Greenlight Company Presentation
What About Apple?
66 You kind of want to manage it like you're in the dairy
business. If it gets past its freshness date, you have a
problem. J
Greenlight Capital, Inc.
- Tim Cook, on inventory
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Tim Cook has been quoted as saying that inventory in his business loses between 1% to 2% of its
value every week.
Think for a moment of the cash portion of Apple's market capitalization as non-productive inventory
that's accumulating at an increasing rate. Now consider the cost of that 'inventory'.
Apple's balance sheet is all equity. This means that both the business and the growing cash pile are
entirely supported by high cost-equity capital.
Assuming a 10% cost of equity, the opportunity cost of the trapped foreign cash is $9.4 billion per
year and growing. The opportunity cost of the domestic cash is an additional $4.3 billion. Combined,
that is more than $14 per share in EPS.
Apple can unlock value by either deploying the cash productively, returning the cash to shareholders,
or lowering the cost of its capital that is supporting the cash pile.
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