5 things Apple can do with its cash hoard

Apple is likely to have ended the September quarter with a cash hoard of over $50 Billion. Steve Jobs has said that he wants the money to do something "big and bold". Here is my take on what they can do with this money. I think most of these things qualify as "big and bold", and also fit in with the grand plans of Apple.

- Apple should look at buying Time Warner. This gives Apple phenomenal presence in Content - including Movies, Music, Print Publications, News, online portal, Cable distribution, Internet Service Provider, etc. Costs $35B, Apple can likely buy them out for $40B. Time Warner's market cap is languishing because of a bad digital strategy, Apple would be the perfect fit to rectify their digital strategy. Considering the close ties Apple has with Disney, this takeover of Time Warner would effectively make Apple unbeatable in the media business.

- Apple is building a massive data center in North Carolina spending about $1B. They should look at creating 4-5 such data centers in different parts of the world - specifically, India, China, Europe, South America and possibly one more data center in North America. This will allow them to become the biggest player in the cloud services space. This will not just allow to offer services to each geographic location, it will also serve as a backup for other locations. Should cost about $5B, but if, as expected, Apple uses most of its own equipment, this will increase their revenues and profits massively.

- Enter the finance business. Apple already is the largest processor of small payments in the world - and they currently pay credit card companies as high as 15% in fees (15 cents minimum transaction fees for a 99 cents transaction on several cards). They should look to create a brand new network for small transactions. They can kickstart this network by adding RFID/NFC capability to the iPhone. They can come up with a global service and also be the biggest customer for this service, via iTunes! Should cost about $2B to create, but will result in massive savings on their current transaction processing costs. In 5 years, iTunes, iBooks and AppStore revenues could easily be $10B - and this payments network will save Apple a ton of money.

- Extend Apple into domains that have huge potential, but are currently not exploited effectively. An area like Home Automation could explode if Apple focusses on this domain. Instead of just taking over the living room, Apple can take over the entire house! Current offerings in this segment are way too complicated to use - Apple has the software and hardware skills to come up with a very easy to use implementation. This could be yet another component of Apple's grand ecosystem with iTunes, iPod, iPhone, iPad, etc. I expect this to take just $1B.

- Pay a dividend - Along with all these initiatives, it will be healthy for Apple to pay a dividend.