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Morning Report: Apple May Cross The $250B Gross Cash Mark Tomorrow, But Watch The Net Figure

Morning Report: Apple is rich. Just not as rich as you may read tomorrow.

Apple reports earnings tomorrow. We will get a fresh look into how the iPhone is performing compared to historical benchmarks, the health of the Mac line, and more.

The company’s regular reports are also a financial bonanza for tech dorks who also track the markets. Apple, the most valuable public company, has tectonic revenues and incomes, making its earnings statement akin to a bowl game. And, tomorrow, there’s one metric in particular that is already picking up interest in the media: the hardware company’s cash hoard.

Axios picked up a Wall Street Journal story this morning, noting that “Apple [now] likely has more than $250 billion in its famously-large cash reserve, per” the paper. The Journal, in its own piece, says that:

Apple Inc. is expected to report Tuesday that its stockpile of cash has topped a quarter of a trillion dollars, an unrivaled hoard that is greater than the market value of either Wal-Mart Stores Inc. or Procter & Gamble Co. and exceeds the foreign-currency reserves held by the U.K. and Canada combined.

The answer to that is yes, well, kinda.

I pulled Apple’s most recent quarterly report, the fourth of its fiscal 2017 ending December 31, 2016. The numbers were put out on January 31, 2017. The numbers include a gross cash position at Apple of just under $250 billion. The components we count in Apple’s case are:

  • “Cash and cash equivalents:” $16.37 billion.
  • “Short-term marketable securities:” $44.08 billion.
  • “Long-term marketable securities:” $185.64 billion.

(If it is confusing as to why the components mentioned above count as “cash,”  you can find more here.)

That sums, as you can add, to $246.1 billion—just a mote under the $250 billion mark that Apple is expected to crest tomorrow morning. Fair enough, but there’s the matter of debt that we need to square into the math.

Apple had over $73.5 billion in “Long-term debt” at last count, according to its financial disclosures. Sums that it has borrowed, often at low cost, to fund shareholder return programs at home, while its cash remains parked abroad, waiting for a Trump-approved repatriation period.

Regardless, that debt reduces Apple’s net cash position so far that the chance of cresting the $250 billion net cash threshold is, at best, slim.

So yes, Apple is incredibly rich. But if you see the quarter-trillion dollar number reported tomorrow without caveat, recall the difference between gross and net.

From the Crunchbase Daily:

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