In reaction to a recent article at BusinessWeek.com considering what Apple should do with its $12 billion cash hoard, Wall Street blogger Roger Ehrenberg explores the pros and cons of an internal VC fund for Apple and suggests that Steve Jobs et al consider the following questions:
- What is the right amount of cash Apple should keep on-hand to cushion variability in free cash flow?
- What is the process for benchmarking internal vs. external investment opportunities? Are there suitable analytical frameworks in place for making these assessments?
- What is the current dollar value of projects – be they internal or external – that warrant investment, given the Company's ROI objectives?
- In the event that additional cash exists beyond that required to fund 1 and 3 above, is this excess likely to be a durable phenomenon (e.g., indicating that a change in dividend policy might be appropriate) or a transient event (e.g., meaning an opportunistic stock buyback might be a better fit)?
Its a great post – read the rest here.
Roger Ehrenberg's blog is new to me this morning and I've already been sucked in by his insight, strong prose, and humbly corrected take on possible arbitrage when the DJIA dramatically dropped last week (another post well worth reading: here).
Information Arbitrage blog
by Roger Ehrenberg
What to Do with Apple's Cash
by Arik Hesseldahl
BusinessWeek.com
March 1, 2007
During her time at Glenbrook, Erin focused on client engagements in business payments, cross-border transactions, bill payment, and the intersection of corporate finance, banking, and ERP/accounting. She has nearly twenty years of experience leading increasingly complex payment initiatives for corporate clients and advising financial institutions and payment technologists on the development of their payment capabilities.
Erin is also the founder of Forte Financial, a consulting firm focused on corporate finance efficiency, technology, and process improvement. She is a past president of the Financial Women’s Association of San Francisco and also a two-term past president of the San Francisco Treasury Management Association. Erin is no longer with Glenbrook, but contributed greatly during her time at the firm.