Business Investments

STOCK TAKE: SILVER LINING?Apple, in the news this week after unveiling its iCloud, has built up an enormous $66 billion cash pile. Unsurprisingly, calls for a dividend are growing louder.

Crédit Suisse recently estimated that Apple could dish out dividends yielding 5 per cent and still have, even in a “conservative” earnings scenario, around $100 billion in cash by 2016. Analysts at Asymco note that Apple’s cash pile is larger than the combined market caps of Nokia, Research in Motion and Motorola, adding that it would sustain company operations into 2018 even if revenues disappeared tomorrow.

Furthermore, an extremely conservative investment approach yielded interest of just 0.75 per cent in 2010, compared to Google’s 2.8 per cent and Microsoft’s 3.7 per cent.

Chief executive Steve Jobs is opposed to a dividend, saying last year that the cash offered “security and flexibility” and the opportunity to do something “big and bold”.

As one investor tweeted this week, however, $66 billion is enough to “do a material cash acquisition, pay a dividend and bail-out Greece”.

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GOOD TIMING:Is this another case of "sell in May and go away"? All major global equity indices are trading below their 50-day moving averages. US indices have fallen for five straight weeks and last week suffered their biggest weekly fall – 2.3 per cent – of 2011.

The US correction has been comparatively minor thus far. Indices are down by 6 per cent and volatility has been lacking. Nevertheless, technicals suggest a bounce is due.

Just 24 per cent of stocks are trading above their 50-day moving average, a level typically associated with short-term rebounds. More than 50 per cent of stocks are trading at least one standard deviation below that aforementioned average – again, this has been a reliable rally indicator over the last year.

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LOBSTER RISK: Hedge fund trader Noah Freeman allegedly made $10 million on insider tips from networking consultant Winifred Jiau. Her reward? Besides cash, Freeman said at a trial in Manhattan this week, the "very difficult" insider demanded three iPhones, a $300 voucher for the Cheesecake Factory (she wasn't happy with the original gift certificate for clothes) and 12 lobsters to be served on Thanksgiving.

“I know you hate her but we have to do this,” said Freeman in an e-mail to his secretary regarding the delivery of the lobsters. “I hope she gets sick from the lobsters,” she replied.

Ironically, the lobsters were never picked up. “Typical Winnie to leave 12 lobsters to die at FedEx”, Freeman’s secretary reflected. “She has no heart.”

Winifred’s tips couldn’t be faulted, however. “Absolutely perfect,” Freeman said.