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The big problem facing Apple and Yahoo: what the hell do we spend all this money on?

It’s a funny old two-speed world and there’s more proof of it this morning: Apple has announced an $18bn quarterly profit – the biggest by any company in history – while flagging online company Yahoo has finally bowed to financial logic and plonked its $40bn stake in Alibaba into a new company, before CEO Marissa Meyer spends it all.

This at a time when whole countries, even regions like the Eurozone, are struggling with huge debts and low or zero growth. Can you remember the last time any country in the Eurozone, even Germany, made an $18bn profit in just three months?

tim-cook-apple-ceo-360x272The big question is what do these companies, and others like Google and Facebook, do with all this money? Barack Obama may be politely (or not so politely) reminding Apple CEO Tim Cook (left) that it’s not a bad idea to pay some more taxes. Cook (poor devil) has to find some way of repatriating Apple’s offshore billions in a way that mollifies critics but doesn’t look like a capitulation.

On top of that, he needs to find something to do with it all, regardless of taxes. Apple spends a lot on research and development but nowhere near $18bn a year, let alone a quarter. The world just doesn’t need that many more gadgets, although it would doubtless like cheaper iPhones.

The obvious thing for Cook to do is buy something. He splashed out $3.3bn on Beats headphones, but that’s loose change in Apple terms. The whole culture of Apple, built by Steve Jobs, was to stick to its last. For decades it looked as though Apple would always play second fiddle to Microsoft, despite the excellence of its products. Eventually it came through, with true innovation in the form of the iPod, iTunes and the iPhone; in the process revolutionising music as well as telecoms.

Apple doesn’t produce the content that pours down its various devices. Jobs had close ties to the film business but he never seemed tempted to toss Apple’s hat in the ring. Might Cook be tempted to buy a content business – like the UK’s ITV? Or Twitter – a content business of sorts – before Facebook does?

As for Yahoo, investors may take the view that the best thing is to sell the operating business and hang on to the one with the Alibaba shares in it. Meyer’s buys, to date, have not been great successes. Looks like it’s going to be another busy year in El Dorado, otherwise known as Silicon Valley.

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