Does Apple Inc. (AAPL) really have $ 200 billion in cash?

Apple Inc. has confirmed the worst fears on Wall Street as the iPhone enters the maturity phase of the product in its lifecycle. Demand for iPhone is declining, iPad is losing market share to Microsoft’s Surface line of tablets, Macbook sales are plummeting, and Apple Watch and Apple TV are yet to gain land on the market. The company also has bleak prospects for the future, as it has provided a bad guidance. Markets responded by sending Apple shares down 6.55% to $ 93.44 on Wednesday.

However, some people on Wall Street are die-hard Apple fans and believe the stock’s current weakness is only momentary. Apple fans believe the company still has strong business fundamentals, and more than $ 200 billion in cash and investment is more than enough to help the company weather bad times. However, CEO Tim Cook believes the company has a tough road ahead and a new report suggests Apple doesn’t own all of that $ 200 billion in cash.

Apple is not as rich as you think

At the end of the December 2015 quarter, Apple said it had $ 215.7 billion in cash and cash equivalents. The cash stack translates to $ 38.90 per share for the company’s investors. Apple’s huge cash reserve is impressive because Apple has the largest reserve of any non-financial company in the S&P 500. In fact, Apple’s cash position is more than double the cash position of Microsoft, which is located at a distant second with a stack of $ 111 billion.

Matt Krantz from USA Today reports that Apple’s cash flow situation is only part of the story because NOT ALL of the money is available to cash out. The company would have accumulated debt in the same way it accumulated its cash and investments. At the end of the December quarter, the company had $ 53.2 billion in long-term debt to mark a massive 64% increase from the quarter last year. In essence, Apple’s current debt position takes about $ 9.60 per share from the cash position of $ 38.90 per share.

Another twist in Apple’s cash position that takes money out of the hands of investors is that about 93% of that money is held outside the United States Apple has not seriously considered bringing this money back to the US. United States because the company would be forced to pay huge taxes. to Uncle Sam. The tax situation is one of the reasons why the firm finances its share buybacks with borrowed funds.

Tim Cook worries about the future

Apple CEO Tim Cook is worried about the future prospects for the company, as shown by the weak indications provided by the company for the future. In his opening remarks, he said: “We are seeing extreme conditions unlike anything we have experienced before, pretty much everywhere we look. Major markets including Brazil, Russia, Japan, Canada, Southeast Asia, Australia, Turkey and the Eurozone have been hit by slowing economic growth, falling prices commodities and weakening currencies.

However, Tim Cook believes that it is in Apple’s best interest to continue investing for the long term even if the near term outlook is bleak. In his words, “we are not taking away. It’s not – we don’t believe it. Fortunately, we’re… strong enough to keep investing, and we believe it’s in Apple’s long-term best interests to do so.