DailyTech - Analysts Predict Apple Could Be Sitting on $170 Billion in Cash This Year

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Gadgets Analysts Predict Apple Could Be Sitting on $170 Billion in Cash This Year
Shane McGlaun (Blog) - March 19, 2013 9:40 AM

31 comment(s) - last by BifurcatedBoat.. on Mar 20 at 5:30 PM

Some shareholders want cash returned as a dividend to investors

Apple continues to be incredibly successful in the technology market and one of the most valuable companies in the world. So far this year Apple is sitting on a cash stockpile that amounts to $137 billion. Some Apple shareholders are upset that the company is sitting on that much cash and isn't paying out dividends to shareholders.

Moody's Investors Services issued a report this week predicting that Apple’s cash stockpile could grow to as large as $170 billion by the end of 2013. That assumes that Apple doesn't change its philosophy towards dividends and stock buybacks. Apple has been under pressure from a hedge fund manager named David Einhorn and other major investors to return some of that cash to shareholders.

Apple has noted that it is in "active discussions" on returning some of that money to investors but no details were offered. Einhorn is currently involved in the suit against Apple that CEO Tim Cook has dubbed "a sideshow."

Moody's wrote, "Unless Apple changes its philosophy towards liquidity/shareholder returns by increasing its $10 billion annual common dividend, or if Apple increases it stock buyback program, we estimate Apple’s cash balances could increase by another $35 billion in 2013 and exceed $170 billion."

When it comes to cash reserves, Apple has roughly twice as much as its closest competitor. Microsoft was sitting on total cash reserves of $68.3 billion as of December 31, 2012. Google is slightly behind with $48.1 billion.

The only non-technology company in the top five biggest cash-rich companies in the United States was pharmaceutical giant Pfizer with $46.9 billion in cash taking the number four spot. Rounding out the top five is Cisco Systems with $46.4 billion in cash.

Source: Market Watch

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RE: The investors are looking for short term gains

By Asetha on 3/19/2013 3:26:55 PM , Rating: 2

People buy shares in tech because it's a capital growth industry. The idea is over time new products come out and generate share growth.

Coca-cola, power generation, these are mature and people buy their shares for stable income.

The reason Apple is paying dividends is because they don't know what to spend the money on.

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RE: The investors are looking for short term gains

By aliasfox on 3/19/2013 3:44:22 PM , Rating: 2

Exactly. What scares me isn't that Apple doesn't have something new right now. After all, it was three years between the first iMac and the iPod, over five years between the iPod and the iPhone, and over two years between iPhone and iPad.

What scares me is that by entertaining all of these thoughts on dividends and share buy back, Apple has tacitly admitted that the well has run dry.

Making money the Willy Wonka way is a heckuva lot more interesting for the public (and pundits) than the Wall Street way.

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RE: The investors are looking for short term gains

By Asetha on 3/19/2013 4:29:06 PM , Rating: 2

Right. I know there's a lot of money to be made trading options, however I don't engage in it because it adds no value to the economy.

And the dividend is precisely that - Apple has more money than innovation, which is a problem I'm sure many companies would love to have.

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