According to MacRumors, Apple has $15 billion in cash reserves.
How does a company typically store this kind of cash? Is it as simple as a bank account with an eleven-figure balance? Do they invest it with availability based on how much they expect to need? If they wanted to buy a company, do they just write out a cheque for a billion dollars?
Is that $15 billion Canadian money? That’s like 12 bucks here. LOL
Sorry. I will still joke about Canadian money, parity or not…
I wouldn’t expect it to be in a checking account, but I can picture Apple holding $15 billion in 60-day T-bills or bearer bonds in a bank in Geneva or some other high-security facility. The money is effectively one phone call and one business day away.
As for a big-ticket purchase, there are tax implications so more likely the sale will consist of stock-trading or something similar to minimize sales tax.
It’s not that astonishing a figure for their industry, either. Dell has $12 billion in cash, Microsoft $19 billion, HP $11 billion, … many of the big tech companies have huge cash positions on their balance sheets, and have had, since the dot.com bust. They HAD money, they just weren’t making anywhere near enough to justify their valuations, and when they trimmed staff, they were awash in the stuff. Microsoft’s cash balance was stratospheric, and they handed out a one-time $3 dividend a few years ago.
Steve Jobs may be a tad eccentric, but I doubt his shareholders would stand for stashing actual securities certificates in a vault somewhere.
Cash reserves for large corporations are typically in money-market accounts and low-risk, short-term bonds. (E.g. the above mentioned T-bills, but they do it electronically.)
One of the major jobs for the Chief Financial Officer (CFO) of a company is to figure out the best way of handling the cash balances and more temporary inflows of a company.
There are a huge variety of instruments that can be applied, ranging from overnight loans to short-term T-bills to longer-term bonds or other investments. The exact form of them as well as the exact mix of shorter or longer stashes for greater or lesser amounts of interest is one thing that tells the skill of a CFO. The CFO also has to work with the CEO to determine when the money will need to be freed from these instruments so that they can keep earning the highest interest for the longest time, rather than bouncing through short-term revolving doors. It is a highly sophisticated position requiring many of the same skills as a investment broker.
Most of these will be simple electronic transactions. Some companies do wind up with large amounts of actual cash in hand, but that is mostly sent to the bank where it is converted into a line in an electronic account. Cash is mostly an obstacle to doing the real business.
Man, if they throw that into an interest bearing checking account for twelve months at 6%, it’ll earn $1,284,573,577.72 in twelve months, then they’d be sitting pretty on $16,284,573,577.72. Why do they need to sell computers? How many outstanding shares are there? That might be pretty good dividends.
Kind of puts it into perspective when my company loses $12.7 billion dollars.
875 million shares, $15.4 billion, so cash is $17.60/sh. 6% of that is $1.06/sh. With the current share price around $180-$190, that’s around 0.6% yield. Hardly exciting.
Why throw it in a bank account? Skip the middle man - invest/lend it out yourself. That’s what banks do in order to pay back interest. You’d make more that way.
Scrooge McDuck’s Money Vault, of course! 
That’s the joke. In reality, it’s invested, of course.
I’m getting $925,167,177.96 earned (compounded). Still, not too bad.
Wouldn’t you like to know. 
In Steve Jobs’ walk-in sock drawer.
I believe that’s what Posche is doing. There’ve been recent articles that say that Porsche makes three times as much in investing as they do in selling cars.
How this is significantly different from what I said escapes me.
I kinda thought that it would be something more lucrative than a chequing account, but it would be neat to see a bankbook with an 11-figure balance, is all.
Note that companies that publicly trade in the US have to register as investment companies (a big undertaking which makes all kinds of special rules applicable) if they are not primarily engaged in an actual operating business. There are lovely SEC rules and interps on what this means in practice (you can hold cash for up to [2] years IIRC if you rasied the cash for the purpose of doing acquisisitons, or if you have a plan to dividend it out or redeploy it in some way, and certain businesses that must hold and invest cash–insurance companies–get execeptions). “Primarily” is relative–for great big companies like Apple and Microsoft a few billion in cash is still only a small percentage of their overall oeprations. Don’t know whether Porsche trades in the US in a way that makes it subject to these rules or not.
I haven’t looked at their recent numbers, but in the late '90s Fortune decided to rank GE in the financial services sector since that is where it made most of its money. GE didnt like it, but it was the truth. Most of their business lines are non-financial, but GE Capital was definitely the biggest.
Or 150,000 accounts, each with $100,000, so that it is all FDIC insured!
Hooray!! We’re slightly richer!!
-C Montgomery Burns