Sitting on It

Om Malik on Apple’s soon-to-be-announced plan for its cash hoard:

I, for one, believe the company should just sit on the cash and not worry too much about Wall Street just yet. It is important that they use the cash to lock up supplies of components for its products. The cash cushion gives the company room to actively compete for talent as well as any future startups it might need to acquire to enhance its overall ambitions.

I’ve always thought Apple’s cash hoard was about freedom. That cash meant — and means — that they don’t have to answer to anyone. Apple’s market cap — the value of all outstanding shares of the company — is at record levels now. But it only crossed the $100 billion threshold in 2007. Its mean market cap for the past 10 years is $114 billion. That’s about how much cash the company has on its hands today.

Apple can’t control its stock price; that’s in the hands of investors. But it can control how much cash it keeps in reserve. If investors sour (or the market crashes) and the stock price dips, Apple could take itself private. I’m very intrigued about what they’re going to announce tomorrow.

Sunday, 18 March 2012