% tax holiday is approved, almost all of that money comes back and
most gets paid as dividends. You don't need it overseas for safety, and you
don't need to burn $30B a year if your revenues disappear. A "skeleton crew"
can spend a couple billion a year developing new profits in the nuclear
meltdown scenario.

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AndrewKemendo
You don't need it overseas for safety, you just keep more of it for safety.

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valuearb
You don't need $250B for "safety". Apple needs maybe $50B tops. If it has a
bad year it's going to slash spending. It's got professional management that
know pretty much how much it will make in a quarter and how much it can spend.
It also has access to further financing, both debt and equity.

Repatriate the $250M, payoff the $78M in debt, and pay out at least $100M to
shareholders. Apple will have over $100M in cash again by the end of the year.

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michalu
I think it's smart to keep cash... we're in economic boom right now with a lot
of cheap money around. It will come handy when it's over

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arcanus
I can't help but think of Peter Thiel's very appropriate comments (admittedly
targeting GOOG, but still applies) here:

[https://www.youtube.com/watch?v=2Q26XIKtwXQ](https://www.youtube.com/watch?v=2Q26XIKtwXQ)

As I read it: if AAPL had any idea at all what to do with this cash, they
would deploy it. They are completely out of innovative ideas, and are just
turning the product crank. Instead, they should return $$ to investors in the
form of a dividend.

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valuearb
They have, which is why they only have $160B in net cash. They will do more
when allowed to repatriate it at a reasonable tax rate.

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sammydavis
Yeah, how can you do anything just that little amount? /s

The could give their shareholders billions and still have plenty left over to
do anything.

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valuearb
They've paid shareholders close to $100B and will pay more. But their hands
are tied on most of the money until congress passes a tax holiday.

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Ftuuky
Why does Apple need all that cash in the bank? Why not spending it in R&D or
giving it to the shareholders?

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valuearb
Massive US tax penalties for doing either.

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arisAlexis
How about investing

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indemnity
That's exactly what they're doing.
[https://en.m.wikipedia.org/wiki/Braeburn_Capital](https://en.m.wikipedia.org/wiki/Braeburn_Capital).

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mwsherman
If they really want to redistribute, they could reduce prices. They could
return to shareholders, sure, but returning to the market (of their customers)
would be more economically valuable.

