You're the CEO: How would you spend Apple's $25 billion?

You're the CEO: How would you spend Apple's $25 billion?

Summary: Apple revealed in its Q4 2008 earnings conference call that the company currently has US$25 billion in cash and no debt. Steve Jobs mentioned that its cash supply allows it to invest in R&D during an economic downturn and that the company created the Apple retail store during the last downturn.

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Apple revealed in its Q4 2008 earnings conference call that the company currently has US$25 billion in cash and no debt. Steve Jobs mentioned that its cash supply allows it to invest in R&D during an economic downturn and that the company created the Apple retail store during the last downturn.Sanford Bernstein's Toni Sacconaghi quipped that "I think you could hire almost every engineer in Silicon Valley on a lifetime employment contract and not really dent that significant cash horde that you have." Sacconaghi followed that by asking Jobs "are you suggesting that there are significant opportunities for Apple outside of Apple, specifically in terms of acquiring companies?"

Jobs replied "I just meant exactly what I said, which is I think there’s going to be some significant opportunities. I think hiring every engineer is Silicon Valley is a good idea, though. Thanks."But seriously, what could Apple do with its US$25 billion in cash?

Fortune's Philip Elmer-DeWitt notes that Apple could buy Dell (current market cap. US$23.5 billion).

Although Jobs said that the livingroom (meaning Apple TV) will "still be a hobby in 2009" I think that he's playing his cards close to his vest because he doesn't want to tip off the competition.

Apple should use a little of its cash to:

  1. Acquire TiVO, the fledgling DVR pioneer has been decimated by flush cable companies giving away DVRs to all their customers. This would allow Apple to turn the Apple TV into the DVR that we all want it to be.
  2. Acquire Pandora and re-brand it Genius or somesuch.
  3. Acquire Last.fm while they're at it.
  4. Acquire Hulu.com, which may be tough because it has the backing of NBC and Fox (which is owned by the News Corp.)

If you could dip into El Jobso's bank account what would you spend Apple's money on?

(Photo: AppleGazette)

Topics: Enterprise Software, Apple, CXO, Hardware, Mobility, IT Employment

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52 comments
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  • Adobe might be nice

    Adobe's market cap was about $13 billion. A
    stock swap would not even put much of a hole in
    Apple's 25 billion.

    Then Apple could own the graphics market and
    that handy little format known as Flash.
    j.m.galvin
    • That would be an interesting purchase. [nt]

      [nt]
      olePigeon
    • Good Idea!

      I hope they do.
      itanalyst2@...
    • Hmmm....

      Is Adobe for sale?
      Misha35
  • Gummi Bears

    Billions and billions of gummi bears.
    Real World
    • RE: Gummi Bears

      At the going price for gummi bears, they'd end up with
      quite a few more than billions of them. Great idea
      though, better get your "chewers" ready :)
      Narg
  • Good Question

    That would be enough to buy all General Motors and all Ford Motor Company stocks...( http://www.autoblog.com/2008/10/10/gm-bankruptcy-protection-iis-not-an-option/ ) They badly need Apple's management....

    Then I'd buy Ford's 33.1% stake at Mazda. It's for sale, by the way, and Ford is not looking for an automotive investors. Mazda is the only company that produces DIFFERENT engine (Wankel's Rotary) so that would be good for Think Different marketing. More importantly, Wankel is the only engine so far capable of running on hydrogen pretty much without modifications. Since electricity needs to be produced (coal, natural gas, nuclear) or manufactured (batteries), it is not a long term solution. Apple would find itself controlling technoogies of tomorrow.

    Still, I'd have about 10 billion left....
    kitko
    • A good start

      I had the same idea but I would include all of Ford, Mack, Freightliner, Wheelhorse, etc. Apples tag line would be "If it moves we get paid"

      Apple would then face off the full line of Apple vehicles against Google's Tesla.
      mswift@...
  • RE: You're the CEO: How would you spend Apple's $25 billion?

    I could sell my 2 sons
    desjardinsy69
    • Wrong Place (nt)

      (nt)
      TripleII-21189418044173169409978279405827
  • Don't buy anything big, but strike harder while hot.

    That's my advice. From the homeowner to Apple, we don't know how long or the impacts of the economic downturn. Apple should redouble it's efforts to fix the problems with it's lineup and software, and wait.

    Also, I would probably strike while the iron is still red hot. Why not drop the prices across the line, call it an "economic stimulus" and drop price 20% through march of next year. Capitalize on Vista's perception problems, probably gain 2-3% marketshare before 7's launch and still make a lot of money.

    Even a 20% off till Christmas deal would see their products fly off the shelves. Offer a retroactive 45 day rebate program.

    TripleII
    TripleII-21189418044173169409978279405827
    • Apple is gaining market share now

      No need for gimmicks. Gimmicks are what you do when you
      AREN'T selling well.
      frgough
      • Growing very well VS explosive growth.

        They still have at least an 8 month Window to really aggressively grow their market share before 7 is introduced. They are doing well, why not really go for the monopoly jugular?

        Why is it a gimmick? It worked for MS, lowball everyone else with all that money in the bank, then revert once everyone is extinguished. It's a brilliant strategy when one company does it but a gimmick when another one does?

        TripleII
        TripleII-21189418044173169409978279405827
        • You just answered your own question

          "Why is it a gimmick? It worked for MS, lowball everyone
          else with all that money in the bank, then revert once
          everyone is extinguished."

          Because if Apple did this MS wouldn't be extinguished!!!

          Also according to you they would only gain 2 -3 % market
          share of which most would be the highly price sensitive
          consumers (consumers likely to jump back to windows
          latter cause cheaper) so very short term gain of which you
          suggest to get this they should reduce their 30% margin to
          10%.

          The 30% margin is one of the reasons stock brokers love
          Apple reducing this reduces the stocks appeal driving
          down its stock price weakens the company.

          But ignoring all this they are gaining market share so why
          reduce margins when they don't need to. Now is a great
          time for Apple to invest some of that cash so that they are
          ready to strike when the economy bounces back. Sitting
          back and doing nothing means instead of a head start on
          all over companies they would be in the same boat.
          David Turner
  • TiVO would be a good purchase. [nt]

    [nt]
    olePigeon
  • RE: You're the CEO: How would you spend Apple's $25 billion?

    Invest in the pr0n industry. Have a media company spin-off into an adult oriented section. You never hear of them going broke and is constantly growing year after year.
    Loverock Davidson
    • "growing year after year"

      ... no pun intended, huh?!
      jznoy-dallas
  • Take the company private

    Then you don't have to worry about conference calls, making
    stockholders happy every quarter and having everyone judge your
    company by what it's stock price does every day.
    frgough
  • Hang on to most of the cash

    Apple was in bad shape when Steve Jobs
    returned and I believe he considers cash
    as a critical asset to have - and will keep
    most of those funds for "difficult
    economic times".

    The key spending needed should be
    focused on maintaining spending in areas
    where they are already spending:

    R&D
    Engineering
    Software Development (new & existing)
    More Apple Stores
    Enlarging services like the AppStore
    New products (like a 2nd iPhone model)

    Basically that means maintaining
    momentum while other companies are
    cutting back. That's powerful.

    Acquisitions, I believe, should be selective
    and add to Apple's roadmap. I don't see
    companies like TiVo meeting that criteria.

    Adobe is interesting, but would probably
    be like FileMaker - too far from internal
    operations to make a lot of difference.
    (Actually, FM's new consumer database,
    Bento, isn't even included on new Macs as
    a "trial version" while MS Office is. What
    gives?)

    $25 Billion allows you to stay strong
    during difficult times, stronger than most
    of the competition. That places you very
    well when the economy improves and that
    is what I think Jobs is looking at more
    than anything else.
    Ken_z
    • Yep, save cash for real prospects.

      Cash is always a great asset to have. People seem to think that if they have money, you have to spend it. Take a wait and see attitude with the economy this way, and when you have a clear insight into something that is going to explosively take over 2.0, or 2.1, or whatever, you have the ability to go after it with a vengeance.

      TripleII
      TripleII-21189418044173169409978279405827