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Apple Is Doing It Right | Entreprelife

Apple Is Doing It Right

Apple

Not that kind of apple.

Apple has gotten a lot of bad press recently. Allowing workers to be mistreated overseas hasn’t done a lot of good for the company (check out the articles I’ve linked to here and here).

But, they’ve recently gotten some amazing press – and for good reason!

Last week, Apple announced they don’t have any debt to speak of; only cash. 97.6 billion in cash.

That’s 97,600,000,000.00.

That’s a lot of cash.

As one website put it, Apple has enough cash to pay the entire world’s oil demand for 9 days. It could bail out Greece. It has more money than the GDP of 2/3rd of the world’s countries.

There are a million things Apple could do with that giant pile of money which is what financial nerds all over the internet have been spec­u­lating about for days.

And while it’s fun to compare and speculate, there is only one thing Apple will do with that money: sit on it.

Not A Recession Move

Apple isn’t afraid of a mythical “second recession” and they aren’t worried about bank­ruptcy or lawsuits. Apple has 97.6 billion in cash because it helps them sleep at night.

How does 97.6 billion in cash help Apple sleep when every other corpo­ra­tion is embracing debt and lever­aging their assets away? I’ll give you three reasons:

  • Emer­gen­cies are covered. Apple loses a $100 million dollar lawsuit? That’s like you or I having to drop a couple hundred on a speeding ticket. Or what if a product flops? No big deal, Apple has the cash-on-hand to cover itself while it regroups and rede­velops. Whatever problem the company faces, they have the money to handle it with ease.
  • Product devel­op­ment Is An Easy Choice. Want the impos­sible? What the best people working insane deadlines to develop the greatest products? No problem. Putting 10, 20, 500 million into product devel­op­ment isn’t something Apple has to worry about. They can pay whatever is needed to do whatever they want in any sort of time frame they come up with.
  • Stock holders are happy. Did you see what happened to Apple’s stock after the announce­ment? It jumped 20 dollars a share and is contin­uing to rise. Some people think it’ll jump over 100 dollars a share by the time this is all said and done. With this much cash in the bank, stock­holders are happy and that makes Apple happy. And if something starts to go badly, Apple can easily appease their stock holders with large dividends from that massive store of cash.

Are You An Apple?

Are you living like Apple? If an emergency hit, do you have the cash in the bank to cover it? If you are offered a once-in-a-lifetime trip, do you have the money in the bank to pay for it?

Apple doesn’t have to worry about those kinds of things and neither should you. All you need is an emergency/opportunity fund.

  • Pick an amount ($1,000 to six-months worth of expenses) for your emergency fund and save a little bit every month until you hit it.
  • Pick another amount as an oppor­tu­nity fund. Continue saving until you get to that mount
  • Put the money somewhere you won’t touch it.
  • When an emergency (or awesome oppor­tu­nity) crops up, tap into your 97.6 billion (or whatever your amount is) and stop worrying about things like debt, stress, and interest rates.

It’s really that simple. It’s what Apple is doing, why aren’t you?

Do you have an emergency fund?

5 Responses to “Apple Is Doing It Right”

  1. Loren Pinilis January 31, 2012 at 10:51 AM #

    I’ve wondered exactly why they’re holding on to that cash. I’ve figured they may be making some super move to purchase Google or something crazy like that. Heh.

    • Alex February 1, 2012 at 9:45 AM #

      I’m pretty sure it has to do with Steve Jobs wanting to keep his legacy safe and to have a major emergency/stock holder fund if anything went down.

      Maybe they will do something crazy like buy Google, but I doubt it. lol

  2. Brent Pittman January 31, 2012 at 11:33 AM #

    You never know when you’ll be sued or patents revoked. And hey, who knows what smaller companies they’ll need to purchase to get into the online wallet wars.

    • Alex February 1, 2012 at 9:45 AM #

      Very true!

  3. Espn August 11, 2014 at 10:08 PM #

    That’s a crccaer­jakk answer to an inter­esting question

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