Apple Hoards Cash

Image representing Steve Jobs as depicted in C...

Image via CrunchBase


Apple (AAPL) announced Q4 results. The buzz over iPad, iPhone and product margins overwhelms a fundamental issue. Capital efficiency. Apple has some $50 billion on the balance sheet. That is roughly equal to 20% of its current north of $300 @ share market cap. When compared to either Citigroup (C),Wells Fargo (WFC) or Bank of America (BAC) their cash stash is approximately 40% of the relative market caps.

If banks get political heat for not lending why does Apple not get the same political heat for not investing. Perhaps politicians still have not figured it out yet.

Apple is reporting half the cash balance as long-term securities. No reporting on what the investment strategy is. For $50 billion in cash we need Steve Jobs to explain the cash strategy and not make guest appearances on his own conference call just to bash one specific competitor: Research in Motion (RIMM). By the way Apple cash balance is equal to twice the market cap for RIM. So what are you afraid of?

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post.