Photo: MR MARK BEK | Flickr
One of the most astounding facts in Apple’s latest earnings report is how quickly the company is adding to its cash pile.In just the first three months of this year, Apple added $12.5 billion to its cash balance, bringing the total amount of cash and investments up to a whopping $110 billion.
It may finally be time to put all that cash to good use and make some acquisitions its future.
Just because Apple can afford to buy something doesn’t mean it will or that the companies themselves would be willing to sell. But here are a few ideas for the shopping spree Apple could go on.
Do you remember Ping, Apple's attempt at social networking? Don't worry, nobody else does either.
If Apple really wants to make headway in the social networking space, the company could afford to buy Facebook, LinkedIn or Twitter -- or all three together.
Facebook values itself at roughly $75 billion, LinkedIn's current market cap is just north of $11 billion, Twitter is valued around $10 billion depending on who you ask, and the most generous estimates place Pinterest at around $7 billion.
That leaves an extra $7 billion for Apple to grab something else...
Apple could easily control the entertainment media landscape by purchasing Hulu or Netflix, or both. rumour has it that Hulu is currently valued at $2 billion and Netflix's market cap is ~$4.5 billion. That's nothing for Apple at this point.
Why not just buy Jack Dorsey's entire portfolio and make him an exec at Apple? Square is currently seeking a round at a valuation around $4 billion, according to reports.
While Twitter could help Apple step up its presence in social media, Square's technology could give Apple an advantage in the mobile payment space.
Apple's $12.5 billion cash haul last quarter would be enough to cover what Google agreed to pay for Motorola Mobility.
It wouldn't make any sense at all -- the last thing Apple needs is a rival phone maker and it's got plenty of patents in the mobile space -- but it's fun to think about.
Apple has added $29 billion to its cash pile just in the last six months, which is slightly more than Dell's current market cap. It would be a fitting end given Michael Dell's infamous comment in 1997 that Apple should sell the company and give the cash back to shareholders.
Don't get your hopes up though, Michael Dell. We doubt Apple would go for it.
It's hard to think of any two tech companies with more different operating philosophies, and harder still to see any scenario in which Jeff Bezos would be willing to sell Amazon.
However, consider all the perks Apple would gain from owning Amazon -- complete domination of the tablet market as well as the market for digital media, not to mention a fleet of incredibly powerful servers.
If Apple wanted to expand its retail business, or just put competitors out of business, it could easily afford to buy out Best Buy and Radio Shack. Best Buy's current market cap is ~$7.7 billion and Radio Shack's is ~$515 million. For good measure, it could throw in Target too, whose market cap is ~$38.7 billion.
There has been plenty of debate about whether Apple should be more aggressive in hiring more skilled workers in the U.S. to boost the amount of manufacturing it does at home. The typical argument against doing so is that there just aren't enough skilled workers.
Hypothetically though, Apple has enough money saved up to educate and hire hundreds of thousands of engineers. Just as a thought experiment, let's assume Apple pays each of its employees the average annual salary of an electronics engineer ($86,000) for two years and pays for each of them to have a four year tuition at MIT for engineering ($41,000/year). With $110 billion, they could hire roughly 327,000 skilled workers -- probably more than they would ever need.
Alternatively, Apple could give each of its 200,000 assembly line workers in China a one-time raise of more than half a million dollars. Then again, if it did that, Americans might start running away to work in China.
Or basically enough for each person to buy an iPad 2. Who knows, maybe it wouldn't be such a bad business model?
Earlier in the year, Apple announced that it would commit $45 billion over the next three years to pay dividends and buyback shares.
But at its current rate of cash generation, the company will pull in enough cash in the next four quarters to completely offset that expense. So that leaves plenty of money left over to play with.