What should Apple do with its cash?

February 28, 2012

Apple’s soaring with the market Tuesday, topping $530 per share. The tech firm first broke the $500 mark earlier this month, on Feb. 13.

Not only is Apple soaring in the stock market, the company is also sitting on $98 billion in cash — a sum that even chief executive Tim Cook said was “more than we need to run the company” — and has faced several calls to issue a dividend to its shareholders.

But that’s boring. So we asked some analysts what, aside from a dividend, would be the most interesting use of Apple’s cash, and we got some great answers, ranging from the practical to the delightfully silly.

Before noting, sensibly, that a dividend would be a good idea, Sterne Agee analyst Shaw Wu suggested that Apple might want to make its products a little more accessible to the general public. It's no secret that Apple products aren't exactly the cheapest out there, Wu said, so maybe Apple could use that cushion of cash to price their products a little lower.

“It'd be great for customers; it'd also kill their competitors," said Wu. “I'm not sure it makes sense to drop their price — one of those things with pricing is that it sends a message — but I'm not saying they should forget about the premium effect. This would just make their products more affordable for more people.”

Pitching the question to the folks at The Motley Fool got us a whole host of interesting ideas.

Advisor Jeff Fischer seemed to be thinking like Wu: he said Apple should subsidize the cost of technology to schools in poorer areas of the country or the world, and set up a grant program for future tech geniuses.

Adviser Tom Jacobs got a serious suggestion in, saying Apple should “use the cash pile to decrease the sharecount, net of options dilution, 5% a year.” He added, “This is why I am not funny.”

Analyst Jim Gillies, put forward the playful suggestion that Apple buy Disney — because it certainly has enough money. Disney’s market cap, as of Tuesday at 11:30 a.m., was only $76.72 billion, leaving Apple with some cash to spare.

“Leave the company largely to run on its own, but it gives Apple a plethora of valuable content (Disney proper, Pixar, Muppets, Marvel, Club Penguin, et cetera, ad nauseam) to push to its devices and the much-rumored AppleTV offering,” Gillies said. “Of course,” he noted, “this would be crazy.”

Crazier still, analyst Tim Beyers suggested that Apple attach rockets to the spaceship-like headquarters it has planned, while advisor James Early suggested buying a space station like Darth Vader’s Death Star, but shaped like the Apple logo.

Stepping back from the edge, analyst Charly Travers suggested that Apple seed a venture capital business with a “couple billion dollars.” The firm, Travers said, should operate freely and invest in companies independently of Apple. “The tech world evolves fast and it's hard to see what the next big ideas will be. By making a lot of small investments across a large number of tech startups, Apple will ensure that it is participating in whatever the future brings,” he said.

Finally, tech analyst Rob Enderle of the Enderle Group had his own remarkable idea for Apple’s cash hoard, mixing serious analysis with a generous dollop of whimsy.

“Apple’s post-Steve Jobs weaknesses fall in two areas,” he wrote. “The ability to husband a product through while maintaining a focus on what can be sold and the ability to pitch products in a compelling way.   They have shown they can run the company but without these two key aspects of Jobs’ unique skill set they likely won’t be able to stay on top or stay focused.”

So what would he do to address those criticisms? “I’d spend the money on an attempt to instrument Steve Jobs, build his personality into the virtual fabric of the company as an ever living entity,” Enderle quipped in an e-mail. “Think of Siri on massive steroids or the Steve Jobs expert system.  There has been a lot of collective work done in this area .  And, going forward they could do the same by immortalizing every key executive that turned Apple from failure to the most successful company in the world.”

What would you do if you were Apple? Let us know your ideas — serious or funny — in the comments.

Related stories:

Apple worth more than Google, Microsoft combined

Apple shares hit $500 for the first time

Apple’s big chance to ‘act different’ on labor

Hayley Tsukayama covers consumer technology for The Washington Post.
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February 28, 2012

Apple’s soaring with the market Tuesday, topping $530 per share. The tech firm first broke the $500 mark earlier this month, on Feb. 13.

Not only is Apple soaring in the stock market, the company is also sitting on $98 billion in cash — a sum that even chief executive Tim Cook said was “more than we need to run the company” — and has faced several calls to issue a dividend to its shareholders.

But that’s boring. So we asked some analysts what, aside from a dividend, would be the most interesting use of Apple’s cash, and we got some great answers, ranging from the practical to the delightfully silly.

Before noting, sensibly, that a dividend would be a good idea, Sterne Agee analyst Shaw Wu suggested that Apple might want to make its products a little more accessible to the general public. It's no secret that Apple products aren't exactly the cheapest out there, Wu said, so maybe Apple could use that cushion of cash to price their products a little lower.

“It'd be great for customers; it'd also kill their competitors," said Wu. “I'm not sure it makes sense to drop their price — one of those things with pricing is that it sends a message — but I'm not saying they should forget about the premium effect. This would just make their products more affordable for more people.”

Pitching the question to the folks at The Motley Fool got us a whole host of interesting ideas.

Advisor Jeff Fischer seemed to be thinking like Wu: he said Apple should subsidize the cost of technology to schools in poorer areas of the country or the world, and set up a grant program for future tech geniuses.

Adviser Tom Jacobs got a serious suggestion in, saying Apple should “use the cash pile to decrease the sharecount, net of options dilution, 5% a year.” He added, “This is why I am not funny.”

Analyst Jim Gillies, put forward the playful suggestion that Apple buy Disney — because it certainly has enough money. Disney’s market cap, as of Tuesday at 11:30 a.m., was only $76.72 billion, leaving Apple with some cash to spare.

“Leave the company largely to run on its own, but it gives Apple a plethora of valuable content (Disney proper, Pixar, Muppets, Marvel, Club Penguin, et cetera, ad nauseam) to push to its devices and the much-rumored AppleTV offering,” Gillies said. “Of course,” he noted, “this would be crazy.”

Crazier still, analyst Tim Beyers suggested that Apple attach rockets to the spaceship-like headquarters it has planned, while advisor James Early suggested buying a space station like Darth Vader’s Death Star, but shaped like the Apple logo.

Stepping back from the edge, analyst Charly Travers suggested that Apple seed a venture capital business with a “couple billion dollars.” The firm, Travers said, should operate freely and invest in companies independently of Apple. “The tech world evolves fast and it's hard to see what the next big ideas will be. By making a lot of small investments across a large number of tech startups, Apple will ensure that it is participating in whatever the future brings,” he said.

Finally, tech analyst Rob Enderle of the Enderle Group had his own remarkable idea for Apple’s cash hoard, mixing serious analysis with a generous dollop of whimsy.

“Apple’s post-Steve Jobs weaknesses fall in two areas,” he wrote. “The ability to husband a product through while maintaining a focus on what can be sold and the ability to pitch products in a compelling way.   They have shown they can run the company but without these two key aspects of Jobs’ unique skill set they likely won’t be able to stay on top or stay focused.”

So what would he do to address those criticisms? “I’d spend the money on an attempt to instrument Steve Jobs, build his personality into the virtual fabric of the company as an ever living entity,” Enderle quipped in an e-mail. “Think of Siri on massive steroids or the Steve Jobs expert system.  There has been a lot of collective work done in this area .  And, going forward they could do the same by immortalizing every key executive that turned Apple from failure to the most successful company in the world.”

What would you do if you were Apple? Let us know your ideas — serious or funny — in the comments.

Related stories:

Apple worth more than Google, Microsoft combined

Apple shares hit $500 for the first time

Apple’s big chance to ‘act different’ on labor

Hayley Tsukayama covers consumer technology for The Washington Post.
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