As of March, Apple
The Journal said Apple could learn a thing or two from Microsoft
The Journal article went on to note that Google
In 2010, more risk meant more reward. Adventuresome Microsoft did get a noticeably higher return on its cash investments last year than less adventuresome Google (see table). And Google's investments outperformed Apple's.
|
Company |
2010 Return Rate |
|---|---|
| Apple | 1.0% |
| 2.8% | |
| Microsoft | 3.7% |
Source: Wall Street Journal.
But sometimes more risk means ... well, more risk. In 2009, stodgy Apple outperformed Google, which outperformed adventuresome Microsoft (see table).
|
Company |
2009 Return Rate |
|---|---|
| Apple | 1.8% |
| 1.6% | |
| Microsoft | 0.4% |
Source: Wall Street Journal.
The compounded return rate over the two-year period narrows the gap in returns among the three companies, as shown in the following table. Indeed, Google's moderately adventuresome approach outperformed Microsoft's more adventuresome approach.
|
Company |
2009-2010 Compounded Return Rate |
|---|---|
| Apple | 2.8% |
| 4.4% | |
| Microsoft | 4.1% |
How bad can an adventuresome treasurer be? Too much cowboy spirit in the treasurer's office at Dell
Foolish takeaway
I'm all for Apple putting its megahoard of cash and investments to better use. But reaching for yield in an environment that doesn't offer it -- particularly as risk aversion seems to be rising -- isn't a better use.
What will Apple do with its cash? An easy way to stay on top of market developments is the Motley Fool's free new My Watchlist feature. You can get up-to-date news and analysis by adding these stocks to your Watchlist now:
