Apple—the Real King of Cash
When you look at just the raw cash numbers (including cash equivalents and short-term marketable securities), Apple is down the list at No.6 with a lowly $29 billion.
Leading the charge, according to Factset, are General Electric at $127 billion; Microsoft, $50 billion; Cisco, $40 billion; Berkshire Hathaway, $38.8 billion; and Google, $36.6 billion.
But once you strip out the debt at GE* and Berkshire , they’re out of the picture.
Debt also depletes the real number at Microsoft and Cisco .
That leaves Google and Apple .
Here’s what most people—even analysts—overlook:
Add back in $35.6 billion of long-term marketable securities at debt-free Apple—a calculation that is included in Google’s total cash number—and suddenly it’s leading the pack with $65 billion.
Numbers crunching by my colleague, Jon Fortt, suggests that at its current pace, Apple is on its way to generate $100 billion in cash by the end of the next fiscal year—or nearly one-third of its current market value.
And don’t stumble over the “long-term” part of the equation. According to Apple’s 10-Q, long-term has maturities one to five years. While this isn’t the normal definition of “liquid” cash, it’s still cash, especially based on the components: US Treasurys, U.S. agency securities, non-US government securities, CDs, munis and the biggest component — corporate securities.
The company doesn’t disclose further detail, but no matter how it is counted and invested, Apple’s cash is growing fast, up more than $6 billion alone in the last quarter, sequentially. Most of that growth is on the long-term side, which over the past year has roughly doubled.
Asymco recently had a piecethat suggested Apple’s cash could keep operations going until 2018 if revenue streams stopped completely.
Based on the
But others believe that the valuation argument, at this point in the company’s cycle, is futile and somewhat meaningless. All that matters is that sales and earnings keep going higher.
Longtime Apple bull Gene Munster of Piper Jaffray recently told clients in a note: “We believe investors have grown tired of the valuation argument, given the monster numbers Apple reports only creates a higher bar for the out year growth rates. Even if the multiple remains depressed, we expect shares of AAPL to move higher driven by earnings growth.”
He added in a note to me: “The reason why most analysts don’t factor the cash into Apple’s valuation is the company has not done anything with the cash, and the theme I keep hearing is ‘don’t give them credit for the cash because we will never see it’.”
At least they haven’t yet gone out and blown it on something stupid. Restraint, especially for a company that is firing on all cylinders, is sometimes a good thing.
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*General Electric maintains a minority ownership of NBCUniversal, the parent company of CNBC.