What Apple Inc. Can Do With It’s Cashflow “Problem”.

Apple Inc.

Apple Inc. is the world’s largest company with a market cap of $405 Billion, and they are flushed with cash at $135 Billion.  Because of this, they have even been accused of having a cash problem…That is; having too much of it!  Think of it, a publicly traded company being in the hot seat for having too much cash, isn’t that really what shareholders want?  Well kinda…   Some would say, “cash is trash” because money parked in a short term savings account is yielding next to nothing.  So what is the opportunity cost of holding all that cash?  I am sure that Apple Inc. plans on spending a significant amount on research and development.  I am sure they have a well paid team scouring the internet, trade shows, colleges, shareholder events, looking to invest in or buy the next Facebook or Dropbox.  That said, maybe they should continue to evolve their products, grow their brand and not worry about their cash “problem”.

Having to answer to board members and shareholders!

This is the difficulty with running a publicly traded company and having to answer to a board, shareholders, and the media.  Maybe if it was up to Apple Inc, they would worry less about appeasing the shareholders who are mainly concerned about putting that Motherload of cash to good use.  Instead, perhaps they would create the best products possible using U.S. Labor, even if it costs considerablly more.  Through employment, and by building production centers in ‘middle America’ they could change entire communities in this country.  Reminiscent of what the oil boom is doing to North Dakota.   They could also aid, through technology, in the research of cures for diseases such as diabetes, cancer, and HIV.  Also, in an effort to build a more educated American workforce, Apple Inc. could fund technology learning centers, perhaps in inner cities so that less fortunate, young kids can understand the future of technology.

I believe Apple has an obligation

Surely Apple Inc. has thought about this, maybe even have plans like these in the near future.  Heck, maybe they have implemented projects like this and I haven’t heard?  I just think that a company this successful and this influential, has an obligation.  I know this is all pie in the sky dreaming, because the shareholders want their investment to thrive, which, dont get me wrong, I certainly understand.  I just think that Apple Inc. could do so much good for our struggling country, they could impact so many lives in such a positive way.

I know that the labor pool in China where most of the guts of their products are built, is cheap and ambitious labor.  I get that, but Apple Inc. is essentially building communities in China, making them stronger and us potentially weaker.  Maybe I am oversimplifying things, and these products cannot be built in this country, for an litany of reasons.  It would almost be enticing for our friends in D.C. to create a bill which could award companies who provide major employment in the U.S, with exceptional tax breaks.  Maybe organizations like Apple and similar sized companies with a market cap of over say, $100 Billion, would be glad to keep jobs here if there were considerable financial incentives.  I think for this country to climb out of our economic doldrums, it may take an ambitious leader like Apple to pave the way for job creation in this country.  Our friends in Washington have proved to be unsuccessful at creating jobs!

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  1. krantcents says:

    The recession has made it economically feasible to bring manufacturing back to the U.S. I think you will start to see change in the next few years, but skilled labor is still a problem. Hard to believe that manufacturing skilled labor is in short supply.

    • Jim says:

      Good Points Krant, I think that maybe automation has replaced many of the skilled labor jobs. I personally believe that it’s a slippery slope relying so much this automation. Maybe it is short supply cause kids are going to school to learn Law and Technology, not engineering and business? Just a thought!

  2. Nice thoughts Jim! I would have to agree with you, that they do have an obligation to look at how they can use some of their cash hoard to help benefit the world community at large. I know it’s pie in the sky as you said but it behooves them to do something with all that cash. I could think of one thing…oh maybe pay their taxes as opposed to shifting things around so they do not have to pay as much.

    • Jim says:

      Thanks John! I agree with you with regard to paying their taxes. I guess when you get so large and in thick with politicians you can avoid paying your taxes….Kinda like GE too? 5 Billion in PROFIT, no tax liability? Shameful.

  3. Manufacturing will slowly gravitate back towards the US, in order to be closer to the final point of sale. But labor is never coming back to the US. Foxxcon, which makes many Apple products, is automating more and more of their plants as labor becomes more expensive in China. I would argue that labor (unskilled and semi-skilled) is on it’s way out for most of the world, as it is slowly replaced by automation.

    • Jim says:

      Well said MFIJ, I knew that automation was taking over the world, its kinda sad that production jobs will eventually be extinct. Where do all those workers find employment if they can’t jump on the technology bandwagon?

  4. Great post Jim, I’ve heard that if Apple were to build the iPad in the US the price would jump from $500 to $5000, all due to the fact that the US labor cost is a lot higher than in China.

    • Jim says:

      That is unbelievable, I hadn’t heard that, but I knew that the price would have to be considerably higher. Guess, the first thing that needs to happen is to lower the labor costs, if that is possible!!

  5. That’s insane. Hopefully they can reinvest that money into creating some jobs in the U.S. I can hope, right?!?!?

    • Jim says:

      Well…..Still waiting on that? They did give a dividend to shareholders which I dont think they ever had in the past, but to my knowledge they still outsource much of the guts of their products to a company called Foxxcon Technology Group… In China!

  6. The most absurd thing I hear on almost a weekly basis is that the government “creates jobs.” The government contributes absolutely nothing to the actual economy it instead takes from it. (Not trying to insinuate a debate) I agree with you, if Apple can be innovative and create a new market I believe there are numerous jobs that can be created.

    • Jim says:

      Marvin, I agree with you, government actually takes from the economy. We should have learned from the stimulus bill in 2009 that they cannot grow the economy by spending. I think it was SIr Winston Churchill who hit the nail on the head when he said “we concur that for a nation to spend itself into prosperity is like a man standing in a bucket trying to pick himself up by the handle”.

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