To those that have been following the rise (and potential
fall) of Apple (NASDAQ:
), one common theme has been the vast cash and investment pile on
the company's balance sheet.
As of the end of the most recent quarter, Apple's fiscal first
quarter, cash and cash equivalents including investments
increased to $137 billion, or about 30 percent of its market
Many have questioned what Apple will do with this cash.
Already, Apple has initiated a dividend for shareholders and
announced that it would be increasing the dividend as of
Still, the question remains, what will Apple do with all of
its cash? It could buy-back stock; it could increase the
dividend; or it could buy other companies.
With lots of cash on its balance sheet, Apple could target
some large companies. In fact, just using market capitalization
as a measure of the value of the company, Apple could buy the
sixth through tenth largest technology stocks traded in the
United States. So what would it look like if Apple bought any of
Target Number 1: Visa Inc. (NYSE:
With a market capitalization of $106 billion, Apple could buy
out the financial transaction processing and credit card company
with a premium. With Apple's push to beat Google (NASDAQ:
) to develop a mobile wallet, purchasing Visa would actually make
The move would also help to bolster Apple's financial position
as it could move in-house financing programs and even offer Apple
Target Number 2: Cisco Systems (NASDAQ:
Currently, Cisco has a market cap of $112.13 billion, making
it ripe to be taken out by the behemoth that is Apple. Apple
could integrate the switches business as well as the other
smaller businesses into its model and make Apple a one-stop shop
for computer and networking services.
Also, Cisco has been a consistent dividend payer and could
increase Apple's cash flow to shareholders.
Target Number 3: Qualcomm (NASDAQ:
Apple could also look to buyout Qualcomm and expand into the
wireless networking business. With Google's secretive push into
developing next generation wireless and wired networks, Apple
could be forced to compete with its bitter rival by expanding
into the business as well.
Currently, Qualcomm's market cap is $110.6 billion, just large
enough for Apple's monstrous cash pile.
Target 4: Intel Corp. (NASDAQ:
Vertical integration would be the theme if Apple were to buy
Intel, the chip maker with a market cap of $104.58 billion. This
purchase makes a lot of sense because Intel has patents on
production processes for chips that allows it to make better
chips than some of its competitors.
Should Apple purchase Intel, it could design its own chips
that would optimize performance in all of its products and it
would also allow Apple to profit from competitors devices through
sales of chips to other companies.
Target 5: eBay Inc. (NASDAQ:
Apple already has the iTunes store, its own App store, and the
Apple store for purchasing Apple products. Imagine if Apple could
go one step further and allow customers to bid on products,
services, or apps in an auction style, making much more efficient
Buying the online retailer with a market cap of $72.72 billion
would also give access to the Paypal service for Apple, which has
been hugely profitable for eBay.
Is it likely that any of these deals will happen? Of course
not, but it is an interesting thought exercise to show the
insanity of how large Apple's cash position currently is.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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