Apple's announcement that it will spend $45 billion in the next three years on a dividend and share buyback has already sent the company's stock soaring in pre-trading, but was it the best possible course of action?
The Cupertino company's decision was an obvious one -- its $97 billion cash hoard was becoming a burden, and a combination of a dividend and a stock buyback program is a simple way to keep shareholders happy.
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However, Apple was in a unique position: it had zero debt and an unheard of amount of cash, which gave it an unprecedented freedom of choice.
With the world coming out of one of the worst recessions in recent history, and Apple being on the forefront of a smartphone/post-PC revolution, one can't help but wonder whether there were other -- braver, perhaps -- ways in which the world's most valuable company could have spent that money.
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Apple has invested in green energy before -- its new data center in Maiden, N.C., for example, will have the largest end user–owned, onsite solar array in the U.S. Also, Apple's new "Spaceship" campus will be one of the most environmentally friendly buildings of its kind.
However, while Apple was only investing in green energy for its own purposes (all that positive PR doesn't hurt, either), Google has gone a step further, making green energy its business.
In 2011, Google invested an astounding $880 million in a variety of renewable energy projects -- an amount that sounds trivial compared to the approximately $2.5 billion Apple will spend only on its first quarterly dividend in July 2012.
Steve Jobs was often criticized for not being particularly philanthropic. Though he was a multi-billionaire, Jobs rarely donated money, and he stopped all philanthropic efforts in Apple as well when he returned to the company in 1997.
Tim Cook has had (he still does) a unique chance to completely turn this stance around. Of course, donating a large sum of money to a philanthropic foundation would probably be frowned upon by shareholders, but there are many ways to donate to a good cause: giving away smartphones and tablets to children in poor countries, or helping them get better Internet access, for example. Such efforts might benefit a multinational giant like Apple in the years to come.
iPads for Schools and Universities
Apple recently announced a big play into the textbook business. For this business to thrive, kids in schools and universities need to have iPads, and the simplest possible solution is to just give them away.
Equipping every kid in the U.S. with an iPad is no cheap task. As of late 2011, there were more than 49.4 million students attending public elementary and secondary schools, and 19.7 million students were attending U.S. colleges and universities.
If you count the cost of iPad at $499 (it costs Apple less to make it, but we'll use the retail price for simplicity's sake), it would cost approximately $35 billion to give an iPad to every student in every classroom in America. It would be a very bold move, but also one that would revolutionize the U.S. education system, with Apple sitting firmly at the forefront.
And if you think such a move would be mere squandering of Apple's cash, just think how much money Apple would get when all those kids start buying iPad apps.
A Major Acquisition
Forty-five billion dollars can buy you a lot of things. When we talk about companies as big as Apple, I'm not a fan of major mergers and acquisitions, because it's really hard to integrate the visions of two different IT companies (remember Sony Ericsson and Benq-Siemens?) into one.
As far as acquiring smaller companies -- Tim Cook pointed this out in today's announcement -- Apple still has more than enough cash to buy pretty much whatever company it fancies.
However, with so much money on its hands, Apple could even afford to buy its way into a completely different industry. The aforementioned green energy comes to mind, but there are other options, as well. With today's electric cars becoming more and more intertwined with the IT industry, an iCar becomes closer to reality. So why not buy your way into the auto-industry?
What do you think? Could Apple have spent its cash on something other than dividends and a stock buyback? We'd like to hear your opinions in the comments.
This story originally published on Mashable here.