Question: which corporation has just announced a cash tally to rival the entire foreign exchange reserve of Germany? Answer (if you haven’t already guessed): Apple.
Yes, the Cupertino Colossus now has more cash than just about any other corporation on the planet. Cash on the corporate scale doesn’t simply mean the stuff we all have in our current accounts; it also includes cash equivalents and short-term and long-term marketable securities. Apple invests a sizeable slab of that in longer-term vehicles (much more so, in fact, than most other companies).
Given the fact that it’s so rich, this perhaps isn’t surprising: it can pump a surreal $160 billion into long-term securities and still have $34 billion to play with to fund its many other global operations. Yet it’s also been growing its debt pool, which soared from $28.99 billion at the end of Q3 2014 to more than $40 billion today. Why would a company so surreally wealthy wish to hire more debt?
Basically, it’s all down to the cost of using its cash reserves. Much of it resides in foreign countries, and repatriating it would incur stinging tax penalties, which is why Apple uses domestic funds to make share purchases. Given the cost of borrowing in the US is now so laughably low, the domestic macro-environment makes debt a far more viable option for Apple than hauling in chunks of its foreign money mountains.
Apple’s Board of Directors issued an announcement that the company is increasing its programme to return capital to shareholders by over 50 percent, making the cumulative total $200 billion by the close of March 2017.
Apple’s CEO, Tim Cook, said:
“We believe Apple has a bright future ahead, and the unprecedented size of our capital return program reflects that strong confidence.
“While most of our program will focus on buying back shares, we know that the dividend is very important to many of our investors, so we’re raising it for the third time in less than three years.”
Plenty of people across the globe will go on consuming digital content on Apple devices, helping to generate cash piles for the company that resemble telephone numbers in scale.