Apple's Cash Horde Is An Asset, Not A Liability
by Adam Levine-Weinberg
The title of this article may seem to be a statement of the obvious. Cash and cash equivalents are accounted for as assets on a company's balance sheet. Yet a surprising number of investors appear to view Apple's (AAPL) massive cash horde as a negative for the stock. Recently, hedge fund manager Leon Cooperman of Omega Advisors jumped on this bandwagon. He told CNBC that several other stocks, such as Qualcomm (QCOM) and Google (GOOG) were now preferable to Apple, because of Apple's "financial policy". Cooperman's preference for Qualcomm over Apple seems particularly odd, as Qualcomm faces as much competitive pressure as Apple, or more, but trades at a higher valuation by most metrics. Like Apple, Qualcomm currently enjoys a dominant position in high-end smartphones, but is under threat from competitors: for Qualcomm, these include Intel (INTC), Nvidia (NVDA), and Samsung (SSNLF.PK). Qualcomm's competitors are well-financed, and Intel and Samsung enjoy potentially massive economies of scale. Like Apple, Qualcomm may be able to maintain earnings growth if it innovates more rapidly than the competition, but it faces three credible competitors, where Apple faces just one. So what could justify picking Qualcomm over Apple? read more »
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