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posted by martyb on Tuesday May 02 2017, @08:36AM   Printer-friendly
from the could-give-$33-to-every-single-person-in-the-world dept.

https://arstechnica.com/apple/2017/05/apple-has-a-record-250-billion-in-the-bank/

When it reports its quarterly financial results on Tuesday, Apple will likely have a quarter-trillion dollars in cash in the bank.

That's a greater hoard than any other company in recent US history, according to The Wall Street Journal, which reported the numbers on Sunday. For comparison, Apple's cash pile exceeds the market value of Walmart and Procter & Gamble. The sum is more than the foreign cash reserves of the UK and Canada combined.

Some 93 percent of the company's cash and other liquid assets are kept overseas. The Trump administration has proposed a tax holiday to encourage companies to bring money back to the US, as well as a lower corporate tax rate, fueling more speculation about how Apple will use its money. Apple CEO Tim Cook has said he's interested in moving some of the company's cash stateside if tax conditions are right.

The article speculates about Apple buying another company, such as Tesla, Netflix, or Walt Disney.

From the WSJ article:

Mr. Cook has been somewhat more accommodating of shareholder desires than his predecessor. He started a dividend-and-stock-buyback program in 2012 that has since sent more than $200 billion to shareholders. And he has invested more in some areas, such as R&D.

But the CEO also stared down Carl Icahn in 2013 and 2014 when the activist investor bought a stake in Apple and demanded it increase buybacks. And Apple remains frugal in other realms, such as marketing. It spent less than $1.8 billion on advertising last year -- not even half the amounts laid out by smaller rivals Alphabet Inc. and Amazon.com Inc., according to company filings.

Apple also avoids large acquisitions. It bought at a rate of 15 to 20 companies a year over the past four years, generally spending several hundred million dollars on companies it can easily assimilate. Its biggest deal was the $3 billion it spent to buy Beats Electronics LLC in 2014.

The swelling war chest has fueled hopes for bigger deals to vault Apple in new directions such as self-driving cars and entertainment. At Apple's 2015 shareholder meeting, one investor asked Mr. Cook about buying Tesla Inc., which today is valued around $51 billion. The CEO didn't directly respond.


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  • (Score: 2) by bradley13 on Tuesday May 02 2017, @11:15AM (6 children)

    by bradley13 (3053) on Tuesday May 02 2017, @11:15AM (#502751) Homepage Journal

    Two things I do not understand:

    - Apple pays taxes abroad, following international law, probably through a tangle of international subsidiaries. These subsidiaries are wholly owned by Apple, their money has been taxed, so...why can they not transfer it to a US bank account, if that's what they want?

    - Normally, when companies make money in excess of their foreseeable expenses, they pay dividends to their shareholders. Why is Apple not doing this? Keep reserves, sure. Sitting on that much money like Scrooge McDuck really doesn't make a lot of sense.

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  • (Score: 2) by Aiwendil on Tuesday May 02 2017, @01:24PM

    by Aiwendil (531) on Tuesday May 02 2017, @01:24PM (#502785) Journal

    why can they not transfer it to a US bank account, if that's what they want?

    Probably would have a better ROI to just buy the bank ;)

    But a bit more serious - having it spread among several countries and jurisdictions lowers risk (both regarding exchange rates and legal spats - it is harder to seize foreign assets)

  • (Score: 2) by Phoenix666 on Tuesday May 02 2017, @02:01PM

    by Phoenix666 (552) on Tuesday May 02 2017, @02:01PM (#502809) Journal

    They do pay dividends. Not enough to bring the pile of cash down, but they do.

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  • (Score: 2) by deimtee on Tuesday May 02 2017, @02:14PM (1 child)

    by deimtee (3272) on Tuesday May 02 2017, @02:14PM (#502818) Journal

    They pay taxes at that countries tax rate. Usually some nice little island somewhere that makes a living taxing $multi-billions at 1% or so. If they send that money back to the USA it gets taxed at USA rates (minus the pittance they paid overseas).

    If the shareholders wanted dividends, they could vote for them. With interest rates as low as they are, having Apple hold your cash is probably as good as putting it in a bank. There are also differences between capital gains (valuable shares because Apple$$$) and income (dividends), but then it gets complicated.

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    • (Score: 0) by Anonymous Coward on Tuesday May 02 2017, @02:27PM

      by Anonymous Coward on Tuesday May 02 2017, @02:27PM (#502835)

      Yikes! Your estimation is off by two orders of magnitude!

      1% would be 200 times more of the 0.005% that actually pay

  • (Score: 0) by Anonymous Coward on Tuesday May 02 2017, @02:22PM

    by Anonymous Coward on Tuesday May 02 2017, @02:22PM (#502830)

    Apple pays taxes abroad

    Yes, apparently a whole whopping 0.005% tax on its global profits [cnn.com]. Less than the taxes paid by any deadbet on social care.

  • (Score: 0) by Anonymous Coward on Wednesday May 03 2017, @05:00AM

    by Anonymous Coward on Wednesday May 03 2017, @05:00AM (#503482)

    Apply 'paying taxes' is rather misleading. They pay a fraction of 1 percent of taxes on their foreign earned income (0.005% was the figure in 2014) through a variety of legally grey practices that the EU is now stating are not legally grey, but illegal.

    I'm rather tired of the "rules for thee, but not for me" state of economics in the US. I'm a US citizen that lives abroad. I haven't stepped foot in the US in over a decade. Nonetheless, I'm legally required to pay upwards of 30% tax to the US for services I do not and cannot receive. The only way to escape this for me is breaking the law or revoking my citizenship. And revoking my citizenship would cost an enormous pile of money as well. If I tried to engage in "legally grey" tax avoidance come evasion I'd have a major risk of ending up behind bars. When Apple does it, the biggest risk they have is a fine which will likely be a small fraction of the profits they earned from said illegal activity.

    I'm not arguing along the lines of, "Well if it's bad for me - it should be bad for everybody." But imagine if individuals were treated like corporations. Yeah, just engage in tax avoidance, come evasion, as long as you want. If you face legal troubles, you'll need pay a percent of your net profit from said behavior - but never enough to ever harm you in any way, since you as an individual are of course too small to fail. And if you refuse to pay your tax for long enough, it's really not a big deal. Eventually we'll get a president and congress that will go ahead and try to dramatically cut your tax obligation (of course with ex post facto effect) to try to "incentivize" you to do so.

    It's just all so broken and unfair.