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Sat, Nov 07, 2009 - 11:21 AM EST  —  AAPL: 194.34 (+0.3099, +0.16%)  |  NASDAQ: 2112.44 (+7.12, +0.34%)

What should Apple do with its $15 billion (and rapidly growing) cash hoard?
Friday, December 07, 2007 - 09:46 AM EST

Apple’s $15.4 billion stash is larger than IBM's, Hewlett-Packard's, Intel's, and Google's, putting the Mac, iPod, and iPhone maker into "the elite ranks of well-heeled Fortune 500 tech companies," Jon Fortt reports for Fortune.

"So what does CEO Steve Jobs have in mind for all those greenbacks?" Fortt asks.

"If the past is any guide, Jobs & Co. could very well use some of the money to swallow smaller companies," Fortt reports.

"Or Apple could make some investments. During tough times, the money Apple had put in Akamai Technologies (AKAM) and ARM Holdings (ARMHY) provided the company with valuable infusions of cash when necessary. It’s a bit more difficult to find places to stash $15 billion, however," Fortt reports.

"Might the company really launch a large-scale buyback program, or begin offering dividends? For Apple, there’s limited advantage in doing that until investors force the issue. Once a company gets onto the dividend treadmill, it has to keep doing it or risk being seen as in decline. The same goes for stock buybacks," Fortt reports.

"At Apple, there are some sizable projects ahead that could demand sizable chunks of cash [like] the brand new campus the company plans to build down the road from its current Cupertino, Calif., headquarters... Real estate experts last year suggested that Apple’s project costs could top $500 million... And, of course, it’s not clear whether their estimates factor in the possibility that Steve Jobs might decide to make a big architectural statement," Fortt reports.

"There’s always the chance that Jobs will surprise us all, break with tradition, and buy something big. Consider this: With the money burning a hole in Apple’s pocket, he could easily buy TiVo, Netflix and Circuit City, and still have plenty left in the bank," Fortt reports.

Full article here.

[Thanks to MacDailyNews Readers "Fred Mertz" and "Mike in Helsinki" for the heads up.]

MacDailyNews Take: What would we do? Well, we like to get a lot of bang for our buck, so we tend toward the dramatic: Apple should buy Adobe and, starting with Photoshop, double the price of the Windows version vs. the Mac OS X version while allowing Windows sufferers to double their number of licenses at no extra cost by migrating to Mac OS X. With the next version of Photoshop, discontinue Photoshop for Windows. Just as Apple did with Shake after they bought Nothing Real. Excecute that process down the line with the most widely-sold Adobe products. While you're at it, Apple, buy Autodesk, and freakin' finally get a version of AutoCAD (last release for Apple Mac: June 1992) out for Mac OS X. It'd be no small task — we hear AutoCAD a spaghetti-coded mess that's long been mangled specifically for Windows, which is why Autodesk can't even begin to think about, much less produce a Mac OS X version — but Apple could do it.

What would you do if you were Apple sitting on a mountain of cash?

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Dec 07, 07 - 09:48 am Comment from: Macromancer

That 700mhz spectrum would be a cool thing to have.
Apple could then launch their own media/phone net.

iTunes everywhere, at high speed.

killer

Dec 07, 07 - 09:50 am Comment from: JadisOne

With $15 billion in cash, I'd retire. grin

I do like the buy Adobe idea along with Autodesk. But buying popular PC only software products, making them for Mac and discontinuing the Windows version is the way to go.

Dec 07, 07 - 09:51 am Comment from: ron

Buy an island.

Google is pandering to the 'left'

Clintons to attend Google wedding
A string of high-profile guests are descending on a private island in the Caribbean for the wedding of Larry Page, Google's billionaire co-founder

Dec 07, 07 - 09:51 am Comment from: Allan

I would buy into the wireless auction and try to get control (with Google) of the 700 Mhz band. I would then offer it at almost no cost to users of Apple products.

Dec 07, 07 - 09:53 am Comment from: ron

Read all about it.


http://technology.timesonline.co.uk/tol/news/tech_and_web/article3011672.ece

Dec 07, 07 - 09:57 am Comment from: pastrychef

Adobe

Dec 07, 07 - 09:59 am Comment from: MegaMe

buy adobe and get the keys to .pdf and flash as a bonus.

seriously, buy adobe.

(maybe buy a movie studio too, how much for NBC Universal wink

Dec 07, 07 - 10:01 am Comment from: Gil

I remember running Autocad on a IIci.

Dec 07, 07 - 10:03 am Comment from: Ampar

In no particular order:
Expand Apple Stores worldwide especially in Europe and the Far East.
Fund the development of specialized vertical business apps.
Increase and continue the investment in customer service.
Invest in the development of Mac only games for all Apple devices.
Spend more on advertisements that tout the actual functionality advantages of OS X on TV, in print and on the internet.
Mass mail a DVD demo of Apple products and OS X in multiple languages to target markets worldwide. The best anti-virus product for Windows is OS X.

Dec 07, 07 - 10:06 am Comment from: auren

Whatever Apple does, they should begin (continue) evolving a strategy to take on the stranglehold Microsoft has on the business side of the equation.

A recent article here bemoans the fact that there is no equivalent to Entrourage, for example. Another glaring hole is the lack of professional grade project management software, such as Prima Vera's Project Planner.

I like the idea of taking over AutoCad and Adobe. Don't stop there, let's take on Prima Vera and knock-out MS Project as well.

Dec 07, 07 - 10:08 am Comment from: MegaMe

I want Apple to spend some money on bringing simple games to AppletTv.

My family would love to play monopoly or life or risk or any of those older board games on our AppleTV.

Dec 07, 07 - 10:08 am Comment from: Ampar

The difference a homonym can make:
Apple has a cash hoard.
MS has cash whored.

Dec 07, 07 - 10:10 am Comment from: Gandalf

Keep the cash in the bank, it provides a good amount of protection from the bankers aka Wall Street. The independence and hence ability of Apple to innovate benefit greatly from this cash.

Why Steve doesn't have shares in Apple except for the options that he gets from time to time (which he often sells off quickly) is because it would divert his attention from running the business. When you have a lot of shares in the company it's human nature to be bothered about falls in stock price and to react to it. Wall Street manipulates the stock price and thence gains some control over the company's actions. This is why from time to time Wall Street analcysts express 'concern' that Jobs doesn't have shares in his own company. They portray it as Steve not having confidence in Apple whereas the opposite is true.

Dec 07, 07 - 10:10 am Comment from: Harry

Buy Dell ..!

Dec 07, 07 - 10:15 am Comment from: aapl says

keep me on the balance sheet

Dec 07, 07 - 10:16 am Comment from: joseph

Unless Apple has something good going on in their labs, maybe they could buy US Telematics ($12.43M market cap) with the loose change. (See previous MDN article)

Dec 07, 07 - 10:18 am Comment from: DLMeyer

There are several Windows programs out there that have no Mac equivalence. AutoCAD has been mentioned, Visio is another. If you need one or the other, you need to work with Windows. And don't talk to me about BootCamp or Parallels or whatever, they keep the Windows and throw away the box.
We have some great consumer-level software in the iLife and iWork packages, good enough to deal with most enterprise-level tasks, but without these two, in particular, one for IT and the other for engineers, we have a small but obvious hole on our arsenal.
Apple should buy in or build-their-own. Just my opinion.
Dave

Dec 07, 07 - 10:18 am Comment from: Predrag

Buying Adobe would be nice; however, their current market cap is around $25B. Apple's entire cash reserver is barely above half that. Obviously, they could get themselves a controlling stake in the company, but still wouldn't own it outright. Not to mention that if it were to announce the intention buy Adobe, it's a given that ADBE would shoot through the roof, making that $25B much higher number.

Autodesk is a nice idea as well, especially since their current market cap is around $11B.

NBC/Universal is a subsidiary of Vivendi ($37B). However, Warner Music and EMI combined are below $5B and could easily be gobbled up (assuming there are no anti-trust issues).

Strategy of picking off Windows-only tools and moving them to Mac-only sounds interesting, albeit a bit bold. They could begin under the radar, with some small, obscure tools. Moving slowly to the bigger guns, such as Autodesk. Mind you, AutoCAD is not the only horse in their stable. I'd first kill Maya for Windows, then migrate 3D StudioMax and kill that as well. Do the same thing Apple did for Logic (and a few other apps). Make options for high-end, niche market tools for Windows dwindle to the point of extinction.

Dec 07, 07 - 10:19 am Comment from: Ampar

Put it all on double zero.

Dec 07, 07 - 10:20 am Comment from: F1Mikal

Make slingbox available for the bloody iPhone already!!

Dec 07, 07 - 10:20 am Comment from: Pete

What should Apple do with its $15 billion (and rapidly growing) cash hoard?

Increase it's computer product line offerings and prepare to enter the business space where the REAL money is.

Run Windows as a Mac OS X shell:

1: To protect against intrusions from the internet.

2: To offer better looking and more reliable hardware.

Both will save businesses BILLIONS during economic slowdowns.

Dec 07, 07 - 10:21 am Comment from: Tom

Apple seeks out markets where the formerly dominant players are in distress. The name change was meaningful as the first step to moving the brand beyond tech.

Apple will be the next company with a GE/ExxonMobil-sized market cap.

The move will be consumer, with volume and margin space for them to be profitable from day one. They may buy Tesla, but they will take their muscle to the car business and shred that market by using their design ethos, consumer brand, and financial muscle to focus on the chaos and fragmentation of the car market.

Dec 07, 07 - 10:22 am Comment from: Realist

The most corrupt business (?) on earth is the automobile business. The most corrupt business people on earth are the car manufacturer and his partner in crime, the car dealer.

A close second has become the technology business - especially in the personal computer category.

The corrupt practice of duping the public by holding back the latest and best in order to create more sales through instant obsolescence is evil-doing.

Faster, better, more stable hardware is in the back room at Cupertino (and, of course, in secret locations throughout China) being held back, waiting for sales of the current stuff to level off and cleverly timed to be launched with some lie dressed up as a Super Bowl commercial.

We consumers, of course, could fix this problem ourselves had we any self control. But, alas, we don't and predators suck us dry.

Steve's quest to change the world is within his grasp now. Rise above the lure of the next billion (you have enough, already). Use it for good. Use the money to fill the stores with the best products there are TODAY instead of trying to knock the car industry off the top of this wicked list.

Dec 07, 07 - 10:22 am Comment from: Siebel

Sun could be a good target to get into the corporate world.

With control over Java, it could drive more corporate and developper to switch.

The key here is all the development under Mac OS X and implement it on any OS (and phones). Once the developpers will experienced OS X, there will be less and less needs to use other OS.

Dec 07, 07 - 10:22 am Comment from: ken1w

At the very least, Apple should start a program that "seeds" free and lower-priced Macs to the U.S. public education system, at all levels. Not just a token donation, but a significant distribution. In addition to the positive impact those Macs will have on students and the good will the program will generate toward Apple, it will spawn generations of young adults who grew up using Macs at school. This is not an original idea... Apple did exactly the same thing with Apple II's a few decades ago. And I think it helped Apple start and grow it's core following among the (then) young adult population, many who would otherwise never have used an Apple computer (due to cost).

Using "just" one billion dollars from the pot will pay for about one million iMacs.

Dec 07, 07 - 10:25 am Comment from: Gandalf smokes good stuff™

Jobs has taken only a token annual salary of $1 since returning to Apple in 1996, for which he is recognized as the world's lowest-paid CEO by Guinness World Records. He is well-compensated by other means, however, being the frequent recipient of gifts from Apple's board of directors, such as a Gulfstream Jet and —— tens of millions of shares in restricted stock——, which have contributed to Jobs's estimated net worth of $5.7 billion.

Dec 07, 07 - 10:25 am Comment from: DJ Jac

Apple should make digital still and video cameras, and solar-powered hover-cars.

Dec 07, 07 - 10:26 am Comment from: Jamie

Put it all on Black in a casino!

Why not, there's a 50/50 chance  could double their money!

Dec 07, 07 - 10:28 am Comment from: visio is a drag

no visio? try omnigraffle. it runs circles around visio. and can read and write visio xml.

Dec 07, 07 - 10:28 am Comment from: Give Me A Mac

Bring in your Windows PC and get 50% off any Mac. With iWork as a bonus if you use Vista.

Dec 07, 07 - 10:29 am Comment from: ../.

Predrag: NBC/Universal is a subsidiary of Vivendi ($37B).

That's inaccurate. NBC/Universal is a subsidiary of General Electric and Vivendi (GE 80%, Vivendi 20%).

Dec 07, 07 - 10:32 am Comment from: Cubert

Apple should corner the office chair market and drive Mafia$oft into the ground!!!

Dec 07, 07 - 10:34 am Comment from: Spark

$1,000,000 rebates to each June 29th iPhone purchaser.

(you didn't think we'd be satisfied with just a hundred bucks did you?)

Dec 07, 07 - 10:35 am Comment from: DLMeyer

OK, that should have been "hole in our..."
Gandalf, I bought AAPL back when they only had $12 Billion in the bank - paid less than $20 per share at the time. (wish I still had the stock <sigh>) The price dropped down to under $14 a share ... the money in the bank was over half of Apple's "market cap" value! Now ... pocket change.
Ampar, homonyms aside, I like your idea about Apple Stores in Europe and Asia. Nothing against East Podunk, but we should have an Apple Store in most other countries and most major cities before we see one there, and multiples in many of those. The stores need not be quite the show-places seen in NYC, a simple store-front (tweaked, but only slightly) would do. Apple is #3 (and rising) in the US yet even Mac portables are not in the world-wide Top Five.
Dave

Dec 07, 07 - 10:36 am Comment from: Charless

It's all about Flash. Apple should buyt Adobe just to acquire Flash and Director and slowly replace Flash with a version of Quicktime for Web. The immediate payback is that every time someone plays video that uses Flash, there's a well-positioned apple logo nearby

QT for Web would use a HyperCard-like authoring environment (not Actionscript, not Applescript). The programming environment would be a web app, and like Hypercard of yore, Apple should give this away. Of course, this rich media engine is a natural fit for Webkit.

Dec 07, 07 - 10:36 am Comment from: K. Brown

Use it build my open rocket company and beat Elon Musk to the moon, mars, infinity and beyond. smile

Dec 07, 07 - 10:36 am Comment from: Ferf Muckmeyer

Rather than buying up companies, make substantial investments in companies that develop key Windows software and use these monies to fund development of Mac OS X equivalents. This would get their foot in the door quickly in the enterprise market.

gk

Dec 07, 07 - 10:37 am Comment from: Jeff

@MegaMe
.PDF is now an ISO standard (happened this week), so the keys have already been given away, sorry to break your heart.

Make .Mac a free gift to all Mac users. Go back to your roots and start selling\leasing Macs to Education at incredibly steep discounts, we need better systems in our schools.

Open an Apple store in Oshawa, Ontario Canada. That ones just for me grin.

Dec 07, 07 - 10:37 am Comment from: cptnkirk

I would like them to work on something really big, for example:

1. Apple transporter
2. Apple warp-drive
3. Apple fusion power generator
4. a blu-ray drive in Apple TV
5. iPhone in Canada
6. Apple moon-base

Let's face it I wouldn't want any of these developments stuck with any version of Windows! Too scary!

Dec 07, 07 - 10:37 am Comment from: Darth Mac

Buy no big corporations... instead use the cash to get bigger and better at what is working, and improve weaknesses. This is where they should invest:

1) Innovation
Keep up and stay ahead of the curve... and buy only small innovative busines, just as now.

2) Brand expansion
More Apple stores worldwide... Europe, South America, Asia, and even in some places of Africa such as Johannesurg (South Africa), and even very tiny stores in Morocco, Egypt or Ivory coast (Cote d'Ivoire).

3) Apple TV/iTunes
Enhance it to become a true living room sensation (movie rentals in major countries, casual gaming, lots more content in iTunes)

4) Competitive prices
Apple really can afford to launch an entry level 15 or 17in iMac for $800. All by maintaining quality.

5) Corporate world
Launch a corporate version of iTunes that will features media content and downloadable applications, in order to make iPhone the plateform of choice for professionals

Dec 07, 07 - 10:42 am Comment from: thethirdshoe

5 votes for Buy Adobe

Dec 07, 07 - 10:44 am Comment from: sn

Love the casino idea, though it's not quite 50/50 (don't forget 00 is green).

The thought of them buying Adobe or AutoDesk is exciting, but can someone please explain to me how that wouldn't be monopolistic and predatory? Especially if they were to discontinue Photoshop for Windows or jack up its price.

Dec 07, 07 - 10:46 am Comment from: Jeff

Put the Intel transition into overdrive, offer 50% discount on New mac with trade in of any PowerPC based Mac.

Hire me as Steve Jobs gofer at $500.000 per year, with a golden parachute to boot.

Dec 07, 07 - 10:48 am Comment from: Ampar

"don't forget 00 is green"

And pays 35 to 1 giving Apple $525 billion (before taxes). But I'd let it ride.

Dec 07, 07 - 10:49 am Comment from: UltraVisitor

Adobe and Autodesk are a fine place to start.

Dec 07, 07 - 10:49 am Comment from: whoitis

They should pay MDN to run a story about how much money they have!

wait a minute....

Dec 07, 07 - 10:54 am Comment from: MacB

Buy Adobe and develop/buy a ERP system.

Dec 07, 07 - 10:54 am Comment from: DJ

1 Adobe
2 NBC Universal
3 Apple Theme Park

Dec 07, 07 - 11:01 am Comment from: effwerd

Apple should buy Adobe

This would create a huge mess for Apple. If they're going to buy Adobe, they might as well kill their whole product line and start (virtually) from scratch. That would be awesome in the long run but very, very painful in the short term.

Dec 07, 07 - 11:03 am Comment from: Scheduler

" let's take on Prima Vera and knock-out MS Project as well."

Primavera is the industry leader. No one would ever use MS Project to track a major project. I have used P3 software since 1987 and just got back from a 4 day training session in P6. Since they will be dropping support for the legacy P3.1 software, P6 (Enterprise) has absolutely no competition.

A port of it to the Mac would be nice.

Dec 07, 07 - 11:07 am Comment from: s

Buy IBM or CSC and get into IT service business. Forget trying to convince the Fortune 500 IT managers to switch. Just buy them.

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