Apple Inc. (AAPL): The $178 Billion Dilemma Of Tim Cook

Apple Inc. (NASDAQ:AAPL) generating record earnings for the first quarter means it has one of the biggest cash piles in the world, and with it comes the dilemma of how it ought to be spent to satisfy investors while also generating growth. A cash pile of $178 billion means it is bigger than the combined market cap of all the 17 stocks in the S&P 500. Fox Business, Tracy Byrnes, maintains Apple needs more, than ever to find a way of ensuring most of the cash, does not end up in taxes in the U.S.

The U.S is known to have one of the stringent tax laws in the world, which has forced a number of companies to shift their bases outside the country as one of the ways of avoiding paying billions of dollars in taxes.

“Tim Cook has to be careful because now that this is out; the government is going to want a piece of it, so I worry about that for him. R&D credits are going to disappear sooner than later because of this and you watch Apple Inc. (NASDAQ:AAPL) is going to do what it can right now to get this money overseas because why not? It is theirs otherwise it will be taxed and taken,” said Mrs. Byrnes.

Apple Inc. (NASDAQ:AAPL) is sure to face increasing pressure especially from activist investors who would love part of the cash to be distributed to investors in the form of dividends. It awaits to be seen if Carl Icahn this time around will be more aggressive than ever in pushing for buy backs as one of the ways of ensuring investors get maximum returns from their investments in the company.

Profitabletrading.com senior strategist, Jared Levy, on the other hand, maintains Apple needs to do a big acquisition with a portion of the cash. Apple Inc. (NASDAQ:AAPL) has already carried out a massive acquisition in the name of Beats for $3 billion, a clear indication that the company is more than ready to spend when called upon.

Apple Inc. (NASDAQ:AAPL)’s cash balance could increase even further according to Levy, who expects Apple Watch to turn out big in terms of returns this year.

“The iWatch I believe is going to be the biggest game changer ever and with that money, I think what they need to do to really supercharge this stock is do an acquisition that’s big. They did like eight last year only beats was the only one known by the public,” said Mr. Levy.

Watch the latest video at video.foxbusiness.com

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