Apple Inc. (AAPL): What Should It Do?

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Microsoft Corporation (NASDAQ:MSFT) is going that same way, but still offers plenty of growth.  The very public decline of the PC market, tied to the importance of Windows, paints a picture that is a bit misleading for investors.  And while Windows is still critically important to Big Softy, there will be a future for Microsoft Corporation (NASDAQ:MSFT) long after the “Death of the PC.” We got a hint of where the growth is coming from in the recent Q3 earnings announcement.

From CEO Steve Ballmer:

“The bold bets we made on cloud services are paying off as people increasingly choose Microsoft services including Office 365, Windows Azure, Xbox LIVE, and Skype.  While there is still work to do, we are optimistic that the bets we’ve made on Windows devices position us well for the long-term.”

Google Inc (NASDAQ:GOOG) is usually in the conversation with Apple Inc. (NASDAQ:AAPL), mainly due to its Android Operating System.  However, its share of mobile Search would likely be just as significant even if it wasn’t in the mobile OS business.  In truth, Android may be a long-term detriment to Google in Mobile Search: Facebook Inc (NASDAQ:FB)’s Graph Search and Facebook Inc (NASDAQ:FB) Home make this case clearly, as it allows Facebook users to utilize Facebook Inc (NASDAQ:FB)’s search functions on Android-based devices, potentially cutting Google Inc (NASDAQ:GOOG) completely out of the mix.  And this is important because it’s advertising revenue that drives Google’s Free Cash Flow.  And this is important for long-term investors because this number has to keep growing, driving up the share price, because we are years away from seeing Google Inc (NASDAQ:GOOG) even consider paying a dividend:



AAPL Dividend Yield data by YCharts

As the chart above shows, Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) are now firmly in the ranks of income-generating investments.  And Apple CEO Tim Cook has demonstrated that the company will follow Exxon Mobil Corporation (NYSE:XOM)’s history of returning excess capital to shareholders, while still keeping plenty of cash on hand for strategic use.

Foolish bottom line

While I wouldn’t count Apple out when it comes to blowing up another product segment, shareholders don’t have to count onit to still be rewarded.  And while that giant pile of cash isn’t going away, the long-term issue – what will Apple do to more effectively utilize cash-flow – has been addressed.  And for long-term investors, that’s the best of both worlds.

And if the market’s reaction in the days following the announcement are any indication, there’s little reason to doubt that investors who buy now will continue to be rewarded for the long term.  Share your thoughts in the comments below!

The article Apple Still Has a Cash Hoard “Problem,” and That’s Great News originally appeared on Fool.com is written by Jason Hall.

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