What Apple Needs To Do With That $20-billion In Cash.

Everything is coming up roses for our favorite Mac maker these days. In this case, a rose by any other name is just a pile of cash.

Mac sales are at record levels. Market share is growing. iTunes dominates. iPod dominates. iPhone is stirring the competition.

Profits are at record levels. And Apple’s stock price is nearing an all time high, and four times what Dell is worth.

The question burning a whole in my pocket is, what should Apple do with that $20-billion in the bank?

$20-billion is a lot of money, and most of it is hard-earned cash from iPod sales, software profits, Mac sales. It was just a decade or so ago that Apple was down to their last billion dollars.

Don’t look now, but Apple is swimming in cash, more than any other U.S. tech company other than Microsoft. The Windows maker doesn’t just swim in cash, they manufacture it.

What should Apple do with some of that $20-billion? The speculation has run rampant the past year. Some expected Apple to team with Google and buy some wireless bandwidth for future cell phones. That didn’t happen.

Others speculated that Apple’s new, and relatively cheap, acquisition of a $280-million chip designer meant that Apple would design their own CPUs. Apple’s Steve Jobs squelched that idea.

Of course, there’s the bi-monthly rumor that Apple will buy Adobe. Or, Sony. Or France. Or, open more stores.

What should our favorite Mac, iPod, iPhone, and software maker do with all that cash?

Microsoft seems intent to get into the online advertising space and compete with Google and Yahoo in search and ads, so far, unsuccessfully. Does Apple need to be in the online advertising space, or have its own search engine?

No. That’s not a core competency for Apple. It is for Google, relatively for Yahoo, but doesn’t appear to be a competent enterprise for Microsoft who continues to lose money on nearly every venture except Windows and Office.

$20-billion is a lot of money. Adobe’s stock is in the dumpers recently, pushing the market valuation down to about, oh, I’m sure it’s somewhere around, um, $20-billion, give or take a billion or two.

While that sounds plausible, Apple, should it decide to devour Adobe, would do so in a stock swap, not through a cash payout.

Some of that $20-billion or so in cash has come about because Apple doesn’t pay Steve Jobs very much money, especially considering what he has done to re-invigorate the company in recent years. Maybe they could give Steve a bonus or a raise.

That would still leave nearly $20-billion in the bank. What else?

Apple isn’t much for acquisitions, especially big ones. It’s not the company culture to devour and conquer. Or, is it conquer and devour.

Does Apple need the money to begin manufacturing their own Macs, iPods, and iPhones? Not likely.

Apple’s far east manufacturers do incredible work and keep retail prices low enough that shoppers stand in line to buy Apple products, yet Apple makes margins that are the envy of the industry.

Apple is not likely to go after Yahoo! and no other software company comes with the same cache and chic as Adobe, tops in a very short list of potential acquisitions.

R & D. Research and development. Any increase in R & D would come out of current earnings, so it’s unlikely that Apple will double or triple research investment—except for a new building or two… or three.

I keep coming back around to Adobe. They’re the graphic software king, and only Apple gives them a run for their money. Microsoft hasn’t made much of a dent in Adobe’s cash cow territory, either.

Between Apple buying Yahoo! or buying Adobe, I would go with where Apple’s strength lies—software. Apple will buy Adobe (not for cash, though).

What’s on your shopping list for Apple? An acquisition? A new business venture? Or, just more of a stockpile of money?