Apple Inc. (AAPL) Actually Putting Cash To Use; Is It Enough?

This will to a large degree depend on the company’s ability to keep innovating its product lines, which so far has proven to be challenging. The iPhone is certainly not as hot a product as it used to be, and the iPad, while popular, is also facing competition from Android and Windows 8 devices. Apple Inc. (NASDAQ:AAPL) as a company has lost a great deal of its shine in the last six months or so, a development that can not be remedied simply by a share buyback and a dividend hike. It thus remains to be seen if Apple can regain its leadership position in the industry.

What’s the Competition Doing With its Cash?

While it is no slouch in terms of its cash position, tech giant and prime competitor Google Inc (NASDAQ:GOOG) doesn’t suffer from quite the same cash return issues as Apple. The company has some $50 billion in cash and operating cash flow in excess of $16.5 billion, which is also a lot of cash to have lying around. Admittedly, Google Inc (NASDAQ:GOOG) uses a lot of money for expansion and acquisition, but some investors believe that Google, like Apple, should start paying a quarterly dividend.

Another historic competitor in the operating system space, Microsoft Corporation (NASDAQ:MSFT), has been paying dividend for years, currently yielding a healthy 3% annually. The company’s dividend growth has outpaced the industry since 2009 at least, and its dividend is sustained by a payout ratio of 44%. With cash reserves north of $74 billion, and a huge operating cash flow of $30.61 billion, they easily have the means to do so and continue doing so.

The Bottom Line

While Apple reported earnings and revenue that beat the consensus estimate, it was the unveiling of the company’s plans to return some of its massive cash hoard to shareholders that had investors excited. While the company is clearly facing some headwinds, which have been reflected in its dramatic drop in share price, the measures undertaken to better manage its cash reserves may serve to incite some confidence in the company as well as its management. The real question however is whether the company will be able to remain innovative and competitive in an increasingly challenging environment.

The article Apple Finally Putting its Cash Pile to Use, But Is it Enough? originally appeared on Fool.com and is written by Daniel James.

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