Monday, May 5, 2008

Apple's Big, Big, Piggy Bank!

Wow, like I knew that Apple was already doing great these days, but not until I read a story in SeattlePi  did I  have any idea of just how great they were doing.

There are many ways, of course, to determine just how well a company is performing and two of those ways is to look at both how much a company owes and how much cash a company has on it's balance sheet. In Apple's case it is nothing and a lot - a very  lot indeed! Presently, Apple's balance sheet is showing virtually no debt, but a lot of cash! Wow, if only more companies and individuals, myself included, could say the same thing. 

Not only does Apple have no debt, which certainly is a big plus for any individual or business, small or great, but incredibly, its in the 'cash-in-the-bank' category, that Apple really, really shines - it now has the second highest cash reserves of any big American corporation - and to think that Apple was on it's way to oblivion a measly short ten years ago! Had Microsoft succeeded in purchasing Yahoo, then it would be Apple, not Microsoft, that would be the king of cash reserves!

Microsoft, of course, is still the king of cash, as it has a huge cash pile of some $26.3 billion dollars, as compared to Apple's $19.4 billion. However, what is interesting is the trend of these two mammoth corporations. Microsoft's cash pile, as mind blowing as it is, is only a fraction of it's former glory. Previously, the Redmond giant had the incredible sum of $64 billion in cash just sitting in the bank, give or take a nickel or two! Wow, I can't even begin to imagine such a huge number. 

Apple, on the other hand, had only a little over $2.5 billion in the bank just before Steve Jobs returned, so with a salary of just one measely dollar per year, I think that it's safe to say that Steve's been a good investment for the company.

After Microsoft and Apple, the top five corporate piggy banks belong to (in billions):

Google - $12.1

IBM - $12

Intel -$10.9

Oracle - $10.5

HP - $10 and

Dell - $8

These are incredible piggy banks, are they not, especially when compared to mine, which, if I'm lucky, might total something like 23 cents or there about? Seriously, kidding aside, the trend, as I have already pointed out, is very interesting, because at the present rate, Apple may just surpass good old Microsoft in the very near future? This would be a psychological blow to Microsoft and a psychological boost for Apple. Just today Apple's stock was upgraded and hit the $184.58 per share level,  and gives it a market cap of over $162.5 billion, which, by the way,  is interestingly over four  times the market cap of DELL - who's founder, Michael Dell, once said concerning Apple, “What would I do? I’d shut it down and give the money back to the shareholders." Michael is a great guy and businessman, but I'm sure, in retrospect, he now regrets making that statement.

So, what does having such a huge piggy bank mean for Apple? Well, for one thing, it means that Apple is not only well positioned to ride out any economic down turn, but it also means that Apple can position itself better to take advantage of any opportunities that may arrive, or as Peter Oppenheimer, Apple's CFO, recently stated, that it helps them to, "maintain a strong balance sheet in order to preserve our flexibility to make strategic investments and/or acquisitions," such as Apple's recent purchase of PA Semi.

In conclusion, Apple's mammoth and drool worthy cash reserves will help Apple to continue to do, in the future, what it has already done so well in the past -  innovate! Yes, it is Apple's amazing innovation that has made it the great company that it is, but it is all that cash that helped fund and make it all possible, and, I'm convinced, will continue to do so long in the future.

And that's my 2 cents 4 this Monday, May 5, 2008.

Graph: Seattlepi

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1 comment:

jfmarcelo said...

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