[DannyBee]

As a slight sidetrack, Apple doesn't have that much cash in reserve. They have short term investments and long term investments.

Articles you read that claim they have 100 billion (or whatever) in cash are seriously confused about how cash and cash equivalents work.

From their latest 10k:

Cash and cash equivalents $ 10,746

Short-term marketable securities $ 18,383

Long-term marketable securities $ 92,122

(this is in millions)

Long term marketable securities are basically those things that they would likely take a significant hit on if they had to actually convert to cash in a reasonable period of time.

So how does this really compare to other companies?

Let's look at google.

As of September 30, 2012, Google had:

Cash and cash equivalents: $ 16,260

Short term marketable securities:$ 29,464

Whoops. It turns out google has more actual cash than apple, and more combined short term securities + cash. Just not as much in long term investment securities.

In short: Apple doesn't really have some amazing amount of cash.

[tatsuke95]

>Articles you read that claim they have 100 billion (or whatever) in cash are seriously confused about how cash and cash equivalents work.

It's semantics. It's cash. Not in the literal sense that they are wallpapering the headquarters with it. But it's cash from profits they've earned, that are invested in bonds and securities, just like you are I would.

>Long term marketable securities are basically those things that they would likely take a significant hit on if they had to actually convert to cash in a reasonable period of time.

Not necessarily true. Apple holds something like $15BB in Treasuries under their LTMS holdings. These are liquid (hence the label marketable). They also own a bunch on municipal bonds and corporate debt, most of which are also extremely liquid.

[DannyBee]

It's not semantics to call it "not cash". If i own a million shares of apple stock, I don't own cash or a cash equivalent, i own a marketable security. They are valued quite differently.

The long term/short term is the maturity, and as you point out, some billions are probably treasuries, which are easy to trade (They don't break it down that I saw, Google does break it down into treasury bonds, etc).

However, some of it could be (and certainly is) instruments that they could transform into cash (hence marketable), but would take a significant loss on if they needed to do so quickly (< 90 days).

Calling that cash is simply false. Let's stick with the simple fact: If they needed to transform that 92 billion in long term marketable securities into cash tomorrow, the percent chance they will get 92 billion for it is quite low.

If they need to transform it into 92 billion in cash in the next 6 months, the percent chance they will get 92 billion for it is quite high.

[tatsuke95]

>"It's not semantics to call it "not cash""

Yes, it is.

I take offense to stating that people who use the term "cash" don't know what they're talking about. They, in fact, do know that "cash" doesn't imply Apple has a Scrooge-McDuck-type vault loaded with hundred dollar bills.

>"If i own a million shares of apple stock, I don't own cash or a cash equivalent"

Commercial paper, short-term debt, preferred stock, T-bills, option contracts are all cash equivalents. This is where Apple is putting its money (they aren't buying tens of billions worth of common stock). It's "cash".

[DannyBee]

I completely and totally understand what cash and cash equivalents mean. Nobody believes Apple has a scrooge-mcduck like vault, and I have never claimed otherwise.

I have very simply claimed that Apple's cash and cash equivalents are not 100 billion, and that long term marketable securities are not cash.

You vehemently disagree, seemingly because they are liquid enough you may be able to get some money for them.

Let's start simple: Can you explain why if you think they are 'cash' or 'cash equivalents', they're explicitly not listed in the 10-k as "cash equivalents"?

I mean, you keep claiming up and down they are the same as cash, or "cash equivalent", and yet apple doesn't believe so. Nor does Google on their 10-q.

Given the companies don't believe they are cash or cash equivalents, or at least their auditors don't, can you explain why you do?

I'll also point out while it's theoretically at the discretion of the auditor whether the marketable securities can be included in "net cash", a lot don't, simply because the risk is not 0, where the risk on cash is ~0.

The risk on long term marketable securities is not 0 either, and in fact, can be quite high.

[tatsuke95]

>"You vehemently disagree, seemingly because they are liquid enough you may be able to get some money for them."

No, I disagree because I know what a substantial portion of Apple's investments are (this information is public), and they are, by definition, cash or cash equivalents.

>"Let's start simple: Can you explain why if you think they are 'cash' or 'cash equivalents', they're explicitly not listed in the 10-k as "cash equivalents"?"

Because they don't have to list them as such? There's a lot of deception in SEC filings; that's half the game. It's only me speculating, but I believe Apple is utilizing many tricks to help them retain all those earnings, rather than paying taxes on all those profits. Would that surprise you?

>"Given the companies don't believe they are cash or cash equivalents, or at least their auditors don't, can you explain why you do?"

Taxes.

I mean, this side-discussion started because you made the claim:

"In short: Apple doesn't really have some amazing amount of cash."

Which is only true in the strictest definition of "cash". When "cash" is used how most investors understand it --those people you accused of being "seriously confused"-- Apple has a bunch. You don't have to take my word for it, it's out there.

[atmz]

Stop arguing with everyone, long-term marketable securities doesn't mean what you think it means.

You're right in that it's not cash, and in some cases it's illiquid. However, you seem to think the 'long-term' in 'long-term marketable securities' means 'will take a long time to sell for fair value'. This is wrong; long-term just refers to the maturity of the instruments. Again, these long-term instruments are more likely to be illiquid, but they're not illiquid by definition. 10-year Treasury notes are 'long-term' but highly liquid.

So, in conclusion, it depends on what these "long-term marketable securities" are, which is what most of the other replies are trying to say. If you want to argue, argue that Apple owns a bunch of RIMM stock or something, don't accuse others of misunderstanding the term.

[melvinmt]

Hint: Marketable assets means liquid assets. If they need to spend the LTMS they can do it in a matter of days, hence the term "cash".

[DannyBee]

Uh, no. If it was "cash", or equivalent, it would be under "cash and cash equivalents". Marketable simply means they can be traded (IE they are not something like non-OTC stocks)

They may be long term instruments that they would take a loss on if they traded before maturity. Heck, they may be long term instruments that have trading restrictions on, etc.

It's simply not cash. Period.

[melvinmt]

If long term assets have trading restrictions they're not marketable. I get that it isn't cash cash in the most literate sense, it's liquid assets, which is nearly equivalent to cash, just like the "cash" in your bank account.

[tribeofone]

Thanks for the breakdown, does that $92,122 represent their investments in infrastructure and manufacturing (that google does not really need to make) or money invested in long term securities/financial products? Whats the Long-Term marketable securities for Google?

[tatsuke95]

It's financial instruments. Apple's cash hoard is essentially a massive bond fund they run out of Nevada.

[jtbigwoo]

Twenty nine billion dollars is still an amazing amount of cash. That's almost $400k for every employee!