Apple’s Cash on Hand vs. Microsoft

| Analysis

I thought it would be interesting to compare Microsoft's cash on hand (and short term securities) to Apple's. Over the last few years, Microsoft hasn't fared well compared to Apple.

I had a chart that was current as of June 2008, but Apple's cash has been rising significantly, so I got curious. In fact, only two companies have more cash right now than Apple: Cisco and Exxon. I took the original chart, read off the numbers, and then went to Apple's and Microsoft's earnings report for the last year to fill out the remaining four quarters. Here's the chart:



Apple and Microsoft Cash/S.T. Securities in US $, Billions


I believe the big drop in Microsoft's cash in Dec, 2004 was due to a major stock buy-back. Then, after a steady decline, Microsoft was able to, recently, put a significant amount of cash to work in investments and did quite well. (There may have been other factors that I haven't explored.)

Of course, as analysts like to point out, neither Apple nor Microsoft is a bank, and earnings should come from growth in sales, not just investments. Even so, Apple does well with its investments too, and it's hard to blame a company that has decided to hold onto its cash, in the midst of a terrible recession, for investing its money wisely.

Microsoft and Apple have wound up at the same place in the summer of 2009, just a little over US$31B in cash and short term investments. But the long term view suggests that Apple is continuously earning money because people stand in line for its products while Microsoft's revenues come from businessmen who have no where else to turn.

Recently, John Dvorak wrote a solid and informative article about the misadventures of Microsoft: projects that failed to produce and then Microsoft lost interest. Seldom does a long series of failed projects listed there lead to rising revenues, especially as customers, IT managers, continuously seek to minimize costs. So the chart also says that Apple's bet on the consumer, with purchase authority, has been a good bet compared to business for whom every dollar they spend on IT is one less dollar in their own pockets.

As the Magic fortune telling Eight Ball says when you turn it over: "Reply hazy, try again." And that's what we'll have to do now: wait another four to six quarters to see how this chart develops. And cash on hand isn't the sole determiner of the health of a company. For now, the chart is like the stock market. It shows what happened in the past, but it's no guarantee of what the future holds.

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They say everyone has their price.

I think mine is $31 billion.

What’s your price?


I believe Microsoft completed a bond offering very recently, causing the cash balance to increase, as it was to be used for “corporate” purposes.  Actually a good move to issue long-term debt at the very low fixed rate of interest.  Someone’s on the ball in finance at least.

You are also correct in Apple’s shot at the consumer vs enterprise.  It’s a lot of work changing out computers and systems across an enterprise.  Much easier to change one or a couple of machines at home.  My view of IT in enterprise, is that they aren’t leading change and innovation.  Just the opposite, they restrict change and innovation, unless it saves them time (personal) and money.  A lousy prospect to try to sell an advanced technology to.


The linked article below went further back and suggested “Apple may have been accumulating the cash faster through the ten and twenty billion dollar levels than Microsoft” did at those levels in years past. There is a table with figures going back to the 1990s comparing the two.

In continuing the cash accumulation rate of the article with the latest number, this quarter revealed 10.7% growth in from last quarter. Not bad for a recessionary period.

Regardless of the historical comparison, it is an excellent corporate performance.


Yes, you should really subtract debt to get a true position. Microsoft’s $6B increase is entirely due to the issuing of $6B of debt in the past year.

Microsoft balance sheet

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