I recently came across these articles which made me mad.At the sametime,the IRS is going after every small Business and citizen to ensure they pay their "fair share of Tax". The Big boys of the tech world like Google are payingonly 2.4% in Taxes !!!
How about making pay their fair share of taxes first,then raise taxes on the middle-classs by repealing Bush tax cuts???
I think its more than ironic that these companies exist (like in Google's case) because of taxpayer money(which started the whole thing at Stanford) and now they refuse to pay their fair-share of Taxes.
Its time the US Govt played Hard-ball with them and forced them to cough up more cash if they want to do business in America.
Answering your question of what Companies should do with their huge cash hoards,my question in the case of Apple and Google is this-
"Do your or my opinions matter to the people running these companies?"
If they did I would have said use the Cash to pay-out one-time Special Dividends to loyal shareholders.At a time,when most Americans are suffering financially and are forced to cut spending because they are either uncertain in their jobs or have seen their salaries cut sharply;any small investor holding stock in either of these companies would see a welcome boost in their annual income.Who knows,it might even end up boosting these companies as those people turn around and buy Android enabled phones or Iphones!!!
This is by the way the No.1 Reason why I don't own either of these two companies-I prefer IBM for their much steadier and reliable Dividends.
In the case of Apple,the net effect of all that cash on the balance sheet has been to enrich Steve Jobs a hundred times over again and again.Through the granting of Stock options which he excercises and dumps hundreds/thousands of shares on the market at a go,making Millions and cumulatively making retail investors poorer in the process.
But coming back to my initial question.Our opinion means nothing to these guys.They will do as they please and so should we.
Anything is possible with the right focus. I was reading this article by departing exec Ray Ozzie (I can't for the life of me find it now to link to) where he pointed out that Microsoft's focus is on too many things. He said if they buckle down and pinpoint the few areas that they want to dominate, they will be a force to be reckoned with. I'd be willing to bet in this case they'd have no problems handling the loads of cash that would be coming their way.
It comes down to perception and right now Microsoft is not looking peachy. The company will certainly need to be successful in areas considered high-growth before the market will boost its valuation again. This is not impossible, though. Apple is smelling real sweet right now but only 10 years ago the company was looking like road kill. It was losing market share in the computer market and its operating system had barely 5 percent representation in the sector. It's taken years to turn Apple around and now its near-death experience has been forgotten. Microsoft can turn itself around. That's a possibility but the company will have to do more than tweak some other company's idea to change its fortune.
Although the Windows 7 numbers impress, I think most consumers and/or investors are waiting to see Microsoft excel in some other space before buying into the hype. If they can succeed at, say, Windows Phone 7, then I think it will be a more viable stock buy.
"what to do with a truckload of liquid assets at a time interest rates worldwide are at their lowest levels in years." That is an excellent question, for individual investors as well as companies. Given the state of the economy, the desire to shy away from higher risk investments is understandable. However, the rewards of safe investments are very low indeed, with interest rates hovering around 1 to 2% -- lower than the standard rate of inflation, which means that your money is actually losing value with such a low return.
Exactly Bolaji! Although it is not a bad thing to end up like Microsoft. What I can't understand is how the market is not that impressed anymore with a company like Microsoft. Just look at the news this week on the Windows 7 OS, in which Microsoft sold 240 Million copies in the first year. And yet, the company’s stock continues to trade in the same range. Those are enviable numbers for any company.
Dave, It's fascinating how sometimes history repeats itself again and again. The issue of Microsoft that you brought up is a good example. The company still controls a huge portion of its market and is trying hard to expand into other sectors but it's stock price no longer reflects this. In many investors' mind, Microsoft is a matured company despite the billions in cash it still spins off each year. Investors are right, though. Apple's revenue, on a fiscal basis, ($65 billion for the year ended Sept. 30) has now exceeded Microsoft's fiscal sales ($63 billion for the year ended June 30.) It's not Apple to Apple comparisons but the picture is quite clear: Apple is growing faster than Microsoft.
What you pointed out remains valid, however. Apple and Google may be on a roll now but they could as easily look in a few years like Microsoft if they do not effectively deploy the cash they are generating today.
On a personal level and as an investor in technology companies, I would like to see some bigger returns in the form of increased dividends. As an entrepreneur, I would like to see these companies invest more in start-ups, as these innovative start-ups is where most likely the next big thing will incubate from. Apple and Google at the moment still have significant momentum, but after a while they will become predictable solid and stable companies, much like Microsoft is today. Microsoft continues to beat analyst estimates quarter after quarter, year after year, but the stock has stayed in the same trading range for years. All of these cash rich companies will have to spend some of their billions to continue to innovate and continue to produce the WOW factor in order to keep moving the dial on their stocks.
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.
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.
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.