Could Apple be Making More Money on Returns?

Apple’s (NASDAQ:AAPL) stock may be soaring high, but the company may not be making the most of it. Apple stock hit new highs Monday, popping over $500, yet they are not taking advantage of the return they could be making off their over $100 billion cash. At its annual results filing, Apple revealed their worth of $81.6 billion earning 0.77 percent, which is much lower than what they could be getting.

Apple’s competitors, however, seem to be able to get higher returns without taking higher risks. For example, in 2011, Google (NASDAQ:GOOG) recorded a gross realized gain of $381 million and net unrealized gain of $469 million, for a total $850 million on its liquid marketable securities. Microsoft (NASDAQ:MSFT) recorded net unrealized gains of $2.83 billion, which totaled $63.64 billion. On the other hand, Apple recorded net realized gains of just $106 million and net unrealized gains of just $80 million.

Some investors and strategists say Apple’s job is not investing, but is to protect their cash. Apple’s financial problems in the 1990s made the company more conservative with their money management and they haven’t hurt for money since listing. Apple doesn’t own any stock for investment like Microsoft and Google.

By being more conservative, Apple in some ways may be taking on more risk. For instance, by the end of 2011, Apple had about 40 percent in corporate securities, while Google had about 14 percent and Microsoft around 17 percent. Apple may have received lower returns because it didn’t have as much in the U.S. Treasury market. It’s Treasury and agency holdings were about 36 percent, Microsoft and Google were more than 50 percent.

There may be hope to overcome Google though. In the quarter ending December 31, Apple reported dividends and interest income of $137 million. During the same period, Google lost $18 million including a charge of $88 million for its investment in wireless company Clearwire Corp (NASDAQ:CLWR).

To contact the reporter on this story: Laurie Danas at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com