A report from Mood’s Corporation (NYSE:MCO) revealed a fun fact about everyone’s favorite Cupertino company, stating that Apple Inc. (NASDAQ:AAPL) holds around 10 percent of all corporate cash in the United States, according to the ratings agency. The news was reported by The Wall Street Journal this morning. Apple is sitting on a $147 billion hoard of cash.
The Moody’s piece doesn’t really mean what its headline suggests, however. The test, which counted the cash reserves of the top 1,000 companies that the firm rates, excluded financial companies. Financial institutions exist in one of the most cash rich industries in the United States. Though not entirely honest, the proportion of corporate cash that belongs to Apple Inc. (NASDAQ:AAPL) is astounding.
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Apple cash boom
The boom in the Apple Inc. (NASDAQ:AAPL) cash pile is a direct result of the success of the iPhone, and to a lesser extent the company’s other products. Apple is now sitting on so much cash that it is attracting attention, and no wonder. According to Moody’s Corporation, (NYSE:MCO) non-finance companies held a total of $1.48 as of June 30.
The distribution of that cash is demonstrably not equal. The top 50 companies hold around 62 percent of the total corporate cash pile. Apple Inc. (NASDAQ:AAPL) is the biggest holder of them all. Apple Inc. (NASDAQ:AAPL) had about 9.5 percent more cash at the end of June than it did at the end of 2012. Technology companies as a whole held around $515 billion, or more than a third, of the cash pile.
Apple Inc. (NASDAQ:AAPL) started shifting some of its cash last year by investing in a large dividend and share buyback program, but the expansion of the buyback program this year was financed by a huge debt offering. Apple doesn’t seem to know what to do with all of that money.
Apple’s use for cash
One of the biggest problems for Apple Inc. (NASDAQ:AAPL) is the worldwide distribution of the company’s cash. Most of the company’s cash is held outside the United States because the company refuses to pay the taxes for repatriation. Apple Inc. (NASDAQ:AAPL) has shied away from big acquisitions and other tools that would rid it of its cash burden.
There is one method the company may use to get rid of the cash, but it seems more and more unlikely. Carl Icahn is trying to push the company toward a $150 billion buyback. It seems that even if Tim Cook listens, that plan will be fueled by debt.