Steve Jobs defended Apple Inc's decision to maintain a $40 billion cash pile and said it was better to save the money for bold risks, like acquisitions, than to spend it on stock buybacks or cash dividends.
Faced with shareholders' questions over his intensions for the company's cash balance, equal to about one-fifth of its market capitalization, the chief executive said buy backs and dividends would not have a lasting impact on the Apple's share value.
"We're a large enough business now, that in order to really move the needle, we've got to be thinking pretty bold, pretty large. And who knows what's around the next corner," Jobs said at Apple's Feb. 25 annual general meeting.
"When we think about big, bold things, we know that if we needed to acquire something, a piece of the puzzle, to make something big and bold a reality, we could write a check for it," he said.
Shares of Apple have been hovering around $200 since October as investors wait for a fresh catalyst to extend a rally that has seen the stock more than doubled from year-ago levels.
Despite Jobs' comments about acquisitions, analysts did not believe a big M&A deal to be on the horizon.
Hudson Square analyst Daniel Ernst said he thought Jobs' comments did not signal a change in strategy, and added Apple Chief Operating Officer Tim Cook had said earlier in the week that the company had yet to see a large target that made strategic or financial sense.
"I don't think they'd do a big acquisition. There simply isn't a business out there that would be a cultural fit with them. They're not like other companies," Ernst said.
He said Jobs was likely trying to explain how valuable Apple's cash was strategically, as it provides the company with the security to take chances with its products.
Apple's more recent acquisitions include: semiconductor firm PA Semi, mobile ad company Quattro Wireless, and music subscription service Lala. All were relatively small deals
"Large M&A doesn't work with their business model," said Broadpoint Amtech analyst Brian Marshall.
"Their historical use of cash has worked obviously very well," he added. "Doing small deals, buying private companies with 100 to 150 engineers and integrating them with the Cupertino establishment and then taking their technology and making it pervasive throughout the organization."
Jobs did not say how Apple might eventually use the money. According to its annual report, Apple earned a weighted average interest rate on its cash and securities of 1.43% in 2009.
"Our judgment and our instincts tell us to just leave that powder dry right where it is right now and it's going to come in awfully handy one of these days," said Jobs, dressed in his trademark blue jeans and black mock turtleneck top.
The CEO, who missed last year's annual meeting because he was on medical leave for a liver transplant, also said Apple would pursue opportunities abroad.
The company plans to open 25 stores in China, the world's largest telecoms market, over the next two years, he said. Nearly 60% of Apple's revenue came from international markets in the December quarter.
Jobs offered few details on the iPad, which was unveiled amid much hoopla last month and is expected to hit stores at the end of March starting at $499.
Most analysts expect the company to sell 2 million to 5 million of the devices in the first year, though they also say it is not clear what demand will be for a "third category" of devices that bridge the gap between smartphones and laptops.
Shareholder Matthew Rafat said he did not plan to buy an iPad, because he didn't see the need for it: "If I had more money I'd buy it just for fun."
Kathryn Corby, a doctor who has owned Apple shares for more than a decade, said there were some areas in which she would like to see Apple become more active, including TV and video.
"I would love to see Apple pick up Netflix, even though that's probably not very likely. Or failing that, become Netflix," she said.
There were no major issues on the voting agenda for the meeting. Shareholders voted to reelect all seven directors.
Google's CEO Eric Schmidt stepped down from Apple's board last summer and no one was nominated to replace him. Apple and Google are increasingly competing against one another in areas like smartphones and operating systems.
When asked about Schmidt's departure, Jobs said: "I think Eric conducted himself as a board member appropriately and recused himself when we were discussing matters that might involve conflicts."
Shares of Apple rose 0.67% to close at $202.00 on the Nasdaq. CNBC reported a rumor earlier that Apple was considering a share split, but Jobs made no mention of that at the meeting on Thursday.
Apple spokesman Steve Dowling said Apple had made no announcement about a share split and declined further comment.