05/05/2008, 10:55am, EDT
Monday, May 5th
Apple cash reserves nearing parity with Microsoft
Apple and Microsoft are on opposite trajectories in terms of their cash reserves, a new report remarks. Over three years ago, the former had a balance of $5.5 billion, while the latter had $64 billion. While Microsoft's reserves have fallen by more than half to reach $26.3 billion, Apple's have climbed to $19.4 billion. Microsoft was in fact arranging to borrow finances until its planned takeover of Yahoo collapsed over the weekend, in the short term saving approximately $44.6 billion.
The company's overall decline is attributed to deliberate investment decisions, namely continual stock buybacks and special dividend payments, such as a $32 billion plan announced in 2004. In the most recent quarter, Microsoft bought back more than $1 billion of its own stock, a strategy which is likely meant to enhance the company's EPS rating.
Apple's balance has grown largely on the back of Mac and iPod sales, but also the conservative philosophy of CEO Steve Jobs, comments analyst Andy Hargreaves of Pacific Crest Securities. "I think that Steve Jobs' experience with this company and the cycles that it's been through has taught him to be very, very conservative, and save for the rainy day."
There is a risk, however, that investors could become jaded at not reaping the rewards offered by similar tech stocks; similarly, one of the purposes of maintaining a large cash reserve is the purchase of smaller companies which can generate extra income. Apple does regularly buy other businesses, but typically only for technologies such as Cover Flow.
Apple's reserves are in fact so large at this stage that they surpass those of many major tech companies, including Google ($12.1 billion), IBM ($12 billion) and Intel ($10.9 billion).
Filed under: Investor, industry, Apple
Other story tags: Microsoft
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wow
Apple has $22/share in cash on hand, Microsoft has $2.82/share.
What's really shocking to me is how MS' cash has dwindled. I guess that's what happens when you are willing to sell at a loss in order to buy your way into a market...
meh...
...Apple's dead. Sell the stock! lol.
could it be
"The company's overall decline is attributed to deliberate investment decisions."
Or could it be that MS SUCKS! They're losing money because people figured out they're a bunch o' crap and aren't buying MS crap.
Zune, Xbox diasters
M$ has shown that it does not know how to innovate and unless it buys up competitors and can't really bring a product to the market that is better. The Xbox has been a financial disaster for the company and Zune is butt of most hi tech jokes. With all the brains and money that company has/had it is unbelievable how all they can do is try to maintain there windows monopoly which is slipping, enter subpar products in to already crowed markets and after several failed attempts to better Google or Yahoo they will effectually kill off any future for Yahoo by bringing the M$ way to running a search portal. Poor beleaguered Microsoft, how long does Balmer have left?
Apple to buy MS
Steve's getting ready to buy Microsoft and put them out of their misery.
No, seriously, could you imagine SJ taking over MS and cleaning house?! A lot of heads would roll!
Actually... Adobe
I know this one was kicked around a few years ago: Apple buys Adobe
http://www.pbs.org/cringely/pulpit/2008/pulpit20080502004815.html
suggestions for steve
You'd think Apple could afford to hire some ergonomic experts with some of that cash. I'd love to buy a Macbook that doesn't trigger my RSI.
Re: Zune, Xbox disasters
"With all the brains and money that company has/had it is unbelievable how all they can do is try to maintain there windows monopoly"
I've been saying this for years although I spell it "their" instead of "there".
as a business
So basically, Apple is managing their company as a business for the long term as opposed to a short-term stock price manipulation exercise like so many other companies. Too many companies see their shareholders as their #1 customers. I'm glad Apple doesn't operate that way (and I think it shows in the products they deliver).
Stock buybacks
I think it is really amazing to see how MS share prices have languished in spite of their aggressive buybacks. I wonder where the stock would be if they had kept those shares in circulation.