Whether or not you like Apple, you have to admit that they’re doing well. So well, in fact, they are expected to announce that their cash reserves exceed $250 billion. Yes, that’s billion with a “b”. Which, for many of you, including myself, is an incomprehensible number. But maybe it’s not for Apple. After all, as of December they hit the $246 billion mark. Which shows some incredible growth in the first quarter. An article in the Wall Street Journal indicated that the growth rate was approximately $3.6 million per hour. Per hour! That’s incredible. The first big question I have to ask, is what is causing it? And the second big question is what are they going to do with it?
As far as what is causing it, my guess is something that I’ve mentioned in other posts. The ability to develop a product that people want to buy into. I’ve suggested that it might be more of a lifestyle than just buying products. And honestly, is there anything you couldn’t want or need? Meaning Apple has so many products, there are very few things you would need outside of what they offer. But that’s not really the focus of the WSJ article. In fact, they are looking at it from the perspective of how it will be spent. And can you blame them? With that kind of money just laying around, of course there is pressure to spend.
I myself tend to be more of a shopper than a saver, so this resonates with me. Although, I do not have that kind of cash lying around, so I can only imagine what they can do with it. Some have suggested purchasing Netflix or even Tesla. Both would be a good move for Apple, but with their segue into original programming, is it the right time? Or maybe that’s what makes it the right time. Having a small TV presence now could lead them to purchase something with an extremely large one.
Tesla also makes sense for Apple, in my opinion. Giving Apple the ability to be part of the future in terms of technology, in a different way. I worry though, what an Apple car would look like. Tesla’s tend to be sleek looking, and I feel like this would look like an old iMac. You know the one’s I’m talking about. The super colourful ones that were popular in the late 90s. Maybe I’m being too hard on Apple from this perspective. Perhaps it would just be an acquisition and nothing further. I worry though, that either of these acquisitions will lead to a change in the products. There is always room for improvement, in my opinion, so maybe I’m putting the cart before the horse in this regard.
Regardless of what Apple does with this kind of cash, it is an incredible amount of money. Hands down. In fact, the number is so large that it surpasses what Walmart has on hand combined with Proctor and Gamble. Two extremely large American companies. What is interesting to me is that it’s like Apple has all this money, but nothing to do with it. It makes me wonder at what point you are just making money for the sake of making money? We all want to have more money than we currently do, but at what point do you “stop”? In the sense that you’ve made what you needed to/wanted to and have enough to live comfortably? That is likely an interesting number, as I think greed tends to drive us.
So is Apple at a point where it can perform comfortably, or does it need to keep growing from a financial perspective? There is also an underlying idea that maybe Apple isn’t contributing to the U.S. economy as it’s keeping a lot of it’s cash outside of the United States. Trump has promised to lower tax rates on this kind of cash. My assumption is in order to bring it back to the United States. But will a lower tax rate suffice when the numbers are this high? And will that directly improve the U.S. economy, and subsequently the American people? It’s hard to say as the promise from Trump might not materialize.