Apple now has an estimated $250bn cash stored in the bank, with growing speculation that the company may (or even should) splash out on a huge tech acquisition, such as Netflix or Tesla.
The estimate, published by the Wall Street Journal in advance of Apple’s quarterly results report later today, is accompanied by the reminder that Apple keeps around 93 per cent of this cash overseas rather than anywhere near its Cupertino, California home for tax reasons.
However, with US president Donald Trump this week proposing a tax holiday to incentivise US companies to repatriate profits and invest in their home country, Apple could use it as an opportunity to put its cash pile to better use.
Apple could either push some of its amassed fortune out to shareholders (as opposed to having to ‘sell’ the money from abroad as bonds in order to avoid tax, as it did in 2013, when corporate income tax stood at a headline 40 per cent, as opposed to Trump’s current 15 per cent proposal) or, as many industry commentators are saying, splash-out on one of its larger, more lucrative peers in the tech space.
Apple CEO Tim Cook has already spoken out as a supporter of a ‘repatriation holiday’ courtesy of Trump earlier this year. Perhaps that’s why he patiently sat at the table with the new president early-on his term with other US business giants. So, if this apparent eagerness to take the money home is read literally, it could point to a big Apple acquisition.
Even if Apple paid back all its outstanding debts – to the tune of $88bn – it would still have a substantial amount left in the coffers.
In truth, it could buy both Tesla (perhaps closing the loop on the ongoing ‘Apple Car’ rumours that just aren’t going away) and Netflix, with plenty of cash left over. Back in 2015, Tim Cook was apparently asked about the possibility of buying Tesla, and didn’t respond directly to the question.
Buying Netflix, of course, would help buoy streaming music service iTunes, which now faces increasing competition from free services such as Spotify. Controlling a more popular model of visual entertainment could lead to all manner of Apple entertainment overhauls.
Whatever Apple’s thinking of doing with its fortune, one clear fact is fairly unarguable: $250bn is too much money to simply sit on. While the company has no history of making absolutely huge acquisitions (headpone companies don’t count), it might as well get brave.
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