Monday, March 18, 2013, 08:58 pm

Apple cash hoard could hit $170 billion this year

By Daniel Eran Dilger

Moody’s Investors Services noted in a report today that Apple's cash pile could reach $170 billion this year if the company doesn't change its policies regarding dividends and stock buybacks.



A report by Marketwatch cited the research note, which alarmingly warned, "unless Apple changes its philosophy towards liquidity/shareholder returns by increasing its $10 billion annual common dividend, or if Apple increases it stock buyback program, we estimate Apple’s cash balances could increase by another $35 billion in 2013 and exceed $170 billion."

Moody's profiled cash stockpiles among non-financial US corporations as amounting to $1.45 trillion at the end of 2012, more than a third of which ($556 billion) is held by tech companies.

Nearly a quarter of the total ($347 billion) is being held by five companies, with Apple at the top of the list with over $137 billion. Microsoft, Google, Pfizer and Cisco round out the top five.

Apple announced plans last year to distribute $2.5 billion each quarter to shareholders as a dividend, and said it would earmark another $10 billion in stock buybacks to offset stock-based compensation. In total, this would amount to around $45 billion over the next three years.

The company has also outlined plans to invest $10 billion in 2013, including nearly $1 billion to enhance and expand its retail stores worldwide, and $9 billion in facilities and infrastructure, including data centers, new office buildings, and manufacturing equipment it will install at its partners' facilities to help guarantee a smooth supply of components.

Despite having articulated plans to put $55 billion of its cash pile to work, Apple continues to generate so much new cash flow that its assets continue to expand. Last quarter, the company added another $16 billion.

While commonly depicted as a cash "hoard," Apple's "cash" is actually conservatively invested in corporate securities (over $46 billion), US Treasury and US agency securities (over $39 billion), and other money market funds, mutual funds, municipal securities and mortgage and asset backed securities, according to the company's most recent 10-K filing.