Apple has so much cash their 64,000 employees could stop working and F around for over 10 years

by jeffhilimire on February 3, 2012

My brother-in-law, this dude, is a financial wiz and we often get into deep discussions on tech company finances. Well, he gets into deep discussions with me, I really just try to keep up and nod and agree.

A few days ago we were shooting emails back and forth about the amount of cash Apple now has ~ $97 billion.

So I got to thinking, what would happen if Apple decided to just stop doing anything, no more producing products or software, no more advertising, etc. Instead, they just let their employees F around until the money ran out.

My bro took the challenge and started running the numbers. He came up with an excel spreadsheet that laid out his assumptions and the data looked pretty close to what I was imaging it would.

I then took that data and gave it to my friend @radrice who I’ve seen put together really nice infographics, and bam, he sent back this:

  • http://mindgrapes.ryantuttle.com Ryan P. Tuttle

    Does this factor in that iTunes, completely unmanned, will probably still keep selling media for a few months (before something crashes, breaks, etc.). How about the remaining time on iPhone contracts? I would think that even at 100% shut down Apple is still good for a few months of positive revenue. Maybe it’s a wash if they get sued for all the contracts they would have to break from a 100% shut down.

  • Toomer

    I just submitted my resume… Califonia here I come…

  • Jonathan Morgan

    The iPhones are purchased 100% from the phone companies. Typically, if you ship hardware, you recognize revenue. So when AT&T/Verizon receive iPhones into inventory, Apply will recognize revenue immediately in some way. The phone companies subsidize that expense with your 2 year contract that you buy into.

    From a GAAP perspective, there may be a “service” element to the iPhone that requires Apple to hold on to a portion of the revenue and recognize it at a later date. I’m not sure how Apple carves out the “service agreement” associated with their products. But again, that is not related to cash-flow, it’s just “funny-money”. 

    So technically yes, there would be future quarters where their revenue would be recognized if Apply shut down. However, since that is coming from a “deferred revenue” account, it may not generate additional cash for Apple (the 2 are completely independent actually). So the short answer is, no that would not generate more cash in the future, just funny-money revenue.

    Assuming iTunes is an “unmanned” machine, it actually could generate additional cash flow if they shut down. But based upon their financial statements, I don’t believe it generates a ton of cash. 92% of their revenue comes from Macs, iPhones, iPads, and iPods while only 4.4% coming from “Other music related products and services”.

  • Jonathan Morgan

    Apple*

    And yes, Apple would get sued in all 50 states in a matter of days in this scenario. Lucky for them, $97.6 Billion would go a long way in hiring lawyers.

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