In one sense, answering the question "How much money does Apple have?" is easy.
During its Q2 earnings conference call Monday, Apple Inc. (Nasdaq: AAPL) reported that it now has $193.5 billion in cash and cash equivalents on its balance sheet.
That's a big number. What does it really mean?
For one thing, it means the AAPL profit machine rakes in an incredible amount of money every hour of every day.
In the March quarter, Apple earned $13.56 billion in net income. That works out to $150.77 million of profit every single day. Or $6.282 million per hour. (If you think that's something, Apple pulled an average profit of $8.3 million per hour in its record-breaking December quarter.)
That's why Apple's cash pile has grown so large. As recently as the end of Q2 of 2012 - exactly three years ago - Apple had $110 billion in cash. That's an increase of $83.5 billion.
That figure is higher than the cash holdings of any other company save one - Microsoft Corp. (Nasdaq: MSFT), which has $107.4 billion. Next on the list is Google Inc. (Nasdaq: GOOG, GOOGL), which has $67 billion - well below Apple's three-year increase.
And the swelling of Apple's cash reserves has come despite a good faith effort to spend it...
Research and development spending has more than doubled over the past three years. And the company has given billions back to shareholders via Apple stock buybacks and Apple dividends. Apple now pays out more than any other company in dividends, $12.1 billion per year.
But let's get back to the question of "How much money does Apple have?" The figure of $193.5 billion is hard for just about anyone to wrap their head around.
So we've come up with some things Apple could do with that money that show how just mind-boggling that amount of cash is...
How Much Money Does Apple Have? Here's What It Could Buy
If you controlled Apple and $193.5 billion was burning a hole in your pocket, you could:
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- Go on a shopping spree: Apple could buy 193 companies worth $1 billion each. Or 1,935 companies worth $100 million each. Or 19,350 companies worth $10 million each.
- Pay a special dividend: Apple could just give all the money back to the shareholders at once in a special dividend. That works out to about $33.25 a share. An investor with 1,000 shares of AAPL stock would get a check for $33,250.
- Buy two-thirds of the gold in Fort Knox: If you believe the U.S. government, there's 258.6 million ounces of gold stored at Fort Knox. That's worth a little over $313.2 billion at today's prices, which means Apple could buy nearly two-thirds of it. The goal would be to create the world's first gold-backed digital currency based on Bitcoin's open source code. Hey, crazier things have happened.
- Buy gift cards for everybody: Apple has enough money to give every man, woman, and child in the United States about $600 each. But instead of a check, Apple could send everyone an Apple Store gift card. Brilliant, right?
- Buy Teslas for Connecticut: The state of Connecticut has a little over 2.5 million registered drivers. Apple could buy each one a Tesla (Nasdaq: TSLA) Model S at $75,000 each and still have some money left over.
- Build your own tax haven: Most big companies, including Apple, already take advantage of tax haven nations around the world. Why not buy one and ensure maximum tax advantages? Going by gross domestic product, Apple could go European and pick up Luxembourg for about $60 billion. But a better bet might be the Bahamas, with a GDP of just $8.42 billion and a much nicer climate.
- Pay off the U.S. national debt: Just kidding. The $18.2 trillion national debt dwarfs Apple's $193.5 billion. Apple's cash would pay off just 1.06% of the national debt - not even enough for a decent down payment.
Apple stock deserved better after monster earnings. Apple had a big beat on earnings Monday, and yet AAPL stock has edged lower. Wall Street seems to have missed all the things CEO Tim Cook talked about that speak to even bigger profits down the road. Here's why Apple stock has nowhere to go but up...
Follow me on Twitter @DavidGZeiler.
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.