For all the passionate creativity which seems to flow through the blood and brains of Apple’s designers and engineers, the company appears to take only measured risks, albeit with very large dollar amounts, and without Steve Jobs at the helm Apple cannot figure out what to do with all the riches gained in recent years.
‘What Do We Do With Money?’
Apple’s financial performance in recent years are unmatched in the history of technology companies. Few companies have greater revenue, but none have greater profits.
When it comes to spending those profits, Apple has taken a decidedly conservative turn; a direction that has me worried that Apple’s new executive team is more fearful of the future than co-founder Steve Jobs.
Yes, Jobs was willing to bet the farm more than a few times. The Apple Store. The iPod. iTunes. Even the iPhone was a make-or-break moment for Apple.
As it turned out, the iPhone’s raging success catapulted Apple from a technology industry footnote into the lead position with more profits stashed away than some developed nations have to run their governments.
As of now Apple has about $175-billion scattered in banks around the world. The company also has more than $40-billion in debt which was used to finance stock buyback programs and to pay dividends to shareholders already counting their riches on Apple’s meteoric stock price rise.
What has Apple managed to do with those tens of billions? Nothing. Well, they bought Beats and saved the headphone company from itself. What else? Apple lost a few hundred million dollars trying to create sapphire screens for the iPhone. What else?
See the problem here?
Apple has over $100-billion in cash and can’t figure out what to do with it other than the same old same old. Other than $3-billion for Beats, Apple spends money and hoards money like Scrooge McDuck.
Yes, yes, I know Apple’s R&D spending is at an all time high but so is cash on hand (even minus the $40-billion in debt run up by CEO Tim Cook). Not that many years ago Microsoft went on a spending rampage buying up company after company, investing in other tech businesses in a vain attempt to diversify itself from Windows and Office.
A couple od decades later Microsoft is still the Windows and Office company, but along the way doled out tens of billions to shareholders. Why? The stock price had flatlined, co-founder Bill Gates had left the company to underlings, and it became apparent that shareholders wanted in on the accumulated wealth. So, Microsoft caved, handed out tens of billions, but remained, well, Microsoft.
Apple seems intent upon going down the same familiar path. Shareholders are being mollified without cause (it’s not as if Apple’s stock price has remained stagnant as it did under Microsoft’s Steve Ballmer), Apple continues to conduct business as usual, but Steve Jobs’ company still can’t figure out what to do with all that money other than throw it away.
Is that not the result of a conservative brain? Buying up a sinking Beats ship is not exactly a creative idea, is it?