Apple Inc. (AAPL) Must Spend Hoarded Cash To Regain Investor Love: Cramer

Apple Inc (NASDAQ:AAPL) Apps

Apple Inc. has undoubtedly lost some of the blind trust that the firm once to enjoyed, and it needs to get that back. Jim Cramer believes the huge amount of cash that it is hoarding ($231bn) should actually be put to work, and must be used to buy Sirius XM, notes a report from CNBC. The Mad Money host said, “My position has not changed: you should sit tight and own this stock, not try and trade it.”


Apple should use cash for acquisitions

Recently, Apple CEO – Tim Cook – estimated that by next year Apple’s service stream revenue could become as big as that of a Fortune 100 company. While this did not get the firm much attention, but its cash hoard did draw Cramer’s attention. There are many channels to use that money even for a $580bn firm, says CNBC.

Cramer has said several times in past few years that to reignite its growth rate, and make investors fall in love with the stock all over again, Apple should make some big acquisitions. “I’ve got a terrific new merger idea that would seriously benefit both Apple and the takeover target in question. Not that either company has to do it, but it sure would make a lot of sense,” the expert said.

Cramer said that Apple Inc. needs to merge Siri with Sirius XM – an under-appreciated firm. Acquiring it, will help both the firms a lot. The subscription satellite radio business will help boost Apple’s service revenue stream, and strengthen Apple’s presence in the automobile infotainment space – the next frontier for technology, as per Cramer.

“Anything that puts Apple on the path toward owning the automobile would really brighten the company’s long-term outlook,” Cramer said.

In the last four years, Sirius XM has seen its revenue grow by 10%. In its most recent quarter, Sirius generated revenue worth more than $1.2bn. Cramer believes that Apple could see a boost of 20% in its overall service revenue.

Has Cook failed as the CEO?

Apple’s stock hasn’t been doing very great since Cook became the boss. Filling in the space that Steve Jobs created, was not an easy task though. However, if looked closely, investors have all the reason’s to celebrate Cook’s five-year anniversary as the CEO, says MarketWatch.

Cook has been successful at guiding the ‘blue chip’ technology giant to become the most valuable US firm – in terms of market cap. Cook took the CEO role on August 24, 2011, when Apple’s market cap was just under $350bn with Exxon Mobil ahead at over $352bn. Since then, Apple Inc. has acquired the top spot every year, and currently, leads Google (at the second spot) by $40bn.

Jobs brought the firm from the 459th spot on S&P 500 company with a market cap of just under $1.7bn at the end of 1997 to the second spot with market cap increasing by more than 200 times, as per the data by S&P Dow Jones Indices.

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Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.


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