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Software industry

Apple's Cash Hoard Jumps 12% to $178 Billion, But Company Piles Up Debt

Strategic Insights

— 1 min read

Apple's cash reserves rose 12% in 2014 to $178 billion, but the company has taken on significant debt to support its share buyback and dividend programs. Despite holding the largest cash hoard among U.S. companies, Apple has surpassed the debt levels of tech giants IBM, Oracle, Microsoft, Cisco Systems, and Intel. The company is poised to raise another $7 billion in bonds, with analysts citing attractive terms on its corporate bonds.

Key Takeaways:

  • Apple's cash on hand increased 12% in 2014 to $178 billion, according to Moody's Investors Service, making it the largest cash reserve among U.S. companies.
  • As of March 28, Apple had more than $40 billion in long-term debt, with Moody's estimating that the company has raised roughly $36 billion from the bond market since September 2012.
  • Apple's share buyback and dividend programs are fueled by its cash hoard, with activist investor Carl Icahn pushing the company to step up capital returns.
  • The technology sector holds $690 billion, or 39.8%, of total non-financial corporate cash, with U.S. non-financial companies holding $1.73 trillion in cash at the end of 2014.
  • Apple's capital program, increased by more than 50% in fiscal Q2, aims to return a total of $200 billion to shareholders by March 2017.
  • Since the start of its capital program in 2012, Apple has returned 100% of its free cash flow on a fully taxed basis to shareholders, according to Morgan Stanley.

Statistics:

  • Apple's cash on hand: $178 billion (as of 2014)
  • Long-term debt: $40 billion (as of March 28)
  • amount of cash raised from bond market since September 2012: $36 billion
  • Total corporate cash held by U.S. non-financial companies: $1.73 trillion (as of 2014)
  • Percentage of total corporate cash held overseas: 64% (as of 2014)
  • Amount of cash held overseas: $1.1 trillion (as of 2014)
  • Increase in Apple's capital program: more than 50% (fiscal Q2)
  • Total amount Apple plans to return to shareholders: $200 billion (by March 2017)
  • Return of free cash flow to shareholders since 2012: 100% (on a fully taxed basis)

Sources:

  • Moody's Investors Service
  • Investor's Business Daily
  • Apple's 2014 financial reports
  • Morgan Stanley
  • Goldman Sachs research report
  • Apple's Q2 earnings report (April 27)

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