How Apple Can Generate A Decent Return On Its Cash
by Jason Kaplan
Apple (AAPL) has taken a lot of flack lately for sitting on a cash hoard of approximately $137B (source: 10-Q dated 01/24/2013), all the while watching the stock price plummet. It is by far the largest cash and investment portfolio in U.S. corporate history outside of a financial institution. It earns a measly return for shareholders. Over the last 12 months, according to Apple's quarterly filings, the investment portfolio has generated $1.28B in investment income. Dividing that return by the average cash balance over the past 12 months ($121.4B), shows Apple shareholders earning an approximate return of 1.05 percent. It has another $864M in unrealized gains, which, if they are booked as gains, bump up the return to a slightly more palatable 1.76 percent. Considering Apple earned $41.75B in net income over the same period, the income earned on the cash balance is hardly a drop in the bucket. read more »
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