The Apple of Washington’s Eye

Size matters, they say, and that is exactly why Apple, Inc. may need to watch its back, as politicians lick their chops thinking about the many ways in which they could cash-in on the company’s success.

Sound crazy? Perhaps, but politicians have a way of making the ends justify the means, so watch for some sort of probe or hearings in the future that will examine how Apple may be too big for the interests of consumers.

The biggest government-ordered break-up in American history was completed in 1984 when AT&T, a regulated monopoly worth $149.5 billion before the break-up, was required to split into seven regional phone carriers. While AT&T does not provide a direct comparison to Apple necessarily, its divestiture does represent a precedent where the long arm of Washington will serve its interests by forcing publicly traded companies to break up.

First on the Apple list would be repatriating company cash that is sitting overseas. Apple is sitting on $28.54 billion in cash in the U.S. and another $64 billion overseas – more than the federal government itself (see: Apple now has more cash than the U.S. government). That will be too large a target for the feds to ignore in the future, especially if Barack Obama scores a second term in the White House.

Forbes magazine had this to say about the cash Apple is sitting on and how they can leverage it for continued growth:

Any cash Apple chooses to bring back to the States would get hit at the 35% U.S. tax rate, not a pleasant prospect. Spending that money on expanding offshore production is far more compelling. Apple keeps the depreciation expense while keeping production costs down. It also means the company will be ready to continue pumping up the volume to feed the seemingly insatiable appetite for iPhones and iPads in the near term and rumored new category-busting products like an interactive TV in the long term. — Forbes: The World’s Bigest Companies

Sounds like a good business strategy, but that assumes that the production investments will be made before congress finds a way to penalize offshore accounts. It may be difficult from a policy standpoint but nothing is impossible in the merry old Land of Oz.

Here are more stats about the technology behemoth and trend creator that will make the company an alluring target for feds desperate for control over innovation and treasure:

• This year Apple climbed 25 spots to number 22 on the Forbes Global 2000 list
• Last fall, Apple passed Exxon Mobil as the world’s most valuable company with a market capitalization of $363.69 billion
• Since October, Apple’s value has risen by 64% to an astonishing $564.9 billion in market capitalization.
• Revenues for the most recent fiscal year reached $142.36 billion, and gross profits were $43.82 billion.

If business success continues to be demonized by the Obama administration, and there is not a major shift of power in Washington this fall, just watch Democrats seek ways to feed off the success of an American icon and innovator any way they can.