I saw on Bloomberg that Apple held it's annual shareholders meeting. There were many questions that were expected to be answered at the meeting, such as who would host it, as CEO Steve Jobs has been on medical leave, and was not healthy enough to attend last year's meeting.
During the meeting, Jobs discussed what the company plans to do with the $25 billion in flexible cash. And by flexible, I mean they can do whatever they want with it. Including distribute it evenly to shareholders in the form of dividends.
However, Jobs said the company is better off keeping the money safe, saying the money gives the company "tremendous security and flexibility." Quite frankly, he's right. This stockpile of money is more than what both Google and Microsoft have. This amount of bank allows Apple to do basically whatever they want. Safely. "We know if we need to acquire something- a piece of the puzzle to make something big and bold-- we can write a check for it and not borrow a lot of money and put our whole company at risk," Jobs said.
And I hate to keep using quotes, but they're effective.
Jobs went on to say, "You never know what opportunities are going to be around the corner. We are a large enough business now that, in order to really move the needle, we have to be thinking pretty bold--pretty large."
What could they be planning?
Well, the meeting also brought to the spotlight plans to open 25 new outlets in China in the next two years. . To put this into perspective, it was only in 2001 that Apple opened it's first outlet, and now has 286 stores worldwide, although 222 are in the United States.
Although Apple's stock was up $1.34, or 0.67%, these moves could easily be seen as questionable. First, do you think Apple should distribute this money to shareholders, or at least some of it? or start up some form of buy-pack program for stock?
And second, what could this large expansion mean for Apple and also for China, especially in light of all the activity regarding Google in China?
I think apple should keep its money and not give it away to the shareholders, i could see possibly some of it to keep shareholders happy though. Keeping more money would allow them to spend money on other types of research for their software or along those lines. I'm not sure how the stores in china would affect the activity with google because google is the internet and apple is just the computer software and you are able to use several other search engines. Having the internet blocked won't stop people from purchasing apples due to all the other possibilities you can do on the mac like create videos.
ReplyDeleteWell, if Google ends up pulling out of China, Apple would have to change a lot of things about their programs that incorporate Google. such as Safari, Google Maps, etc.
ReplyDeleteNot to mention both companies are expanding their horizons very far beyond search engines and personal computers.
I agree with Jared that Apple should keep the money. It would act as a possible buffer should anything drastic happen; the amount that shareholders would get if the money were to be distributed is probably not a lot for most shareholders. By having the money, the company is making itself more secure in case of an emergency or to support any big expenditures with less risk. As for China, the country is becoming quite the superpower, so it makes sense that companies would want to build there.
ReplyDeleteI'd be curious to know just how much the Apple execs are getting. Companies usually provide those at the top with big bonuses when they do well, and even when they fail spectacularly, as we've seen with the financial crisis; it is the lower level employee that is all too often overlooked. I'm not accusing Apple here, just talking generally.
ReplyDeleteEmployees and executives should be rewarded for a job well done, but stock holders shouldn't really get anything beyond the standard dividends. The majority of the money would best be spent in further research and development, rather than going to someone's yacht payments.
I agree; the stockholders shouldn't get a bonus. The cushion of extra money is safe and smart to have when the economy isn't doing too hot. Plus, holding onto the money could mean distributing it to more research, production, or engineering costs. This would shift out the supply curve and production possibilities frontier and further increase profits. The stockholders could get more money in the end anyway. T
ReplyDeleteI think that Apple should give out at least some of the money to shareholders as recognition that without shareholders Apple would not be running as well as it does. Latter the company might not be in the position to give back to investors or have that flexibility in their budget. Furthermore with their current sales it should not be a problem to find more willing investors, so really there is no absolute need to invest that money in production or development.
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I think it's best to save the money or use it to invest in more inputs (like the new outlets in China). Once profit has been maximized to an even higher level from this investment, then maybe they should give some to shareholders. I think it's extremely smart of Apple to look ahead for possible downfalls or opportunities that would require a lot of extra cash. By trying to remain independent and debt free, they are already creating a company that shareholders should be even more likely to invest in because of their reliability.
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