Apple, HTC rumored to cut back on handset chipset orders in Q4

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Comments

  • jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by digitalclips View Post


    I always get confused in this area. As an expert please explain GE to me in this context. Half a trillion in debt last time I checked. Do I understand then that GE has this level of debt some other way? I assume they spent this money already, but without utilizing share value? How did they do it?



    It is not a simple matter - debt can be in all sorts of forms. Some is good, some is bad, and some is both good and bad.



    Rather than trying to get an education on business finance on an Internet forum, you should try to get an education through a more formal process. At least pick up a book or two. If you can't understand it from a decent book or two, trying to make sense of it from 5 paragraphs in a forum like this is a waste of everyone's time.
  • accessoriesguyaccessoriesguy Posts: 86member
    It makes sense that they produce less, if people have less money demand for luxuries go down.



    I would expect apple to use this as an excuse to produce less. Even low income neighborhoods love their SUV's and latest phones. I do feel sorry for that middle class, that gets no support yet has to pay those higher taxes.



    I think like Warren Buffet said, raise the taxes on the super rich (who pay less on taxes then others who make $250,000+) and lower the tax for that unhelped middle class.
  • anantksundaramanantksundaram Posts: 16,927member
    Quote:
    Originally Posted by jfanning View Post


    Not by Apple it can't be, they don't own it, the shareholders do.



    Hmm.... know about new share issues?



    Not that Apple needs any additional cash, but if it wanted to, it could - just as any company could - easily monetize (subject to a small signaling discount) a high share price.
  • anantksundaramanantksundaram Posts: 16,927member
    Quote:
    Originally Posted by digitalclips View Post


    I always get confused in this area. As an expert please explain GE to me in this context. Half a trillion in debt last time I checked. Do I understand then that GE has this level of debt some other way? I assume they spent this money already, but without utilizing share value? How did they do it?



    You posted this question to jfanning, but let me see if can throw in a couple of cents.



    1) Re. GE's very high levels of debt, you probably know that half of GE is GE Capital, i.e., its financial services business. All financial services firms have very high levels of debt since that is the 'raw material' they need in making loans, which is their core business.



    The level of debt attributable to GE's industrial businesses is quite low.



    2) GE had a near-death experience in 2008 when GE Capital could not access any credit (recall that the short-term credit markets had completely frozen up). The US government threw GE a lifeline to keep what was then a liquidity issue spiraling downwards to becoming a solvency issue. The very existence of a company with hundreds of thousands of employees could have been at stake. Following that experience, Jeff Immelt decided to issue massive amounts of debt when the market recovered, to keep as cash on balance sheet as a rainy day fund, so that he would never have to go through that again (I've heard him say this in public forums).



    As an aside, this may explain Jobs's, and hence, Apple's obsession with holding on to obscene amounts of cash!



    3) As far as I can tell, GE did not 'monetize' a high share price to raise this new debt - although many companies do that, e.g., as Google did, recently, even though they had no need for extra cash - since GE's stock price was near historic lows when they did decide to tap the debt markets (in 2009-10, when the credit crunch eased).



    The bottom line is, companies can monetize their high share prices to raise new equity or issue debt cheaply, although the latter is less related to the share price.
  • anantksundaramanantksundaram Posts: 16,927member
    Quote:
    Originally Posted by jragosta View Post


    It is not a simple matter - debt can be in all sorts of forms. Some is good, some is bad, and some is both good and bad.



    Rather than trying to get an education on business finance on an Internet forum, you should try to get an education through a more formal process. At least pick up a book or two. If you can't understand it from a decent book or two, trying to make sense of it from 5 paragraphs in a forum like this is a waste of everyone's time.



    Gosh, you're not only poorly informed, but also arrogant.
  • jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by anantksundaram View Post


    Gosh, you're not only poorly informed, but also arrogant.



    Really? What part of my post is poorly informed?
  • anantksundaramanantksundaram Posts: 16,927member
    Quote:
    Originally Posted by jragosta View Post


    Really? What part of my post is poorly informed?



    For starters, why don't you explain this puzzling - actually, borderline vacuous (or zen-ish, depending on your p. o. v.) - statement: "Some is good, some is bad, and some is both good and bad."
  • jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by anantksundaram View Post


    For starters, why don't you explain this puzzling - actually, borderline vacuous (or zen-ish, depending on your p. o. v.) - statement: "Some is good, some is bad, and some is both good and bad."



    You want me to cram an entire semester's course into a brief comment?



    If you have to ask that question, you are hopelessly uninformed. The fact that you don't understand it doesn't mean that it's wrong.



    In the end, though, it comes down to what the debt is used for and the type of debt. To simplify it immensely:

    Good - typically, this is low risk debt that is well secured and which generates income. For example, GE's leasing business is an example. Or closer to home (literally), the small landlord who buys properties by borrowing 70-80% of the purchase price and then rents them out to pay the mortgage and other costs plus a profit.



    Bad - borrowing money for operating expenses is almost always bad. If you don't have the cash to handle operating expenses, you run the risk of digging a hole that you will never escape from.



    Good/Bad - lots of things in between have some good characteristics and some bad ones. For example, buying the money to buy a subsidiary. It can be good if it is properly structured and cash flow is sufficient to handle the payments even in the event of adverse consequences. Even so, there is the negative consequence that it significantly increases risk for the borrower.



    Now, why don't you stick to posting about things you understand rather than insulting people who know more than you do - simply because you're too lazy to learn?
  • jfanningjfanning Posts: 3,332member
    Quote:
    Originally Posted by anantksundaram View Post


    Hmm.... know about new share issues?



    Not that Apple needs any additional cash, but if it wanted to, it could - just as any company could - easily monetize (subject to a small signaling discount) a high share price.



    All of which takes time to do, Apple can't immediately benefit from their share price, and as you have said, it they did it would discount their current shares, it is just a value placed on it by the share holders.
  • nvidia2008nvidia2008 Posts: 9,262member
    Don't forget to mention the fractional reserve system. You touched on it briefly but did not give it a name.



    I can't put it eloquently but I would say:



    One should know that everyone is shuffling around lots of money that nobody really has.

    http://www.youtube.com/watch?v=KyDU4X8GSmE



    What's possibly sad is the few thousand views this has while Bieber's gets millions and millions.



    While I don't agree 100% with the recommendations in the video the description of money as debt is very eye-opening.



    Quote:
    Originally Posted by anantksundaram View Post


    You posted this question to jfanning, but let me see if can throw in a couple of cents.



    1) Re. GE's very high levels of debt, you probably know that half of GE is GE Capital, i.e., its financial services business. All financial services firms have very high levels of debt since that is the 'raw material' they need in making loans, which is their core business.



    The level of debt attributable to GE's industrial businesses is quite low.



    2) GE had a near-death experience in 2008 when GE Capital could not access any credit (recall that the short-term credit markets had completely frozen up). The US government threw GE a lifeline to keep what was then a liquidity issue spiraling downwards to becoming a solvency issue. The very existence of a company with hundreds of thousands of employees could have been at stake. Following that experience, Jeff Immelt decided to issue massive amounts of debt when the market recovered, to keep as cash on balance sheet as a rainy day fund, so that he would never have to go through that again (I've heard him say this in public forums).



    As an aside, this may explain Jobs's, and hence, Apple's obsession with holding on to obscene amounts of cash!



    3) As far as I can tell, GE did not 'monetize' a high share price to raise this new debt - although many companies do that, e.g., as Google did, recently, even though they had no need for extra cash - since GE's stock price was near historic lows when they did decide to tap the debt markets (in 2009-10, when the credit crunch eased).



    The bottom line is, companies can monetize their high share prices to raise new equity or issue debt cheaply, although the latter is less related to the share price.



  • nvidia2008nvidia2008 Posts: 9,262member
    This seems to be getting more views... Money As Debt II:

    http://www.youtube.com/watch?v=_doYllBk5No
  • philboogiephilboogie Posts: 7,286member
    Quote:
    Originally Posted by nvidia2008 View Post


    One should know that everyone is shuffling around lots of money that nobody really has.

    http://www.youtube.com/watch?v=KyDU4X8GSmE



    Thanks nvideo2008! That certainly is an informative video on the How&What about money. (it's a 5 part video, every part a little under 10 minutes, yep, worth watching!)



    Thanks,

    PhilBoogie
  • nvidia2008nvidia2008 Posts: 9,262member
    Quote:
    Originally Posted by PhilBoogie View Post


    Thanks nvideo2008! That certainly is an informative video on the How&What about money. (it's a 5 part video, every part a little under 10 minutes, yep, worth watching!)



    Thanks,

    PhilBoogie



    Cheers, check out the 2nd series as well as I posted above:



    This seems to be getting more views... Money As Debt II:

    http://www.youtube.com/watch?v=_doYllBk5No
  • philboogiephilboogie Posts: 7,286member
    Quote:
    Originally Posted by nvidia2008 View Post


    Cheers, check out the 2nd series as well as I posted above:



    This seems to be getting more views... Money As Debt II:

    http://www.youtube.com/watch?v=_doYllBk5No



    Oooh, thanks very much for this 2nd post nvidea! I'm using some Clean-YouTube-Extension and probably missed this part II because of that. Thanks to you I get to watch it now. Well, I might download it and watch it on my iScreen while commuting/waiting...



    Thanks much, appreciated!

    PhilBoogie
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