The Core of Apple is Cash
You know - so far the posters hear are ignoring the fact that such a large cash hoard is actually a drain on earnings. What rate of return is the company getting on its cash?
I don't believe the regulars on this board are ignoring the large cash hoard and its 'drain' on earnings. I think there is much more to this topic than the typical analyst is addressing in the latest press release.
Apple management has done a spectacular job in executing - virtually no one argues this point - and it seems to have managed internal resources very well - including liquid reserves. Shareholders really can't complain about the gains the stock has made. They can't really complain about the book value of the company which has risen steadily. The only thing in these dividend conversations that is addressed is, "WOW! That's a lot of money." There are good reasons why Apple may feel they need to keep the cash in the bank.
Apple is very constrained and fragmented with its work-space for employees. That's about to change and initial estimates are projecting $15-$18 billion dollars for a new campus. Hopefully, Apple won't go down the road of building a monument to their success, but constructing a facility that will foster efficiency and creativity.
The cash also permits Apple to dictate terms to their suppliers which has a cascading effect on its competitors. Not only can apple get the best prices and lock up supply, but they can cut the legs out from the competition when parts (or transportation) are scarce. $7-$8 billion seems to be tied up in this direction on an annual basis (ballpark figure).
Of course, Apple doesn't make big acquisitions. They make strategic small and mid-size purchases that help with overall value and innovation within the company. None of the last few purchases have put a dent in the bank account but that doesn't necessarily mean it will hold in the future.
Innovation isn't solely based on how much money you throw at it. Though I doubt that many people would argue that it isn't expensive to go through multiple iterations of products - many that will not see the light of day - over multiple year time spans.
Finally, you have to wonder the effect of the so called 'cash hoard' is on competitors such as HTC, Google, HP, Dell, Microsoft as well as component suppliers such as Samsung, Intel, LG, Sharp, FoxConn.... what leverage do they have when considering litigation against Apple? Does Michael Dell clap his hands in glee when Apples cash balance continues to climb off the charts,"Oh wow, look at the drag on their earnings! Yea!" Does Intel ever wonder if they don't give Apple prompt access to new chips that Apple might buy a competitor and cut them out? How about Samsung? What are these intangibles worth? What kind of return do shareholders and analysts NOT SEE that this 'pile of money' is returning?