The Motley Fool Discussion Boards
Stocks A / Apple
|Subject: Re: say no to financial engineering distractions||Date: 11/1/2013 3:08 AM|
|Author: commoncents33||Number: 197697 of 205112|
It is inconceivable that Apple has not thought very carefully about its money pile, even while it works on its products...If you can accept that Apple has indeed thought carefully about its cash pile, then logic would lead us to believe that they are holding onto it for some compelling reason. It is doubtful that they are doing it just for a security blanket or to admire it like King Midas.
The corporate world is rife with managements making poor capital allocation decisions. Seems to be the rule, rather than the exception.
So why should we assume Apple is immune from this? Because they have done well creating iProducts and iServices? That success has absolutely zero to do with managing the cash pile.
Based on 1) the near-impossibliity of actually spending $100,000,000,000 of cash on top of the roughly $40,000,000,000 that is coming in every year like some huge monetary tsunami, and 2) Oppenheimers comment (slip?) that of course Apple can only use domestic cash for share buybacks and dividends, it sure seems like a big reason they're not doing a bigger buyback is because they're just too fixated on avoiding paying taxes on it. But unless there is a good reason to believe that the tax rate will be greatly lower in the future (good luck with that in a country drowning in financial over-obligation), that is wrong thinking. That's like saying you'll never withdraw money from your IRA (even though you could put it to good use) because you don't want to pay taxes on it.
As far as this fantasy that Apple actually has some magnificent plan to spend more than the GDP of most nations in some R&D or enormous acquisition (that would almost certainly destroy the culture Jobs worked so hard to build)...if that was the reason they're holding on to a cash pile representing 10% of all the corporate cash of all U.S. corportation, they could just come out and say "well, we have big plans for that cash, but for competitive reasons, we can't share any of the details with the public".
|Copyright 1996-2015 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us|