Steve Jobs Sleeps On A Mattress Of Your Money

Just kidding. But his box spring is probably made from gold bars. Maybe not. But one thing's for sure: Apple is swimming in cash. $15 billion in cash, to be precise. You'd have to be crazy to think that won't grow a lot with Christmas right around the corner. Unlike companies like Microsoft, Apple doesn't pay a dividend to their stockholders, so their big profit margins leave mounds of cash in their vaults.  What to do with it?

If the past is any guide, Jobs & Co. could very well use some of the money to swallow smaller companies. In 2001 Apple bought education software company PowerSchool; in 2002 it went on a binge and snapped up audio production company Emagic, video effects company Nothing Real, and FireWire developer Zayante. (Apple’s acquisition record is mixed; it sold off PowerSchool last year and its FireWire technology has taken a backseat to USB 2.0, but audio and video software efforts have flourished.) It’s conceivable that Apple could use cash to buy its way into a new niche, like social networking or online collaboration.

Or Apple could make some investments. During tough times, the money Apple had put in Akamai Technologies (AKAM) and ARM Holdings (ARMHY) provided the company with valuable infusions of cash when necessary. It’s a bit more difficult to find places to stash $15 billion, however.

Might the company really launch a large-scale buyback program, or begin offering dividends? For Apple, there’s limited advantage in doing that until investors force the issue. Once a company gets onto the dividend treadmill, it has to keep doing it or risk being seen as in decline. The same goes for stock buybacks. For example, in its heyday Dell (DELL) regularly bought back $1 billion or more worth of stock at a time. Though Michael Dell surely needs every cent these days to finance a turnaround, analysts are already asking about restarting the old buybacks as a sign of renewed health.

An enormous pile of money hanging around a tech company is generally followed by an acquisition of dubious value. Remember 1999? It's incredibly hard to build a very profitable company, but Apple has surely done that. It's even harder to buy one. and its brethren are a worse investment than a bed of gold bars, after all.