NEWS ANALYSIS: Apple is closing in on $100 billion of cash on hand. It’s about time the company starts using some of it.
the fourth quarter with more than $97 billion in cash on hand. If all goes
well, the company could end this quarter with well over $100 billion, making it
the richest company in the world. Over the last few months, Apple's cash has
been a source of much debate between those who believe the iPhone maker should
hoard it and those who think it should start spending it.
For his part,
Apple CEO Tim Cook said at an investor conference on Feb. 14 that he plans to
be cautious with his company's cash and won't rush into any decisions. However,
Cook did seem to indicate that he's thinking of ways to use some of its cash
within the next several quarters.
As one might expect given Apple's history
Cook wouldn't say what he might do with his company's cash. But that doesn't
mean we shouldn't ask questions about it. In fact, we might as well give Apple
some tips on what it should do with all the cash that's piling up in its bank
accounts across the world. Here are a few suggestions and observations.
1. Research and development
If there is
anything Apple should spend some money on this year, it's research and
development. With that much cash on hand
Apple could push markets forward by leaps and bounds. Reports claim it's trying
to do that with HDTVs, but in what other spaces can Apple push forward with all
of its cash?
2. Dividends, please
strong financial performance over the last several years, the company hasn't
offered any dividends to shareholders. It's an odd move that many financial
analysts would like to see change. For its part, Apple hasn't said if it will
offer dividends or not, but as the chorus of complaints grows louder, it might
only be a matter of time before it offers them.
3. Strategic acquisitions
$100 billion in cash, Apple can afford just about any company it wants to buy.
So, why not set off an acquisition spree designed to buy up firms that could significantly
improve its standing in the mobile space? Apple recently bought Israel-based
Anobit to reduce its component costs. Making similar acquisitions in the coming
months might be a good idea.
4. Acquire more patents
In the mobile
space right now, having more patents is a good thing. So, perhaps Apple should
start acquiring patents from other companies, like Kodak and IBM. Last year,
Apple, along with several industry partners, invested in Nortel patents. It was
a good first step, but acquiring more patents now would be an even smarter idea
as it continues to field lawsuits from competitors.