Apple's cash stash
Why does Apple keep so much cash on hand? If someone knows, please tell me. Some speculate it is due to a “depression era mind set”. Others say for acquisitions or because much of the cash is overseas. I don’t know what the true answer is.
Apple released earnings last month. After analysts peppered Apple CEO Tim Cook with all sorts of questions, this answer in particular stood out to me.
Tim Cook - CEO: Toni, the most important thing to Apple is to make the best products in the world that enrich customers' lives. That's our high order bid. That means that we aren't interested in revenue for revenue's sake. We could put the Apple brand in a lot of things and sell a lot more stuff, but that's not what we're here for. We want to make only the best products. And so what does that mean for market share? We've been able to do that, and I think we've had a great track record here on iPod of doing different products at different price points and getting a reasonable share for doing that. And so, one doesn't – I wouldn't view these things as mutually exclusive as some might. But the high-order bid is making a great product that enriches customers' lives. And so, that's what we're focused on.
If Apple wanted to increase revenue they could. If they wanted to better utilize cash they could. Apple is NOT focused on optimizing the value of the company at this snapshot in time. They are NOT focused on optimizing the balance sheet to make the stock price go as high as possible. THAT’S OK! It’s called having a long term vision.
So why does Apple keep so much cash on hand? It is not really business PC to say but I don’t think they care. They can absolutely do things to temporarily increase value but then what? The cash pile gives them options and it is not a great priority. The priority is to be a luxury tech brand and they are doing a great job at it.
Author is long AAPL