Has Apple Inc. (Nasdaq: AAPL) finally reached a decision about what it should do with the enormous cash the company has built up over the last five years? CEO Tim Cook has scheduled a conference call for Monday morning during which he will announce the "outcome of the Company's discussions concerning its cash balance," according to a media alert issued on Sunday night.
Apple's board of directors had been holding discussions for some time on how the company should dispose of its $97.6 billion in cash, short-term, and long-term investments. During its last conference call with analysts, the company said it expects to announce a decision soon.
The company's cash hoard has grown strongly over the last five years, jumping from $24.5 billion in the fiscal year ended September 27, 2008 to $34 billion in fiscal 2009 to $51 billion in fiscal 2010 and $81.6 billion by the end of the last fiscal year. The increase has come on surging demand for Apple products, first with the iPod digital music player and exploding once the company entered the wireless handset market with the iPhone.
The cash has become a problem for Apple, however, with more than two-thirds of the funds now packed in investments outside the United States as the company -- like many other cash-rich technology companies -- tried to avoid a huge tax payment on its overseas profits. As long as the funds stayed outside the United States, Apple could indefinitely defer tax payments.
Some industry observers have speculated Apple could issue a special dividends payment to shareholders. Others have criticized the company for taking so long to take a decision. Today's conference call should end the controversy.
"Definitely, i think in just 1-2 years competitors will catch up very fast"
I think that Apple still has a good leap ahead its competitors and it might take more than 2 years for them to catch up. But you are right Apple should continue to innovate in order to keep that lead.
@Eldredge: I agree with you. It seems to be the more socially responsible approach. In times like these where the industry is already suffering I think companies like Apple can create new jobs for a lot of people. Not only will it create jobs but will eventually increase production which in some areas is necessary to meet demands.
@Himanshugupta - I agree, with the amount of cash they have on hand, it seems like they should be investing in business interest somewhere. Issuing dividends and stock buybacks is fine for some of the funds, but doesn't do anything to grow the business or find future products/services.
@Jacob, Apple executives are not even giving hint that they are planning to expand. There have been rumors about Apple TV but this is not a sure shot thing. I think that Apple is keeping its former customer strategy of wait, watch and get drench in entertainment. I do not think that Apple will expand in any other market than the consumer products
@Jacob, Apple executives are not even giving hint that they are planning to expand. There have been rumors about Apple TV but this is not a sure shot thing. I think that Apple is keeping its former customer strategy of wait, watch and get drench in entertainment. I do not think that Apple will expand in any other market than the consumer products
Himanshu, I think they have to diversify their business to allied sectors too. As of now they have only a few products like IPad, IPod and Laptops and they can look in to other IT related products or services. I strongly feel that instead of distributing the surplus cash, they have to invest for new ventures or R&D.
Bolaji, that is only about 10% of the money. In last 5 yrs the cash reserve has increased more than 3 folds. Why does not Apple expand into other businesses as other companies do when they have so much cash? Did executives discussed about it.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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