Wow! Apple Owns 10% of Non-Finance Corporate Cash in the U.S.

| Analysis

Here's a statistic for you: Apple holds 10 percent of all the non-financial corporate cash in the U.S. 10 percent. That's not bad for a company that is clearly on its death bed and can't figure out how to sell smartphones in a way that analysts and pundits can understand.

Apple's Cash Hoard

Apple's Cash Hoard

It's an interesting thing. As someone very interested in Apple's doings—as someone who loves Apple's products—seeing Apple become such a massive success is a great thing. It serves as a sort of quasi-validation in my belief that Apple is offering the best products and services where it competes.

On the other hand, as an enlightened individual who believes that the growing concentration of wealth in the U.S. (and the world) represents a threat to democracy and stability, it's a frightening statistic.

One single company holding 10 percent of all the corporate cash in the U.S.? That's scary, perhaps even dangerous. Worse, the top 50 companies in the U.S. control 62 percent of all the corporate cash in the U.S. and the top five—Apple, Microsoft, Google, Cisco, and Pfizer—hold 25 percent.

These numbers come from Moody's (via The Wall Street Journal), which reported on Tuesday that cash hoards in U.S. corporate coffers (for non-financial companies) totaled US$1.48 trillion at the end of June, 2013.

Though Apple has spent tens of billions of dollars in stock buybacks and dividends in the last couple of years, the company's cash holdings still increased by 9.5 percent in the last year, and sits at about $148 billion, or 10 percent of the total.

All told, Moody's reported that the technology sector as a whole has some $515 billion, which means that Apple also holds 28.7 percent of all the cash in the technology industry.

Wow.

Again, it's super cool in so many ways, but where does it end? Will Apple some day hold all of the money? No, of course not, but it's just so much wealth concentrated in one company. If it were an energy company we were talking about (note that I probably wouldn't be discussing it if it were) or a defense contractor, I would personally be quite concerned about such a concentration.

The thing is that for most companies, that wealth would be put to use buying up all of the other companies. Most corporations would either want to buy new revenue streams or limit competition by buying current and potential competitors. That's the way it's always been done.

Other corporations would plow untold wealth into lobbying efforts to affect U.S. regulatory and legislative direction to the benefit of its corporate self. That's also the way it's always been done.

That's not the way Apple works, of course. Apple has used its money to buy relatively tiny companies that it can then incorporate into its ecosystem of products. Apple has also used its money to secure incredibly favorable component deals by paying for infrastructure (there's security in that, too), paying up front for large percentages of available components, and even opening up a factory in the U.S. (of all things) to build at least one product line (I still assume it's the upcoming Mac Pro).

On the lobbying side, Apple is practically notorious for eschewing a lobbying presence in Washington, D.C.

That's why as a tiny shareholder I've never been concerned about Apple's cash hoard mounting. As a concerned individual concerned about the concentration of wealth, I haven't worried about what Apple might do with its power.

Still, it's a curious thing for one company to have so much money, especially when you consider that Apple has made all of that money by doing things differently than the rest of the tech world.

That said, Microsoft's cash hoard of $77 billion is second on the list and also fabulously large, and Microsoft is effectively the definition of thinking undifferently. Microsoft has come to define the way most people think technology companies should work.

And Google—another arch nemesis (and sometime partner) for Apple—is third on the list, and that company has more than $50 billion in cash. So it's not as if Apple's cash hoard is proof that everyone else is doing it wrong, just that Apple is doing it better than everyone else.

In the meanwhile, I'm still waiting for Samsung to say that it also has 10 percent of the corporate world's cash, but that it had it two days before Apple.

Image made with help from Shutterstock.

Comments

Lee Dronick

Wow! That is a very interesting statistic.

wab95

In the meanwhile, I’m still waiting for Samsung to say that it also has 10 percent of the corporate world’s cash, but that it had it two days before Apple.

...but only in the UAE.

Somewhere an angry analyst is poised to pen that these statistics only prove that a dead company can still be profitable.

Bryan Chaffin

Somewhere an angry analyst is poised to pen that these statistics only prove that a dead company can still be profitable.

Wow, that is so true, wab95.

furbies

wab95; LOL

geoduck

Four of the top five are technology companies. I find that just as interesting. Not defence contractors or oil companies, or even drug companies, (there’s just one of them in the top 5). No, they’re all computer companies that in a real sense don’t compete in the same space. Apple (hardware), Microsoft (software), Google (data), Cisco (networking).

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