Apple peparing for deflation?

apple cash from asymco

Horace Dediu on Apple’s Cash Holdings
[Via Daring Fireball]

Horace Dediu points out that many financial reporting services are overlooking over $20 billion in Apple’s assets:

To illustrate, the following chart shows the total cash equivalents for the company. The orange colored bars represent long-term securities. If they are excluded, an investor may conclude that Apple’s cash has been declining since 2008 when the opposite is true. The company is shifting an increasingly larger proportion of its holdings to long-term (but fully liquid) securities.

If Dediu’s Asymco isn’t on your daily-read list or in your RSS subscriptions, I highly recommend it. He’s been killing it. E.g., check out this comment he wrote yesterday, positing that today’s Android handsets are iPhone knock-offs, along the same lines as the various BlackBerry knock-offs that were popular a few years ago, like the Samsung Blackjack, Motorola Q, and HTC Dash.

[More]

In a deflationary period, things are worth less in the future than they are now. And you want things to be in cash than in assets. This article at CNBC explains the reasoning.

Putting money into long term bonds is thus a hedge against deflation. Looks like Apple is taking that hedge. Over the last 2 years, long term securities has gone from negligible to 45% of all their cash.

I wonder if I should sell my Apple stock and put it into long term securities.

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2 Responses to “Apple peparing for deflation?”

  1. Mister Reiner Says:

    “…today’s Android handsets are iPhone knock-offs,”

    That’s too funny. I wonder if he has watched this video:

    • Richard Gayle Says:

      If you read the comment, he never said Android handsets are knock-offs. That was the blogger.

      What he said in the comment is that the growth of Android has mostly been due to the operators wanting devices that worked like iPhones, just as several years ago the commissioned devices that looked like Blackberrys.

      The reason they do this is that they do not want to be beholden to one supplier or OS. So, ATT is also looking at other devices than the iPhone. And Verizon will be very happy to sell iPhones.

      In the end, he thinks it will all stabilize with 4-5 platforms (because that is what the operators want). So Apple is not working for total market domination (ala Windows) but for penetration to be one of the big ones left.

      Not sure what the knock-off comment was referring to.


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