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Moody’s: Apple holds 10 percent of all US non-bank cash reserves

updated 09:00 pm EDT, Wed October 2, 2013

Despite generous shareholder dispersals, company still mega-profitable

Such is the level of Apple's success in making its mobile device, Mac and even its "hobbies" profitable that despite a $60 billion stock buyback program and additional billions given out in dividends, the company continues to make bank faster than it can disperse its capital. According to a new report from Moody's, Apple has at least $147 billion in reserves unencumbered by debt, accounting for about 10 percent of all the cash held by non-financial US companies.

The analysis, reported by the Wall Street Journal, also notes that America's top 50 companies hold about 62 percent of US corporate cash reserves. Apple's stash is rivalled only by the combined holdings of Cisco, Google, Microsoft and Pfizer, which together account for a further 15 percent. Apple plans to disperse a total of $100 billion of that money by 2015, but investors think it will have earned all of that and more in additional sales by then.

For years, investors have grumbled that Apple hasn't done enough with its largely debt-free cash. When Apple first began to accumulate a really sizeable cash hoard under former CEO Steve Jobs, many presumed that it was insurance to make the company defensible against possible buyout or takeover attempts. As Apple entered the mainstream of consumer electronics and became the most popular individual brand name and most profitable company for music players, all-in-one computers, notebooks, streaming set-top box devices and finally smartphones and tablets -- even though it is only rarely also the marketshare leader -- stockholders began to feel shortchanged by the company's lack of dividends.

Under CEO Tim Cook, Apple restored quarterly dividends, mostly fended off Wall Street raids on its treasury and announced some precedent-setting borrowing in order to engage in an aggressive stock-buyback program, but apparently the company's efforts thus far are not enough. One investment house sued Apple to attempt to force it to return more money to shareholders, and investor Carl Icahn met with CEO Tim Cook and CFO Peter Oppenheimer to try and pressure them into doubling the size of the buyback program.

Apple's success in terms of profitability is actually difficult to fully comprehend, with the company recently knocking American perennial Coca-Cola out of the "most valuable brand" award. If Apple's iPhone business were its own company, it would earn three times in revenue what McDonald's or Nike does, twice what Goldman Sachs or Disney makes, and nearly nine times what Visa takes in annually.

A theoretical iPhone standalone business would be the ninth-largest stock on the Dow, and have larger revenues than all but the top 25 of the Fortune 500. The iPhone makes more in revenue than all of Proctor & Gamble, Boeing, Home Depot or Microsoft, and more than MS, Google and IBM put together.

By Electronista Staff
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  1. iphonerulez

    Dedicated MacNNer

    Joined: 11-28-08

    Yet all of Apple combined yielded some of the worst performance of any profitable tech stock in 2013. They can sing praises of Apple all they want but as an investment the stock totally sucks. Apple has nearly twice as much cash as Microsoft and yet Apple's dividend certainly isn't twice as much as Microsoft's dividends. Apple is really one tightfisted company.

  1. Charles Martin

    MacNN Editor

    Joined: 08-04-01

    The stock is, in fact, up 30 percent from two years ago, and up 404 percent from five years ago. For day traders, AAPL sucks (the stock is down 25 percent over the last year). For longer-term investors, however, it remains probably the best-performing stock in their portfolio (particularly compared to MSFT).

  1. climacs

    Mac Enthusiast

    Joined: 09-06-01

    I'm with chas_m. Focusing on short-term results is a tad silly unless you're a day trader and then you are chasing whatever the hot stocks are. Good luck with that.

  1. Inkling

    Mac Enthusiast

    Joined: 07-25-06

    When I earn a few dollars from the sale of one of my books, Tolkien Warriors, in the UK, that money comes into this country, pays taxes here, and gets spent here. That income gets spread around and does some good.

    But when Apple earns tens of billions in the UK and elsewhere, that money sits in off-shore bank accounts not creating jobs, not paying taxes, and not doing any good.

    Yes, I know Apple's executives whine that if they bring that money into this country, they will have to pay taxes on it. Well if I can manage the taxes, then I suspect so can they.

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