murchr wrote:Kusadikika wrote:Impunity wrote:Kusadikika wrote:Ericsson wrote:Apple has $230bn in cash
During the days of Steve Jobs, Apple used to hold a lot of cash but not any more. Right now they have about 80 Billion in Cash and debts of 112 Billion
https://finance.yahoo.co...L/key-statistics?p=AAPL
Microsoft is more cash rich with 131 Billion in cash and debts of only 86 billion. They hold enough cash to pay off all their debts and still have 45 Billion to play with.
https://finance.yahoo.co...&.tsrc=fin-tre-srch
US companies have crazy debts and Microsoft is one of the few with minimal debt.
What's the rationale for holding such a huge swath of liquid cash?
Some companies generate so much cash they do not know what to do with it!!! A company like Microsoft does not even manufacture anything so it is not like they need to pay suppliers or anything. For Microsoft I know it was also a deliberate decision made by the founders early on that they wanted to keep enough cash to run the company for I don't remember what number of years even if no revenue was coming in. Jobs had the same principle from his experience in the early days of Apple when they were struggling.
Even locally Safaricom generates so much cash that they just give it all away as dividends.
You want to say money can only be used in manufacturing? Dont they buy equipment, maintain, and pay engineers?
Some businesses are more capital intensive than others. If you are manufacturing you need a lot of capital outlay before you can earn your cash.
Check out these 2 companies side by side Microsoft and Ford Motor company:
Ford revenue: 158 Billion
Ford EBITDA: 12 Billion
https://finance.yahoo.co...?p=F&.tsrc=fin-srch
Microsoft Revenue: 125 Billion
Microsoft EBITDA: 54 Billion
https://finance.yahoo.co...MSFT&.tsrc=fin-srch
Microsoft is just in the best business in the world. If the worst came to the worst and business went down you just fire people. With Ford if business goes down what do you do with the manufacturing plant? You still have to maintain it because if business picks up again you may need to have it in working condition.
If a guy bought a Ford pickup in 1990 and still likes it there is little Ford can do to make him buy a new one. With Microsoft they just stop supporting and giving updates of old software and you are forced to get the newer version.