Apple Pay doesn’t work on Twitter, so don’t even ask. Apple does not have enough cash to buy Twitter and still operate its business. We all know Apple has lots of cash, which is mostly overseas, but Apple has little cash here, in the United States.
Apple’s cash stash is part of its EU tax problems. Apple – like other Silicon Valley companies – transfers intellectual property to foreign subsidiaries. In this case, Apple then makes royalty payments to foreign subsidiaries for use of the intellectual property. Apple’s royalty payments transfer cash overseas and also reduces its U.S. tax bill.
Apple tax strategy has stashed about $214 billion overseas or 93% of its total cash. This means Apple had only $18 billion of cash left in the United States as of June 2016. So Apple does not have enough money to do large U.S. acquisitions. It does have money to do “small” acquisitions such as the purchase of Beats Audio for $3 billion in 2014 or overseas investments such as Didi.
Lots of taxes will be paid if Apple brings the cash back here. But with so much cash, activists pressured to Apple return it to shareholders. So starting in 2012 and until of June 2016, Apple has return about $172 billion in the form of stock repurchases and dividends. Apple has gotten the cash from issuing debt, so the overseas cash, stays overseas.
Maybe this why Buffett’s Berkshire Hathaway purchased Apple’s stock for $1 billion or $109 per share early in 2016. Berkshire bought the Apple not for the “product pipeline”, but for the cash. Apple’s Board recently raised to the annual dividend to $2.20 per share and increase the amount committed to stock repurchases.