Metaphors

Apple’s record cash haul could repay Detroit’s debt eight times over

July 23, 2013
July 23, 2013

Apple now has $146.6 billion in cash and marketable securities on its balance sheet, with some $106 billion kept offshore, the company said during today’s earnings call.

That’s a record for the poster-child of tech companies maintaining mountains of overseas green. It’s enough to pay off bankrupt Detroit’s $18.5 billion in debt about eight times over, a comparison that gets right to how the US is handling its transition from an industrial economy to a “knowledge” economy: unequally. Detroit, over-dependent on manufacturing going offshore or becoming automated, couldn’t handle the consequences of this transition, leaving its residents in a very tight spot, indeed.

Apple’s cash has grown for two reasons: One, its executives apparently can’t think of a business plan worth investing the money in, and two, they doesn’t want to pay US corporate taxes on repatriated earnings, hoping that tax reform or a temporary holiday will allow it to bring profits back to the US at low rates.

A third reason that could once have been added to the list is a reluctance to return those profits to investors, but after much hue and cry, Apple is returning $50 billion through share buybacks and dividends. Even then, though, Apple doesn’t want to touch that cash, preferring to take advantage of low US rates to borrow $30 billion in debt, keeping that cash safe overseas.

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