Fast Company

A Challenge To Apple To "Think Different" About Spending Its $100 Billion Cash Stash

Apple should do more than just pay off stockholders with a dividend. It should take the opportunity to redefine what it means to be a corporation.

It's hard to imagine how big a billion is. Now try with $97.6 billion (call it an even $100 billion), the wad of cash Apple has squirreled away. One hundred billion one-dollar bills weigh about 200 million pounds (or 100,000 tons, give or take) and if you laid them end-to-end they'd circle the earth 40 times at its widest point, the equator. Layer one bill on top of the other and you could build a tower 6.8 miles (36,000 feet) into the air, high enough to obstruct air traffic. Convert Apple's cash stash into a giant stack of pennies and you could reach the moon. Twice. The company that sprouted modestly from Steve Jobs' garage on April Fool's Day 36 years ago has enough cash on hand to pay off the total public debt of eight European Union countries. It could buy Facebook outright, or spring for 33 billion Starbucks tall cappuccinos or 100 billion packs of Skittles.

That's just cash. Apple's market capitalization is, as I write this, $566 billion, bigger than the entire U.S. retail sector, and some predict Apple could become the first trillion-dollar company. It's already worth more than Ford, GM, Boeing, and General Electric combined, twice the size of Microsoft, and equal to two Walmarts, five Amazons, or 10 eBays. Its half-a-trillion-dollar market cap would place it 25th in the world in gross domestic product between Thailand + South Africa (not an exact comparison, but you get my drift). Meanwhile, Apple gets richer, reporting revenue of $46.33 billion and net profit of $13.06 billion in its last quarter. 

Do you want to sell entertainment devices for the rest of your collective lives? Or would you like to do something that takes real courage and make the world a better place?

So I was disappointed that Apple's big announcement earlier this week turned out to involve dividends to stockholders. The company had issued a press release on a Sunday, which gave the impression that CEO Tim Cook planned an earth-shattering announcement. Instead we hear news only a stockholder could love. What happened to the company that once lionized "the crazy ones," "the misfits," "the rebels," "the troublemakers," "the round pegs in the square holes," "the ones who see things differently," and "push the human race forward"? 

Now that Apple is the richest company in the world, it has an historic opportunity to redefine the role a corporation can play, and if Apple leads others will follow. When Steve Jobs recruited Pepsi president John Scully to jump to Apple, he asked, "Do you want to sell sugared water for the rest of your life? Or do you want to come with me and change the world?" Now that Jobs is gone, I'm throwing down a similar challenge to Tim Cook and Apple's board: "Do you want to sell entertainment devices for the rest of your collective lives? Or would like to do something that takes real courage and make the world a better place?" 

Here's how I propose Apple spend some of its billions and invest in the collective good: 

Education

About the iPad Apple boasts "the device that changed everything is now changing the classroom." If Apple is serious about changing education it should invest in the classroom of the future. The company could work with top educators to create a learning environment that would not only improve the efficiency of education, but would tap the imaginations of our nation's school children. In other words, do to education what the Apple Store has done to retail. 

Training

In Walter Isaacson's biography of Steve Jobs, Jobs says he told President Obama that Apple could relocate more manufacturing plants from China to the U.S. if the company could hire an additional 30,000 American engineers. They would not have to be PhDs from MIT or Carnegie Mellon. They just needed basic engineering skills for manufacturing, which could be learned at community colleges or trade schools. Apple could--and should--fund programs across the country to train these engineers. It could provide grants to these trade schools and community colleges and offer free tuition as an incentive.  

Foreign Factories

Steve Jobs believed that Apple's success ultimate depended on controlling the entire ecosystem so that hardware and software worked seamlessly together. Yet this tightfisted control hasn't extended to its supply chain management. "We've known about labor abuses in some factories for four years, and they're still going on," a former Apple executive told The New York Times. "Why? Because the system works for us. Suppliers would change everything tomorrow if Apple told them they didn't have another choice." Apple should apply the same ironfisted control it exerts over its design process to its working conditions overseas. This, admittedly, is a much taller order, as the factories are not owned and operated by Apple. There has been speculation lately that bringing production to the U.S. would not crush the company's bottom line, but the issue is complicated, as the Times has illuminated in a recent series.

Far-Out Fantasies

Nicholas Thompson, the editor of New Yorker.com, served up a suggestion over Twitter: "Personally, I wish Apple decided to use its cash on futuristic R&D---like the old Xerox model." Apple could create the modern equivalent to Bell Labs and let great minds working in tandem conceive of even greater inventions, the kind that dazzle the mind and nourish the human spirit. Realize that "the minute that you understand that you can poke life ... that you can change it, you can mold it ... that's maybe the most important thing." 

Yep, that's Steve Jobs. Here's hoping Apple grows up to change the world beyond selling mere electronics, that it embraces a new kind of corporate heroism at a time when we could use some heroes. 

[Image: Flickr user Pierre Marcel, and Richard Thomas]

Adam L. Penenberg is a journalism professor at NYU and a contributing writer to Fast Company. Follow him on Twitter: @penenberg.

Add New Comment

14 Comments

  • Steve Osborne

    Some nice stats that bring home the meaning of the numbers (eight EU countries' public debts!!) and interesting ideas for investing the cash in ways that seem to fit with Apple's stated mission. You'd have to hope that Steve Jobs chose that guy from Pepsico very carefully indeed. Adam's first suggestion about education is so relevant and 'on brand', it should be a no-brainer, except for one issue: no amount of genius or innovation seems to be able to penetrate state institutions' infinite reserves of inertia, and entrepreneurs and innovators can get very tired of trying. The market solution would work though - why not create Apple iLearn Universities with some early takeover targets - MIT and Cambridge might fit the bill.

  • kaustubh.dhargalkar

    Apple today stands at a point from where it could revolutionize education & training, Hoping that Cook & gang show the same vision as obs did over the last three decades. However, expecting Apple to help the US govt reduce its debt burden is like "Overeating for a weeks at a stretch & then expecting God to save one from an upset tummy". A leaf from Jobs' life & Isaacson's book-- Jobs & his family, despite the millions that they had, lived middle-class, to the extent that Reed, his son, once referred to Larry Allison, the CEO of Oracle, as Dad's rich friend". I think the American govt. & the public should take a leaf from that......

  • Ruth Ledesma

    Apple has the marvelous opportunity to do something no other corporation can do: buy a country!  If Apple buys all the US debt, we won't be owned by China and other not particularly friendly countries.  Corporate states is the wave of the future and Apple can lead where no other has gone before.

  • Jonathan Talbot-Kelly

    "Now that Apple is the richest company...Apple leads others will follow".  While I agree with this statement, I would suggest that Apple needs to first redefine its business model and embrace a social conscious as an organization by becoming more meaningful to people, profit and planet.  With respect to funding initiatives such as education and training, these are all great but Apple first needs to revisit their company vision, values and practices by adopting more meaningful list of objectives.  It's no longer good enough to "just" donate to various charities for a tax receipt while disregarding how they conduct themselves as an organization.  At the very least, Apple should get certified as a B Corporation (www.bcorporation.net) and Tim Cook should visit and learn from other leaders who have adopted a more beneficial business model and still showed a healthy bottom line. 

  • Brooke Kelley

    I think they missed an opportunity as well. But I'd describe your suggestions as philanthropic. Their announcement was a half measure that will be fruitless for anything but a short term gain or brief stabilizing effect. A company with the market capitalization and cash balance of that size had the opportunity to change the way blue chip stocks, and equities in general, are viewed. The current state of equity trading valuation is far and away speculative and draws little distinction from casino gambling.  While some will still extoll the virtues of the dividend issuing stock, it's rare and it is not what boosted Apple's share price to the high levels currently experienced. A real commitment to viewing the equity in Apple as a share in the company and it's profits rather than hopes akin to the roulette wheel could a step forward for markets world wide.  Many companies look to Apple as leaders in design, marketing, supply chain and most of all strategy. They could have stepped up to the plate and said we are going to issue dividends, at a significant given level of our profit, permanently and regularly, while maintaining a specific cash position for stable operation.  This payout is a token gesture and Apple has passed up it's opportunity to make a statement to separate the meaning of equity in terms of sharing in the profit and speculation in terms of gambling with imaginary value. As long as our global economy is driven by imaginary gains in value from companies that don't profit or pay their profits back to their executives we'll continue to experience the pain volatile, panic-driven and opaque markets.

  • Barry Coyle

    As I've been ranting in assorted posts on this issue.  Think of the marketing win Apple would have, and the unmatched good will generated, if they were to at least build a "token" factory of their highest profit item in the USA?  Say, the PowerMacs.    But, with their profit margins, they of course, could build almost their entire line of hardware in the states and still be hugely profitable, AND improve their time to market, reduce shipping costs (even though their shipping is "free", it's already in the price of the device) and shipping a 30 lb power mac 6000 miles is not cheap.   Finally, the labor costs.  The cost per worker in China is incredibly low, but how many on avg are needed to create a single iPad?  20?  30 pairs of hands?   America can't build low cost items anymore, but we know how to automate.  And why are semiconductor factories around the globe automated?  To remove the human element.  Apples quality would go up (even by today's standards) and the cost per device would likely be on par with it's current costs;  including people involved, shipping, logistics, suppliers, added Apple legions in China to get this done, etc...   versus having much of this "in house".  I say it's POOR business, when you're in Apples situation to NOT produce here.   One wave of bird flu, earthquake, typhoon, political upheaval, strike, another explosion, could wipe out an entire line of hardware for months.  I'm surprised they leave all that to be controlled elsewhere, when Apple is so passionate about control.   

    Finally, if it DOES cost way more to build say, an iMac in the states, the good will and marketing wave could be rode for years for just 1 factory.  No brainer....

  • Andrew Duneman

    The author ignores the contributions Apple has made simply by focusing on building great products. Like the tens of thousands of people employed world wide by Apple and the hundreds of thousands of jobs created to support Apple products - manufacturing and distribution of parts of accessories, writing and selling apps, etc. How about apps that provide health data and services to 3rd world and developing countries like extremely low cost eye exams?

    You don't have to give away your profits to be good.

  • Jonathan

    Well said. I wonder if Yvon Chouinard and Steve ever met. Tim Cook could undoubtedly benefit from taking a page from the Patagonia playbook.

  • Keith Spanberger

    I love Apple and do agree that being the leader is gone, that the house has changed.  At some point we have to realize that it is not about filling our own pockets, but making a difference in a global way!  Apple, rethink your decisions before greed becomes your end!

  • Travis Price

    I lectured on saving the world's global cultures and on my peraonl  efforts at Apple's Masters Series year before last.  It was  a big honor and an exciting dialogue.  I also was of course hoping that Apple had a corporate giving for my 501C-3 to help with this work.  I was surprised they had none.  I thought about it with great care,  and now fully concur, they shouldn't.  They should plow and sow  all they have back into their work.  They are creating jobs, saving the world, and indeed their employees and they know what's best for their fruits.   They should not get lost in government nor foundations who largely talk about it all like mutual bureaucrats full of their own idiosyncrasies and bloated overheads.  Why waste great capital on false distributions.  Apple should stay the course, its exciting, hard nosed, and indeed a shining example.  Ask a "crat" for money in the foundation world or government and watch yourself drown in mud.   Go APPLE. 

  • Gerald Riskin

    I like that this article stimulates thoughts about what options and alternatives Apple has… at the same time, I have confidence in Steve that choosing Tim was wise… I have confidence in the current board and executive of Apple to make some great decisions in the areas the article covers…  Apple still has plenty of resources to invest in the ways suggested… relax… have confidence… you will be rewarded as usual… 

  • Marc Fey

    Mr. Penenberg makes a compelling case for how Apple might use its staggering stash of cash. The problem, however, is his lack of respect for the individual investor and understanding of the fundamental lever of the American economy which drives innovation: profit.

    When the richest company in the world doesn't share profits with investors, the wrong signal is sent to investors--that profit is not a valid end goal. Do that and you undermine the fundamental assumption that fuels the best of American innovation.

    It is not an either/or dichotomy. Share the wealth with investors. Then, map out a long-term plan for innovation that changes the world.

    Good for Tim Cook--affirm your competitive advantage, all the investors who trust you and will fund the future. And do it by acknowledging why they're in the game with you--to share in your future success.

    Now that's a long-term strategy to change the world.

  • Andrew Norris

    The beginning of the end indeed. Paying the shareholders who have already done very nicely! Apple is not the same without Steve Jobs. It is just another corporation now, and not a good one. 

  • Ralph Amato

    Apple announcing that they are going to start paying a dividend is the beginning of the end.  The company is loosing its Mojo.  The corporate culture has changed and without Steve Jobs at the helm I fear this company will eventually become a mammoth corporation with no vision or innovation.
    What happens five years from now when the Apple pipeline of great ideas from Steve Jobs comes to an end.
    Are they even looking for the next futuristic genius to lead them into new frontiers?