Hasta La Gadget!

This article was written on May 09, 2008 by CyberNet.

Can you imagine having 20 billion dollars plus in cash, just lying around? Microsoft for many years has been one company in the tech industry that always had at least that on hand. In fact, four years ago they had a whopping $64 billion dollars sitting around. The San Francisco Chronicle recently posted a really interesting article about Microsoft’s cash balance of $26.3 billion dollars, and how that gives them the title of biggest cash pile in the tech industry. They may have some company soon though, because another tech company is creeping up on them. Any guesses of who this might be?

If you guessed Apple, you guessed correctly. Apple’s cash balance has been mounting and recently they hit the $19.4 billion dollar amount. To help put into perspective the growth Apple has seen, it was just four years ago that they had about $5.5 billion dollars in cash at their disposal. A good chunk of that money that they now have is due to the success of the iPod and of course then the iPhone. That got us thinking about where Apple would be if they hadn’t developed and had so much success with the iPod.

You’ve probably heard the “Halo Effect” mentioned in regards to iPods over the last several years. It is used to describe the notion that people who buy iPods may eventually buy a Mac computer and so the sales of Macs are dependent on the success of the iPod. The sales results we’ve seen from Apple tend to show that there is at least some type of Halo Effect going on, and at least some of the millions of iPod owners choose to buy a Mac because of their satisfaction with the music player.

I guess what we’re getting at is that Apple is awfully lucky that the iPod was successful for them because if it turned out to be a flop, there’s absolutely no way that they would be creeping up on Microsoft in the amount of cash they have available. This puts Apple in a really great position because now they’ve got the money to fund and consider acquisitions to help boost their business even further. While they’ve got the money to spend, some have speculated that Apple won’t be doing much with it soon. Andy Hargreaves who covers Apple at Pacific Crest Securities in Portland says, “I don’t really expect them to do anything with it in the near term. I think that Steve Jobs’ experience with this company and the cycles that it’s been through has taught him to be very, very conservative, and save for the rainy day.”

For now there is no rainy day in site, and the piles of cash continue to mount in the tech industry…

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