After all, Apple’s debt has increased to a staggering $43-billion, all of which came on CEO Tim Cook’s watch; not leftovers from Steve Jobs’ reign as head honcho. How can we call Apple the world’s most prosperous company– on the heels of the most profitable quarter ever– with all that debt?
Where The Numbers Live
The first thing to look at with Apple’s money is where it is and where it came from. With about $175-billion in the bank Apple is quite solvent.
Much of that money was earned overseas, not in the U.S., so Apple keeps the earnings overseas rather than pay U.S. taxes on money that which was not earned in the U.S.
That seems to be a sound, pragmatic strategy, right? All that money sitting offshore might tempt the U.S. congress to make some much needed changes to the tax code so Apple isn’t penalized should it decide to repatriate the riches.
Good is often balanced with crazy, which explains why Apple has been buying back its own stock at a feverish pace, and why that fever is contagious– Apple is paying dividends to stockholders by the tens of billions.
Guess what? That’s where the debt is coming from. Stock buybacks and dividends. Instead of using cash to give cash to shareholders or using cash to buy stock, Apple borrows the money. That runs up the company’s debt load, now topping $43-billion.
That still leaves Apple sitting in piles of green because of simple math. $175-billion in cash scattered around the world, minus $43-billion in debt, still means our favorite Cupertino, CA tech giant has more cash than most free world countries.
That’s enough for Apple to give every man, woman, and child in the United States a new iPad Air 2. That’d be a good way to get iPad sales to turn around.