Apple is swimming in Cash following Massive Q4 Earnings

by Matt Klassen on January 26, 2012

Is the new iPhone 4S the latest innovative mobile device or simply an incremental upgrade over its predecessor? It’s a question I asked following what I considered to be the unveiling of the relatively lacklustre iPhone 4S back in early October of last year. I was thoroughly convinced that the general public would simply not be hoodwinked into purchasing an Apple device that was, in essence, a carbon copy of its predecessor with a few minor tweaks and upgrades…and I couldn’t have been more wrong.

If it wasn’t the long lines at Best Buy, the fiscal reports from carriers showing the burden of iPhone 4S subsidy fees, or the fact that Chinese Apple fans rioted at the release that proved to me that the iPhone 4S wasn’t a lame duck device, its certainly this…the iPhone 4S has rocketed Apple back into the corporate stratosphere.

In its Q4 report released yesterday Apple posted huge earnings, watching its overall capitalization reach a staggering $418.8 billion (to put it in perspective that’s double the value of Wal-Mart). With more money than Scrooge McDuck (minus the money bin to put it in) the only real question is, what’s Apple going to do with it all?

Apple finds itself in a unique and enviable position in the mobile sector, having created an entire in-house operation that includes control over its devices, its operating system, and its applications. In looks like about the only thing that Apple doesn’t do in-house is actually selling the phones, but as I mentioned yesterday with Verizon Apple ostensibly controls the carriers with its stiff subsidy fees and draconian distribution agreements.

In fact, following the company’s latest fiscal report Apple’s stocks soared in early trading yesterday, up nearly 7 percent to $449.33. The company’s strong performance stems directly from a record-breaking holiday season, during which Apple posted $46.33 billion in revenue and pocketed a record profit of $13.06 billion. It wasn’t simply the iPhone that spawned the company’s robust performance either, as both the iPad and Mac got in on the fun with sales rising to 15.43 million units and 5.2 million units respectively.

While all of this undoubtedly has Apple investors sleeping comfortably at night—no doubt the polar opposite to the sleeping habits of any remaining RIM investors—there is better news for those invested in the Cupertino Company, it has no debts. According to a recent report from the Securities and Exchange Commission the company has no debts currently on its books and it has $97.6 billion in cash on hand. With that much disposable income and indebted to no one, the only thing Apple has to worry about is what to spend all that money on.

Strangely enough, however, spending the money does seem to be a problem for Apple. For quite awhile now investors and industry analysts have pressured Apple to actually use those funds—of dividends paid to stockholders being the most attractive scenario I would guess—but to date they remain in Apple’s deep pockets.

The company addressed that very issue, though, in this latest fiscal report, with both Apple CFO Peter Oppenheimer and CEO Tim Cook stating that the company is “examining all uses” for the money, including reinvesting in its supply chain and strategic acquisitions. Perhaps instead they could invest it on something that’s truly innovative; instead of what I’m guessing will be yet another almost-antiquated iPhone update in 2012.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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