John Gruber writes:
I’ve always thought Apple’s cash hoard was about freedom. That cash meant — and means — that they don’t have to answer to anyone. […] Apple can’t control its stock price; that’s in the hands of investors. But it can control how much cash it keeps in reserve. If investors sour (or the market crashes) and the stock price dips, Apple could take itself private.
This quote is a good example of a common misconception about who really owns the company. It is in fact, shareholders who own and control company. They are simply happy to delegate that control to current board of director for as long, as it is doing great. But when it doesn’t, it’ll quickly be replaced and shares will be sold to less pessimistic people.
About freedom: it only makes sense to speak about freedom where some coercion takes place. Like government regulations and taxes or somalian piracy. Otherwise, it’s all about mutually-benefitial partnerships. Better cash just helps negotiating things, but it does not buy any more freedom from any of the partners.
Apple is not even an acting entity. It’s a mode of acting of a group of people: shareholders, directors, employees. The company is used only to pool investments and limit liability of the owners and employees. And the real owners of the Apple assets are, of course, shareholders.
Therefore, Apple cannot get “free” from “investors” by buying itself and getting private. Tim Cook and others may buy Apple shares for their own money, but Apple’s cash does not belong to them at all.
Today shareholders are happy with what Tim Cook is doing. If tomorrow he announces a really stupid way to use company’s cash, owners will either sell shares or put another board of directors and CEO.
What Apple can really do? They can invest into a startup, people, factories etc. They can buy government to liberate themselves from regulations and taxes.
They can also pay dividends, but that is not a smart thing to do. There are only two ways you can spend dividends: consume them or re-invest in some other companies. While Apple is the fastest and biggest growing company, it makes very little sense to invest dividends into something else or to consume them. See also: Dustin Curtis on the subject.