| There isn't a 'point' exactly. Typically companies hold cash or cash equivalents to write checks against when they are either expanding or buying material that will later be sold. So if you're a company building widgets you need parts for the widgets to build them before you have sold them to get the money. Some companies will use a line of credit for that, others will use cash. An interesting comparison here is IBM. Like Apple, IBM's operations generated a huge amount of cash in the early days. Way more than they needed to run the business. As a result IBM bought real estate. They bought up large parcels near cities and transportation hubs and office buildings etc. In the Bay Area you can see their Almaden Research center, an example of some property they bought in the 60's. When IBM lost their way in the 90's and it was looking like they were toast, they survived by selling off a lot of that property and living off the proceeds. Apple could conceivably operate for 15 to 20[1] years off just their cash on hand. That said, given today's market rates for cash (under 2% and sometimes even negative), almost anything that wasn't completely stupid would likely give them a better return. And that is something of a conundrum for economists who are wondering why all these companies are sitting on so much cash. It really depresses an economy when there isn't enough cash running around in it to operate it. Then 'what should they invest in'? Is a solid question. I felt they should build a web crawler/search engine, dump the last dependencies on Google for their destiny. But clearly they are looking at self driving cars (see the story about getting a permit to test in California) they are developing CPUs (they could create an actual semiconductor subsidiary if they wanted). And then there is the challenge of 'where' the money is. First and foremost a number of people would argue that the 'cash hoard' consists in no small amount of unpaid taxes, which is to say taxes that have been avoided through a variety of legal schemes from being paid to the governments of the territories where they do business. And that argument is bolstered by the fact that Apple doesn't move cash around in order to avoid taxes on it (the whole repatriation thing). On the one hand if the governments give up their claim on any taxes owed, then Apple is free to collect the money into the jurisdiction where it can be invested most profitably, on the other hand there are civil servants who would really like to get their hands one some of that cash[2]. Bottom line is that there isn't a point, but various conditions have made holding cash the default choice. [1] Their cost to operate would go up as they were non-profitable but their headcount could go down if they weren't in product production. [2] And in many cases the governments believe it to be 'owed' even if there is no legal statute that states that. |