This post is by Jason Lemkin from SaaStr
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It’s confusing. Realistically, Apple, or almost any successful tech co., can only do 3 things with their huge piles of cash:
- Buy other companies; and/or
- Repurchase their own shares; and/or
- Declare or increase dividends.
then, acquiring another company for cash is almost, sort of, free. It doesn’t come out of your earnings for now, or ever if the deal is a good one. Also, repurchasing shares also does not hurt earnings. In fact, it does the opposite. It reduces the share count. And that actually increases earnings — per share! It’s sort of like magic. That adds no value to the company, and shrinks its bank account. But again, doesn’t make a hit to earnings. Dividends also are a sign of a mature company, but increasing them nominally increases shareholder value. Once again, not a hit to profits. So a ton of cash actually becomes a bit of a trap. You can’t really spend a lot of it without depressing earnings. And if you aren’t super acquisitive (which Apple isn’t), there doesn’t end up being too much to do with it except buy your own stock (often when it is very expensive) or distributing it out. Apple’s $400 Billion Buyback Program View original question on quora The post Apple now has $210 billion in cash on hand. What should the company do with this money? appeared first on SaaStr.