In 1997, Apple was on the verge of bankruptcy [1]. That experience deeply scarred the company's culture. Prior to that, Apple didn't hoard cash (relative to revenues). Afterwards, it did.
At this point, the instinct is overplayed. But cultures are difficult to change. So the obsession with runway remains.
[1] https://www.businessinsider.com/apple-comeback-story-2010-10...
It's pretty simple why they have such a big cash pile. They literally don't have a better place to put it.
Even if they sold zero iPhones next year, there's still a lot of iPhones in the world that need services and apps.
How exactly is that “a lot more”?
iPhones produced in India, presumably.
https://asia.nikkei.com/Business/Technology/Made-in-India-iP...
Or in any other place.
https://www.gizchina.com/2020/04/21/apple-plans-to-assemble-...
Not saying it is.
The last time Apple’s culture was re-forged, runway was an existential priority for Steve. It remained a priority for the rest of his life. As such, it remains one today. Call it a ritual, if you like; an act once practical, now maintained for being part of a culture.
The limitless alternative to amassing cash piles is returning it to shareholders. Apple does that, but it is averse to accelerating its pace.
Perhaps they want to be prepared for losses much larger than their peak historical losses.
In 1996, Apple's market cap was ~$3B and they had about $1.7B in cash and short term investments.[1] That's over half the value of the company. If they had proportional amounts of cash today they would have a trillion dollars.
I think the context of the talk about bankruptcy wasn't leverage like most companies have now, but simply that people might stop buying Macs and no revenue would be coming in.
The hoarding of cash I associate with Fred Anderson, who was CFO from 1996-2004.
[1]https://www.sec.gov/Archives/edgar/data/320193/0000320193-96...
This is a sign of distress. The equity markets were attributing minimal value to the non-cash parts of the business.
In 1996, Apple had about one fifth of its net turnover in cash. Today, it’s close to four fifths. Operating-to-operating metrics are a better indicator of management’s preferences than operations-to-markets.
[1]See "Item 6. Selected Financial Data"
...which is closer to the 1996 ratio of cash to revenue than today’s.
There is a lesson on corporate financing here, but I am not sure what it says.