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Further Uses for Apple's Cash

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BIG AAPL
DailyFeed

As most people are probably aware -- and have an opinion about -- Apple (AAPL) announced Monday that it would start paying a dividend. Beginning July 1, the tech giant will make quarterly payments of $2.65 a share.

Since the announcement, the Internet seems to have erupted with complaints and suggestions for how Apple’s cash hoard could go to better use -- although shareholders have been strangely quiet. PC Magazine, for example, called the move “sad and depressing” and lamented the fact that Apple is behaving “like a normal company.”

Counter-suggestions for Apple’s cash stockpile include the acquisition of new companies and improvement of working conditions in Chinese factories. Early today, the New Yorker put forward another idea: the establishment of a research laboratory similar to DARPA, Xerox PARC or Bell Labs.

Even with the dividend, Apple still has a ton of cash -- enough, apparently, to buy Facebook. Yet, at the moment, it spends very little on research and development ($2.5 billion last year).

Over the past five years, Apple has spent less than 3 percent of its revenue on research. Compare that to Microsoft’s (MSFT) 14 percent, Amazon’s (AMZN) 5.5 percent and Google’s (GOOG) 13 percent. A greater focus on research could expand its already impressive roster of game-changing products.

Beyond that, the New Yorker points out that investing in large-scale research can help soften a company’s reputation. Both Bell and Xerox used their labs to assuage public concerns over their monopoly status.

Apple is still one of the coolest companies in the US but concerns -- now partially vindicated or at least softened, thanks to Mike Daisey -- over their employment practices have raised public ire recently. Also, it seems that Steve Jobs was, occasionally, a little rude.

Apple’s dividend might finally confirm the company’s move from outsider to establishment figure -- Microsoft has, after all, paid a dividend since 2003. If that’s the case, it may lose some credibility as a “cool” tech company. Even if it doesn’t, an investment in research can’t do any harm, and Apple certainly has enough money.

Plus, it might get the iTV here a little faster.
POSITION:  No positions in stocks mentioned.

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