"Cash" in balance sheet accounting-speak isn't limited to the dollar bills under Tim Cook's mattress. It refers to a large number of essentially "cash equivalent" things that can be converted to cash quickly and easily, albeit at essentially risk-free rates of return.
You maintain a cash reserve so that, if there is a (hopefully) short-term market correction, you're not stuck with having to sell assets in a dip to meet payroll, etc. Not really much different from people in that regard although obviously at a different scale.
Drug lord Pablo Escobar once burned $2 million cash to keep his family warm while they were hiding in a cave. It is also said he lost 1 billion cash per year due to rats eating the bills and/or dampness spoiling them.
I'd imagine more like Scrooge McDuck in swim trunks diving into a large vault of gold coins.
Also, I doubt there's really a matress. He just sleeps on the money directly. Stacks of banded bills is probably pretty stiff vs just loose bills all piles up organically. Like each night before bed, he takes a few new stacks of cash reserves and makes it rain before diving in.
The other user is right. In a low interest rate environment it’s well possible for risk-free to underperform inflation. You can see this in the current short-term US treasury rates. This is one of the reasons so much money is piling into riskier assets.
Because the company would have gone bankrupt in the late 90s had Microsoft not given them a loan (and it's likely the only reason MS did so was because they were facing monopoly scrutiny). Jobs swore that would never happen again and made sure everyone on his executive staff and board of directors was on the same page.
That is a bit of a mis-statement. Apple was in trouble at that time, but it was not on the brink of a bankruptcy (despite the constant use of the word "beleaguered' by the press), and Microsoft's investment did not materially affect Apple's ability to continue. The investment was intended as a show of faith from Microsoft (and turned out to be a good investment).
The far more important part of that announcement was the commitment of Microsoft to continue development of Microsoft Office for the Mac. That was the single biggest symbol that Apple was going to continue. Without Office the Mac was likely doomed to an ever smaller nitch, and everyone knew it. That one commitment on Microsoft's part cemented the Macintosh's place as a big player, and kept Apple from dwindling to the point where bankruptcy would have been a real worry.
It’s really not. Their financial results for FY97 was a loss of $1 billion. That was after posting a net loss of $816 million for FY96. At the time of the Microsoft stock purchase it was down to $1.2 billion in cash… you can do the math on their runway had Jobs not quickly turned things around.
Only in an accounting sense is their money stored "around the world". It's all managed by their Nevada investment company Braeburn Capital. They can freely move it to banks in the US or to anywhere else they need it, it's only "overseas" in the sense that they recognized the revenue elsewhere.
Cash and cash equivalents is the line on the balance sheet and includes things like T-Bills and other low-risk investments. Apple almost certainly does better than inflation and regardless, it's completely normal treasury management to return ~0% since if your shareholders wanted exposure to riskier assets, they'd buy those assets with their own money.
> They can freely move it to banks in the US or to anywhere else they need it, it's only "overseas" in the sense that they recognized the revenue elsewhere
Yes, they could, however the point made above is valid - if they did that, they'd have to pay a chink of US corporate tax on it, and unless they have a use for it in the US, that'd be analogous to throwing money away.
In recent years, Apple has been taking out big loans in the US (or selling bods - same effect) collateralized by their overseas cash equivalents whenever they need an infusion of USD. Paying 2% interest is much cheaper than paying 10-15x that in taxes.
I haven’t used Apple Card, but it was apparent when I financed with their previous partner Barclays that they had their own say at least in the application and approval process. It was wildly different from applying for credit in any other scenario I’ve experienced. They’re clearly backed by other credit vendors but that doesn’t mean they’re not operating their own financial institution.
You maintain a cash reserve so that, if there is a (hopefully) short-term market correction, you're not stuck with having to sell assets in a dip to meet payroll, etc. Not really much different from people in that regard although obviously at a different scale.