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Summary:

Steve Jobs wouldn’t hear of a dividend or share buyback. But under the Tim Cook regime, it appears things might change. Apple hasn’t made plans public of what it will do with its $97.6 billion in cash, but the company is currently discussing the matter internally.

pile of cash

Steve Jobs wouldn’t hear of a dividend or share buyback as a way to make use of Apple’s famously large cash pile. And the company doesn’t do the big M&A deals often seen at other large cash-rich tech firms. But under the Tim Cook regime, it appears things might change.

I emphasize “might” because Cook hasn’t made plans public of what he’ll do with the $97.6 billion in cash Apple has on hand, but CFO Peter Oppenheimer hinted on Tuesday that the company is at least talking about a potential strategy.

Unprompted and during his scripted remarks during the company’s quarterly earnings call, Oppenheimer said Tuesday that the company is “actively discussing uses of our cash balance” but added that they had nothing to announce at the moment.

Then later in the call, when asked by an investor, Oppenheimer expanded slightly:

“We have always discussed internally our cash. We recognize our cash is growing for all the right reasons, and I would characterize our discussions today as ‘active’ with what makes the most sense with the cash balance. When we have something to announce we will announce. Again, we are actively discussing the best usage of our cash balance.”

Apple under Jobs was incredibly conservative — he clearly never forgot how close the company was to bankruptcy when he returned in 1997. Apple typically uses its cash to make big investments in components or for a few smaller acquisitions each year. You’d think your investors would be happy the company is swimming in cash and being disciplined about its use — but when the pile grows too big and it’s just sitting there in a bank account, it’s obvious that many investors would like to see that money put to work. There have been calls for share buybacks or investors dividends for years, but they never made much headway with Jobs at the helm.

There was a hint that things would be different under Cook during his first earnings call as CEO last quarter. At that time, when pressed on the cash issue, Cook told investors, “I’m not religious about holding cash or not holding it — I’m religious about a lot of things but not that one.”

That, combined with Oppenheimer’s emphasis on “active” discussions is a good indication the company is at least more receptive to creative uses of cash in the future.

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  1. How about putting 1% of that into cancer research.

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    1. I don’t think it’s been long enough for that joke

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  2. They could buy T-Mobile, and use cash sitting in foreign accounts, so they don’t have to pay tax on it before they buy the company.

    OK, they won’t do that. They should just pay a dividend. They could easily afford a one-time $25 per share dividend, and still have way too much cash sitting around doing nothing. It’s bad for the economy when so much wealth is extracted from circulation, and does nothing – it would be different if the money was being lent out or invested, but it’s not for the most part. If a less profitable company was generating as much revenue, it would be better for the economy, as more money would be in circulation.

    If they can’t think of what to do with it, they should distribute it to those who can use it.

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  3. Michael W. Perry Tuesday, January 24, 2012

    This is the year I need to upgrade my Mac desktop and laptop. If they lower prices, I might afford to replace both. Otherwise, it’ll just be one.

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    1. True, they should consider lowering their prices by at least 20%, buying Netflix is another good idea if they are really working on enhancing the AppleTV

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  4. I’ll take some as a grant so I can go back to school for Industrial Design Engineering:-)
    They should continue to Invest in R & D as well.

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  5. Buy Netflix, it’ll cost less than $10B, perfect for AppleTV, and you take the fight to Youtube and Amazon.

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  6. I cant believe that Apple gets away with sponsoring nothing, its time they started backing volunteer medical organisations that could use their tech. Sponsoring sports too would be great.

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  7. Well, here’s an idea.

    Numerous articles have stated by way of Apple’s claim that Apple holds education very close them, is passionate about it and is deep in their roots. If this is true, why not take a portion of this profit margin and donate a generous charitable contribution to education rather than trying to schlep the iPad on students to further escalate their profit margins?

    This company is greedy and has found a way to place itself amoungst the only other greediest companies. The oil industry.

    John B.

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    1. I’m with John on this one relating to education (not so much on the greed part, LOL). The bulk of the American education system is still a manufacturing system that processes children based on age and minimum govt qualifications. If Apple really wants to do something interesting, fund creative, inventive and current technology-based ideas to teach our kids how to learn, invent and take creative risks. iPads have no use in the classroom if we’re extending the same methodology of ‘teaching to the test’ but I will gladly fork out money if the (any) technology assists in improving the success rate of students to do something they will enjoy after school. Ideas like what Principal Greg Green is doing, http://bit.ly/AvYOhL (cnn link). There are other great ideas out there that Apple could greatly influence.

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  8. LOL @ the people wanting or expecting apple to do something charitable. Not going to happen! Not now, not ever!!!

    Now purchasing a wireless network or something like that, maybe–they want total locking of their customers and since everything is now so connected to the internet all the time that looks like a logical step, and that’s what Jobs wanted when they were starting the iphone in the first place–they just didn’t have the cash to do it.

    To know what they will do next, always look at a changing market and if it is something apple can potentially use to lock customers in–Music, apps, now ebooks, I’m sure TV/cable is being worked on, mobile carrier seems like logical possibility. . .

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  9. Vincent Buyssens Wednesday, January 25, 2012

    Am I the only one concerned with the fact this guy’s name is Oppenheimer?

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