Apple gaining on Microsoft in cash money

You know, I think I’m doing pretty well when it comes to saving: I don’t spend a lot of money, I’ve got some investments, and I’ve put some money away for retirement. But just when I’m feeling pleased with myself, I find out that Apple’s got almost $20 billion in the bank. Among big tech companies, that puts Apple in the number two three spot behind their favorite rival, Microsoft, whose own piggy bank is stuffed to the gills with over $26 billion, and networking giant Cisco, with $22.7 billion. In third and fourth fourth and fifth place are Google and IBM, both with about $12 billion.

That’s a whole lot of cash. But what exactly can Apple do with $20 billion? Well, aside from anything it wants. Over at the Seattle Post-Intelligencer, Todd Bishop discusses the differences between how Microsoft and Apple treat their cash reserves.

Apple has historically built its business from the ground up, preferring smaller strategic acquisitions of technology and talent. If the company continues to follow that pattern, that means it’s not likely to reduce its cash pile through a blockbuster deal.

Meanwhile, Microsoft has engaged in stock buybacks and dividends. Not to mention, their cash is a little safer now that the proposed Yahoo merger is out of the question. Apple has not traditionally gone down these roads, partially, as Bishop points out, because of Steve Jobs’s penchant for financial stability given Apple’s ups and downs in the past.

For all the talk of Apple buying huge companies like Adobe or Yahoo, I think they’re on the right track with their smaller, targeted purchases (i.e. PA Semi) and pumping money into their own R&D budget, while keeping the vast majority of their cash on hand just in case. Think different? Sound off below.

Update: Seattle P-I later updated their story to add Cisco, who has almost $23 billion in cash reserves, so we’ve updated as well. Because all the cool kids are doing it.