rtmark
LearnBonds.com

Does Apple Inc. (AAPL) Really have a $200 Billion Cash Pile?

Apple Inc. (NASADAQ:AAPL)

Apple Inc. has confirmed the worst fears on Wall Street that the iPhone is entering the stage of product maturity in its life cycle. Demand for the iPhone is waning, the iPad is losing market share to the Surface line of tablets from Microsoft , Macbook sales are crashing, and the Apple Watch and Apple TV are yet to gain traction in the market. The firm also has a bleak outlook for the future as it provided a poor guidance. The markets responded by sending the shares of Apple down 6.55% to $93.44 on Wednesday.

Apple Inc. logo

However, some folks on Wall Street are die-hard fans of Apple and they believe that the current weakness in the stock is only momentary. Apple fans believe that the firm still has strong business fundamentals and that $200+B cash and investment holding is more than enough to tide the firm over the bad times. However, CEO Tim Cook thinks that the firm has a rough road ahead and a new report suggests that Apple doesn’t own all of that $200B cash pile.

Apple is not as rich as you think

As at the end of the December 2015 quarter, Apple reported that it had cash and cash equivalents of $215.7B. The cash pile translates to $38.90 per share for the firm’s investors. Apple’s huge cash pile is impressive because Apple has the largest pile for any non-financial firm in the S&P 500. In fact, Apple’s cash pile is more than double the cash position of Microsoft, which comes at a distant second with an $111B cash pile.

Matt Krantz of USA Today reports that Apple’s cash position is only one side of the story because ALL the money is not available to cash in. The firm has reportedly been piling up debt in the same way that it has been piling up its cash and investments. As at the end of the December quarter, the firm has $53.2B in long-term debt to mark a massive 64% increase from the year-ago quarter. In essence, Apple’s current debt position takes out about $9.60 per share out of the cash position of $38.90 per share.

Another twist to Apple’s cash position that takes the money of the reach of investors is that about 93% of that cash is held outside the U.S.  Apple has not seriously considered bringing that money back to the U.S. because the firm would be forced to pay huge taxes to Uncle Sam. The tax situation one of the reasons the firm has been funding its share buybacks with borrowed funds.

Tim Cook is worried about the future

Apple CEO, Tim Cook is worried about the future prospects of the firm as seen in the weak guidance that the firm provided going forward. In his opening remarks, he said, “We’re seeing extreme conditions unlike anything we have experienced before, just about everywhere we look. Major markets including Brazil, Russia, Japan, Canada, Southeast Asia, Australia, Turkey and the Eurozone have been impacted by slowing economic growth, falling commodity prices, and weakening currencies.”

However, Tim Cook believes that it is Apple ‘s best interest to continue to invest for the long term even though the short-term outlook is gloomy. In his words, “we’re not retrenching. That’s not—we don’t believe in that. We are fortunately…strong enough to continue investing, and we think it’s in Apple’s best long-term interest to do so.”

Trusted & Regulated Stock & CFD Brokers

What we like

  • 0% Fees on Stocks
  • 5000+ Stocks, ETFs and other Markets
  • Accepts Paypal Deposits

Min Deposit

$200

Charge per Trade

Zero Commission

Rating

64 traders signed up today

Visit Now

75% of investors lose money when trading CFDs.

Available Assets

  • Total Number of Stocks & Shares5000+
  • US Stocks
  • German Stocks
  • UK Stocks
  • European
  • ETF Stocks
  • IPO
  • Funds
  • Bonds
  • Options
  • Futures
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 Zero Commission
  • NASDAQ Zero Commission
  • DAX Zero Commission
  • Facebook Zero Commission
  • Alphabet Zero Commission
  • Tesla Zero Commission
  • Apple Zero Commission
  • Microsoft Zero Commission

Deposit Method

  • Wire Transfer
  • Credit Cards
  • Bank Account
  • Paypall
  • Skrill
  • Neteller

What we like

  • Sign up today and get $5 free
  • Fractals Available
  • Paypal Available

Min Deposit

$0

Charge per Trade

$1 to $9 PCM

Rating

Visit Now

Investing in financial markets carries risk, you have the potential to lose your total investment.

Available Assets

  • Total Number of Shares999
  • US Stocks
  • German Stocks
  • UK Stocks
  • European Stocks
  • EFTs
  • IPOs
  • Funds
  • Bonds
  • Options
  • Futures
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 $1 - $9 per month
  • NASDAQ $1 - $9 per month
  • DAX $1 - $9 per month
  • Facebook $1 - $9 per month
  • Alphabet $1 - $9 per month
  • Telsa $1 - $9 per month
  • Apple $1 - $9 per month
  • Microsoft $1 - $9 per month

Deposit Method

  • Wire Transfer
  • Credit Cards
  • Bank Account
All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
Avatar

Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.