Analysts Predict Apple Could Be Sitting on $170 Billion in Cash This Year
March 19, 2013 9:40 AM
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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.
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How much does it really matter if they do or they don't?
3/20/2013 5:30:48 PM
If they were to pay a big dividend, and no longer have such a large pile of cash, the stock price would go down accordingly.
If they were to buy back stock from the investors, the price of the remaining shares would go up accordingly.
If they do nothing and continue to accumulate cash, the stock price will go up based on those cash reserves. Anyone who wants cash can simply sell some stock.
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