Apple has more cash on hand than any company currently in business, but Wall Street is still not impressed.
Apple shares plunged by as much as 10% in after hours trading Tuesday despite beating earnings and revenue estimates for the June quarter. Driving the decline: a worse-than-expected outlook for the upcoming quarter.
Apple had $202 billion in cash and marketable securities on hand as of the end of the June quarter, according to its latest earnings report on Tuesday, marking the first time the technology giant has crossed the $200 billion threshold.
Apple has tried to spend its money by buying back its own stock and investing in new technology categories like smartwatches and the rumored electric car. Still, Apple’s cash pile has continued to soar — from $164 billion in the same quarter a year earlier.
That cash, however, presents a lot of risks.
The biggest risk is that Apple may be besieged again by activist shareholders like Carl Icahn and David Einhorn, who launched campaigns in past years to force the company to reduce its hoard of cash. Those sieges also coincided with a sharp fall in Apple’s stock price, which has only recently recovered.
Another risk: The vast majority of Apple’s money sits overseas, which worries U.S. lawmakers because the company is not paying U.S. taxes on any of it. Apple had $158 billion in offshore cash as of last year. Read more…