14 DAY TRIAL // Whether it’s actually making a car or just add-ons for the automotive industry, Apple is desperate to get rid of some cash, according to a high-profile analyst, and even Elon Musk, CEO of Tesla Motors.
There are various reasons why a huge cash pile can become a burden. While that’s not synonymous with bad news, it does pose problems for a company like Apple, whose reputation precedes it.
Apple is in for some challenges
Bloomberg is running a piece today citing various industry experts, as well as data compiled by its own staff, suggesting that Apple may not be aware of the bumpy road lying ahead (pun intended).
However, if history is any indication, Apple always does its homework before entering uncharted territory. With a few exceptions that are well behind the iMac and the iPod, Apple has rarely released a product that risked to be dead on arrival.
Wiser than ever, Apple Inc. should have thought out its every move by now. Still, there’s a question of why Apple is doing this. At least two people think they know the reason, and it’s simpler than many of us have thought (if indeed true).
Too much money
Valued at $700 billion (€616 billion) by Wall Street - and at nearly double that amount by investor Carl Icahn - Apple has racked up one of the biggest fortunes in the tech sector. It is currently sitting on $178 billion (€156 billion) and is looking at its options to get rid of some of that money. If it doesn’t, by the next quarterly earnings call it will have amassed just south of $200 billion (€176 billion), if past quarters are any indication.
Sam Jaffe, a senior research analyst at Navigant Consulting Inc., tells Bloomberg the following in a phone interview:
“The iPhone maker may be looking at the car business simply because it needs a way to spend money. So how do they spend all of that cash? They are going to have to enter into new markets. It’s inevitable that one of those markets will be automotive. The future of the car industry is how to replicate the design ethos of consumer electronics.”
Elon Musk, the founder and CEO of Tesla Motors, agrees. Even before the Apple Car rumors broke out, Musk had been quoted as saying that Apple is “just running out of ways to spend money. They spend money like it’s water over there and they still can’t spend enough of it.”