Apple's Sales Ripen

Of course, it also doesn't hurt that in the third quarter, Apple showed strong iPod, desktop, and laptop sales, as well as its best educational sales in almost a decade. I imagine Apple shareholders, a rather passionate bunch, are feeling pretty giddy today. It's a natural feeling when the company is firing on all cylinders -- and your shares have leapt 7% in a day.

I truly don't mean to rain on the parade, but there are a couple of items in the quarterly numbers that warrant a mention; while they're not problems now, they're trending the wrong way. Inventory grew to more than twice the increase in sales, and the company's cash-conversion cycle lengthened by just under a week. That said, Apple, like Motley Fool Stock Advisor pick Dell (Nasdaq: DELL), still has a negative-cash conversion cycle; Apple sells its finished goods before they have to pay for the inputs, which is a beautiful thing.

As a Red Sox fan, I can relate to the blind passion people feel for Apple's products. Try as I might, though, I can't understand Apple shareholders' love for their investment. When I root for the Red Sox, I'm aware of the emotional investment I'm making, and I ride that emotional roller-coaster each season. But if my investment in the Red Sox were monetary, I'd feel differently. I would care deeply about how the team allocated its cash. As much as I love this team, I'm not independently wealthy, so I'd want a decent return on my money. I'd understand sinking money into an investment, but not so much on frivolous bonuses.

Apple has a history of giving away obscene amounts of money in compensation, and of management treating company money as their own. And please don't write to me about CEO Steve Jobs' $1 salary, because it's a red herring. Jobs has been compensated quite well with stock-appreciation rights a couple of years back and a $90 million jet Apple gave him five years ago. I'm not against people making a living, even a good living, but a $90 million jet is absurd. What's to stop Apple's board from getting that frivolous again?

The next logical question: What will Apple do with its massive $7.5 billion cash hoard? To date, Apple seems content to hold on to that money. The company has mentioned it may go toward acquisitions or, with board approval, possibly a share repurchase to clean up its shares' dilution. If Apple really wanted to be shareholder-friendly, though, it would return a portion of that cash to shareholders as a one-time or recurring dividend.

We've polished up related Foolishness:

• Get the scoop on Apple's latest numbers.
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• The company enables iPod addictions.
• For Apple, the best revenge is living well.

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Nathan Parmelee counts a G4 iBook and two iPods in his family's holdings, but he has no financial interest in any of the companies mentioned. The Motley Fool has an ironclad disclosure policy.