Apple is expected to release a report Tuesday morning that shows the company holds over a quarter of a trillion dollars in liquid cash–an amount greater than the total market capitalization of Ford, Tesla and Fiat Chrysler combined.
Some 90 percent of Apple’s anticipated cash holdings are stockpiled outside the U.S., The Wall Street Journal reports. The company’s quarterly report is expected to show Apple has doubled its cash over the past half-decade. Apple brought in cash at a rate of nearly $3.6 million per hour in 2016’s final quarter.
President Donald Trump will likely take issue with Apple’s exorbitant overseas cash reserves, as he did repeatedly on the campaign trail. Apple became the president’s shining example of what was wrong with the U.S. tax code, and with big business in general.
While promoting his book, “Crippled America,” in 2015, Trump described his views of Apple outsourcing labor and production to China. “China makes more money with Apple than we do, if you think about it. We have to bring Apple — and other companies like Apple — back to the United States. We have to do it,” Trump replied.
At a campaign stop at Liberty University in January, 2016, Trump doubled down, saying: “We’re going to get Apple to build their damn computers and things in this country instead of in other countries.”
Trump promised in March, 2016, that when he became president, Apple would be “making their products in the United States,” instead of in China. The president even suggested imposing a 45 percent tariff on Chinese goods to make the U.S. a more attractive place for Apple to produce its iPhones.
His administration previewed its much anticipated tax reform package on April 26 at the White House, which included huge cuts to the corporate tax rate and a one-time holiday rate on corporate cash brought back home. (RELATED: Trump Releases Highly Anticipated Tax Return)
Apple and its CEO Tim Cook are outspoken supporters of a “holiday tax” that would allow companies to repatriate funds without taking a significant tax hit. Cook said in January that if the administration and Congress were able to strike such a deal, it would be both “very good for the country, and good for Apple.”
Carl Icahn, the billionaire investor and special adviser to the president on regulatory reform, slammed Apple in a 2015 letter, arguing that the company’s stock price reflects a “massive undervaluation,” because it has so much excess capital sitting unused as cash reserves. (RELATED: Trump Picks Icahn As Special Adviser To The President)
Icahn cited the company’s billions in cash reserves, saying Apple should offer more stock, “which would meaningfully accelerate and increase the magnitude of share repurchases.”
Financial experts are scratching their heads trying to figure out why Apple is beefing up its war chest. Some are hoping the large amounts of cash will be used to acquire new firms, like Netflix. Others are praying that Apple chooses to continue its push to enter the self-driving car market, and make a bid to purchase Tesla.
While Apple has yet to release its plan for all of its cash, the company did say in April that it is “investing heavily in the study of machine learning and automation,” according to company letter.
Apple isn’t quick to make large plays in the acquisition market, which makes it difficult to hypothesize what its next move might be. The company has purchased an average of 15 to 20 companies a year over the past four years, but only ones it could quickly assimilate into its business model.
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