Apple's $100 Billion War Chest: 10 Ways It Can Spend It

 
 
By Don Reisinger  |  Posted 2012-02-15
 
 
 

Apple's $100 Billion War Chest: 10 Ways It Can Spend It


Apple ended 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

Despite Apple's 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

With nearly $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.

Apple Should Know Cash Means Freedom in Tech Markets


 

5. Deliver new products

You know all that talk about an HDTV Apple might launch this year? Apple should make it all come true. The company might also consider launching products in other markets simply because it has the cash to make a difference in those spaces. Cash is freedom in the technology market, and Apple has an abundance of both. Why not take advantage?

6. Invest in the supply chain

Apple's supply chain is the best in the business. But as with any company's channel, it can be improved. That's why Apple should take some of the billions of dollars it has and invest in its supply chain. That could mean buying up some production facilities or simply streamlining the channel. Either way, improving its supply chain, which ultimately increases profits, would be a good idea.

7. Make a goodwill investment in factory workers

Apple has come under fire from critics who say it is not doing enough to protect workers in Foxconn plants around the world. A number of Foxconn workers have committed suicide over the last couple years, and employees are complaining of poor working conditions. Although Apple doesn't own those companies, it recently enlisted the help of the Fair Labor Association to audit them and ensure working conditions are up to par. Maybe with all its cash, Apple should invest in those workers to make even more progress on its goal of improving their lives.

8. Help store employees, too

Too often, Apple Store employees are ignored when it comes to Apple discussions. The people who work at Apple stores around the world are the unsung heroes that make the company so successful. In fact, it's believed Apple makes more than $400,000 per employee each quarter. That should be enough for the company to realize it should give them a little bonus this year as thanks.

9. Charitable investments would be nice

When Steve Jobs was running Apple, the company was not engaging in as much charitable investment as some critics would have liked. Now that it has nearly $100 billion in cash on hand, it might be a good idea for the company to up its charitable giving and establish itself as a standout in the philanthropic community.

10. Keep attracting top-tier executive talent

The nice thing about having so much money is that investing in top-tier executive talent isn't all that difficult. Whether it's Google, Microsoft or any other company out there, Apple should try to find the very best executive talent€”and pay them whatever they require€”to help Tim Cook become even more successful in his position.

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