Apple's problem: Too much cash

Apple Inc Chief Financial Officer Peter Oppenheimer faces a dilemma that perhaps every finance chief wishes to have: obscene amounts of cash and nowhere to put it.

The iPhone, iPad, iPod and Mac computer maker has accumulated a cash pile that totals nearly $46 billion, the biggest cash hoard among U.S. tech companies and equivalent to one-fifth of Apple's market capitalization.

And yet, due to an ultra-conservative investment strategy and low interest rates, that cash is earning next to nothing for Apple, which rarely makes acquisitions and does not pay a regular dividend or buy back stock. Analysts say Apple's near-death experience in the 1990s helps explain why it likes to remain liquid by investing in safe but low-yielding U.S. Treasury and agency debt.

Oppenheimer's cautious approach dates from his time at Automatic Data Processing Inc, but Apple's conservatism is also driven by Chief Executive Steve Jobs.

Both Jobs, 55, and Oppenheimer, 47, subscribe to the Silicon Valley maxim that "only the paranoid survive," he said.

They remember the dark days when Apple was struggling to stay alive and had to lay off thousands to cut costs. When Oppenheimer joined the company in 1996 as its controller for the Americas, a series of bad management decisions had eroded profits and sent its share price diving to less than $5.

Things got so bad that one of the first things Jobs did when he returned to Apple was take a lifeline in the form of a $150 million investment from Microsoft Corp in 1997.

Although Apple is famous for innovation, research and development costs only account for 3 percent of revenue - far lower than at Microsoft and Cisco Systems Inc, due in part to Apple's narrow product portfolio.

Apple does not appear to pay especially high salaries, either. According to career website glassdoor.com, which relies on anonymous users sharing their salary data, an Apple software engineer earns around $100,000 per year, roughly the same as engineers at Google Inc.

While many top tech companies are awash in cash, unlike Apple, they tend to put excess cash to use. For example, Intel Corp and Microsoft pay dividends; Cisco and International Business Machines Corp buy back big chunks of stock; and Hewlett-Packard Co and Oracle Corp are serial acquirers.Apple makes few acquisitions because it develops products internally, and pays little for what it does buy.

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Who Owns What ? -Labnol

Amy Webb is tracking all the acquisitions made by Internet giants like Yahoo!, Google, Microsoft and AOL. No wonder, the red block corresponding to Google occupies the maximum estate.

Taking on Google! -The Hindu

It's the classic David versus Goliath battle being played out in the 21st century. We are talking of the great race between Web behemoth Google and Zoho, the Chennai-based underdog, to launch a suite of online office applications.

However, Sridhar Vembu, CEO of AdventNet, the company behind Zoho services, doesn't see it as an all-out battle. ``That would imply that there can be only one winner, which I don't agree with. Business is not like sports in that respect. It is perfectly possible to have a profitable, growing business without `winning' the market in the sense of being number one.''

While Google has been going about its mission with a mix of buyouts and internally developed products, Zoho has a team of several hundred engineers focused on churning out one product after the other, sometimes within a span of a few weeks!

On how a company very focused on the telecom market forayed into Web services, Vembu says: "When the telecom bubble burst, the company found itself with a lot of talented engineers. That's when Zoho was born. We decided to diversify out of telecom and it was obvious that Web-based applications was a key area of growth."

Which is why Vembu and company decided to make the pragmatic choice of building a company without venture capital. Does he have anything against taking VC money? "I don't have anything philosophical or religious against it. It's just a strong personal preference for the operating freedom that comes from not having to answer to financial-minded investors, while being subject to the discipline of living within our own means."

With independence being at the core of its culture, Zoho is unlikely to be gobbled up by an MNC with deep pockets. "We have a track record of patient engineering execution. Based on that history, I would say we will be around as an independent player, though in business one learns to never say never."

Google's Personalization Push: iGoogle, Localization, Gadget Maker -Read Write Web

Google has been experimenting with personalization a lot this year. In regards to its personalized homepage, Google has always had far more gadgets available on its platform than live.com, Netvibes or Pageflakes. Currently there are over 25,000 different Google gadgets that you can put on your iGoogle page.

Here is some useful background to Google's personalization efforts. Google wants to compute PageRank for every single person, Google thinks of personalization in 3 parts:

• Search Your own stuff (like Google Desktop Search, Web History)
• Traditional (Pull) Search
• Push Search (like recommendations, iGoogle/ personalized homepage)

Google seems to be fighting a two-pronged battle with their personalization efforts - one is to keep themselves ahead of the alternative search engines, and the other is to one-up Yahoo, Microsoft, Netvibes, Pageflakes and the other personalized start page contenders.