Apple’s Cash Cache Could Hit $170 Billion This Year
At $137 billion, Apple’s cash stockpile is the biggest around — a little more than double Microsoft’s, which ranks second-largest. A grotesquely large cash cache — one that will be obscenely large by year’s end if Apple doesn’t do something with it.
Moody’s Investors Service figures Apple’s cash could balloon beyond $170 billion by year’s end if the company doesn’t start returning some cash to shareholders, whether it be through buyback, increased dividend or even distributing those perpetual preferred iPref shares that Greenlight Capital founder David Einhorn proposed.
“I believe $170 billion in cash by year end 2013 is conservative,” Moody’s Senior Vice President Richard Lane told AllThingsD, “unless Apple decides to do something materially different with respect to capital allocation.”
Lane says Apple generates about 20 percent of its cash flow domestically. If it retains its current dividend and share-buyback program, he figures it would end the year with $40 billion or even $45 billion worth of domestic cash.
As I noted here yesterday, today is the first anniversary of the announcement of Apple’s quarterly dividend, and some expect the company to celebrate by boosting it. That would go a long way toward addressing criticism that Apple’s cash accumulation has become excessive and the company like a Depression-era grandmother in its hoarding of it.
But will Apple do it? Lane’s not certain, though he knows the company is obviously entirely capable of it. “I do not know what Apple may decide,” he said. “But clearly the company has financial capacity to increase returns to shareholders without jeopardizing its financial flexibility to aggressively invest to defend its competitive position.”