Things to keep in mind after Apple reported earnings yesterday:
I. Apple Sits On $237 Billion in Cash
Cue the Rodney Dangerfield because, for the last ten years, cash hasn’t been getting any respect. During a business cycle in which we see interest rates rise by at least three points, people are going to start talking about corporate balance sheets much more than they do now. If the AT&T-Time Warner merger goes through, you are going to read a lot of “Is the dividend safe?” articles about AT&T stock as it deals with $160 billion in debt in a higher rate environment (right now, AT&T’s debt is at $126 billion.)
Firms like Alphabet, Johnson & Johnson, Cisco, Berkshire Hathaway, and yes, Apple are often praised for their operating results but are rarely praised for their excellent balance sheets. This ought to come into focus more during the next business cycle.… Read the rest of this article!