How Should Apple Spend its Money?


(Image credit: Barry Falls / BusinessWeek)

BusinessWeek writes that while Apple shareholders are a pretty happy bunch lately, if there is one complaint, it’s the company’s refusal to touch its $20.8 billion hoard in cash and short-term investments. “The cash just sits there, earning little more than the average savings account.” (For comparison, Microsoft has $23.7 billion in cash.)

Plus, Apple’s hoard is only going to get bigger. Some analysts predict the company’s hoard could surge to nearly $30 billion over the next year because of strong sales of its products, the report said. “[Apple] could have $40 billion in the bank [in two years],” said Gene Munster, a Piper Jaffray analyst, in the article.

But what to do with it? “Valuations are low, and Apple has the marketing horsepower” to turn promising technologies into hits, said Murray M. Beach, managing director at investment bank TM Capital, in the article. That could mean making a series of small acquisitions. Another option would be to jump further into the music business, taking advantage of the fact that the major labels are circling the drain.

Meanwhile, American Technology Research analyst Shaw Wu thinks Apple should provide funds so its suppliers can stock up before prices rise more, ensuring that it can build its products well into the future at lower prices. Any way you look at it, this must be a nice “problem” for Apple to have.