Top 10 ways Apple could spend cash pile
Apple is still doing the old Steve Jobs trick of surprising people with "one more thing. " When Jobs gave a public presentation, people...
Seattle Times staff columnist
Whopping holiday seasonApple sales grew 73 percent over the holiday season. From Oct. 1 to Dec. 31, the world spent $504 million a day on Apple products, including:
Apple is still doing the old Steve Jobs trick of surprising people with "one more thing."
When Jobs gave a public presentation, people always held their breath until the end, waiting for that other shoe to drop in a grand finale.
Apple's awesome earnings report last week didn't need any tricks to leave the business world slack-jawed, shaking its head and wiping tears of amazement and envy.
Sales grew 73 percent over the holiday season. From Oct. 1 to Dec. 31, the world spent $504 million a day on Apple products, including 37 million iPhones, 15.4 million iPads and 15.4 million iPods.
But that's not all. It turns out there is one more thing coming, and it's going to be huge.
At the end of the earnings call, Apple revealed that it's finally going to open the spigot and start spending its ridiculously huge cash pile.
Apple is "actively discussing" how to use the $97 billion hoard, Chief Financial Officer Peter Oppenheimer teased.
That's the "one more thing" that investors and competitors have been waiting for since Apple's latest tear began in 2007, with the iPhone's debut. Back then it had only $15 billion on hand.
Now that we know something will happen with all the money we've spent on iStuff, the suspense is excruciating.
Will Apple wow the world with a giant investment in another company, build a semiconductor factory, reward investors with a cash payout or use the cash for composting in its cafeteria's organic garden?
The possibilities are tantalizing. Just imagine what you could do with $97 billion and the world's love in your jeans pocket.
Since it's always fun to guess what Apple's doing next, here's my list of ways to use the dough:
10: Buy Sony.
Apple wants to crack the TV business and it has money to burn in Asia. Sony makes nice TVs, but it could use better software.
It's a steal for $19 billion.
9: Pay a special dividend — to Chinese sweatshop workers who make Apple gadgets.
Scrutiny of these factories is growing and it's not pretty.
Apple prides itself on quality design and engineering. It shouldn't have taken this long for the company to address the huge gap that's showing between those working conditions and its balance sheet.
Would anyone object if Apple put a tenth of a percent of its cash toward better conditions in Shenzhen, or established a health-care fund for these workers? How about a scholarship program for children who spend their middle-school years polishing iPhone screens and iPad cases?
8: Pay an actual dividend.
Keep dreaming. Dividends carry a whiff of maturity, which upsets the karma of vibrant, middle-aged tech companies.
Apple told investors in October that "for the foreseeable future" the company will "retain any earnings for use in the operation of its business."
Maybe Apple is waiting until it can give investors a better dividend experience than Microsoft.
That may take a while, though. Over the past decade Microsoft's returned $184 billion to shareholders through dividends and stock buybacks.
7. Buy a propulsion system.
Have you seen renderings of the new headquarters Apple is building in Cupertino, Calif.? It's a humongous, ring-shaped spacecraft.
The company must be saving up for rockets and fuel, so it can leave behind Paul Allen, Jeff Bezos and their puny spaceships in the galactic dust.
Either that or Apple wants to spend the cash on one those South Pacific islands that open up to reveal an underwater space port and command center for world domination.
6. And pay taxes
on foreign earnings.
Like most tech giants, Apple is hoarding cash it makes overseas so it won't have to pay U.S. taxes on the earnings.
These companies are perennially asking the feds for a break, so they can bring the money home without paying the 35 percent tax.
Soldiers overseas (but outside of combat zones) send their taxes home to Uncle Sam. American tech companies fighting the smartphone wars in Europe and Asia stash the proceeds until they find a place to spend it abroad.
More than half of Apple's $97 billion is this kind of suspended, overseas profit.
Companies big and small emulate Apple. Imagine what could happen if it stepped up the plate, brought the profits home and just paid the taxes.
With luck, Microsoft would be a fast follower.
5. Take on Google with
a new search engine.
If you haven't noticed, Microsoft stopped being Apple's arch enemy a few years ago. Now it's Google.
The opportunity's ripe. Google is frustrating users by tweaking privacy policies and tinkering with search results to promote its latest answer to Facebook.
Building an entirely new search business to challenge Google could easily use up the $97 billion — just ask Microsoft.
4. Bail out California.
The state that gave birth to Apple, supports most of its employees, and inspires the sunny character of its products is more than $73 billion in the hole.
Maybe Apple could buy California in a distress sale and reinvent its government.
3. Try philanthropy.
The same day that Apple reported its stupendous profits, Bill Gates challenged world leaders at Davos to invest in innovations to improve global health and fight poverty.
What could Apple do to make the world a better place for everyone?
2. Buy T-Mobile USA.
If Apple is looking for a way to use cash stashed in Europe, Deutsche Telekom is trying to unload some pretty nice assets.
1. Start a revolution,
Apple likes to talk about being revolutionary. Perhaps it could use some of its overseas cash — and clout in China — to nudge the authoritarian country toward democracy.
It could leverage the millions of Chinese who regularly connect to iTunes to update their iPhones and iPads. Or it could try buying Baidu, the leading Chinese search engine, which has a market cap of around $44 billion.
Seriously, if Twitter can help get things rolling in Egypt, Apple and its $97 billion war chest ought to be able to get something started in China.
Then we'll talk about waiving taxes on those overseas profits.
Brier Dudley: 206-515-5687 or firstname.lastname@example.org
Information in this article, originally published Jan. 30, 2012, was corrected Feb. 2, 2012. A previous version of this story suggested that soldiers overseas, including those serving in combat zones, pay U.S. income taxes. In fact, the pay of enlisted soldiers in combat zones is excluded from income taxes, as is a portion of pay of officers in combat zones.
About Brier Dudley
Brier Dudley offers a critical look at technology and business issues affecting the Northwest.
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