What would you do with Apple's cash hoard?
Apple is currently sitting on almost $60 billion dollars cash and appears to be adding at least another $30B/year. What would you do with the money? Paying a dividend is, of course, an option but let's try thinking of acquisitions that would build Apple further. And we don't need to spend every last dollar.
If you have ideas for acquisitions, try to point out specific companies and why they would mesh with Apple's strategies. Or identify specific technologies/IP that would benefit Apple in the future.
Let's see if we can come up with some reasonable ideas that would whittle down Apple's mountain of cash.
One possibility that I can think of is up-front payments for content like the cable companies and Netflix do. It would barely put a nick in the cash pile but might provide the opportunity for Apple to gain more traction in the living room.
In conjunction with more content, I can see more data centers. At the very least, a sister-site to the Maiden, N.C. DC situated in the western part of the US. Maybe NV, UT or AZ. Perhaps Apple would build data centers around the world - Europe, Asia and South America. At a billion dollars a pop, this would at least slow down the growth of the cash.
ANyone else have any thoughts?
If you have ideas for acquisitions, try to point out specific companies and why they would mesh with Apple's strategies. Or identify specific technologies/IP that would benefit Apple in the future.
Let's see if we can come up with some reasonable ideas that would whittle down Apple's mountain of cash.
One possibility that I can think of is up-front payments for content like the cable companies and Netflix do. It would barely put a nick in the cash pile but might provide the opportunity for Apple to gain more traction in the living room.
In conjunction with more content, I can see more data centers. At the very least, a sister-site to the Maiden, N.C. DC situated in the western part of the US. Maybe NV, UT or AZ. Perhaps Apple would build data centers around the world - Europe, Asia and South America. At a billion dollars a pop, this would at least slow down the growth of the cash.
ANyone else have any thoughts?
Comments
Strategically purchase land for the development of manufacturing facilities, warehousing and R&D that is currently positioned overseas and bring those jobs to the U.S.
You'd need a whole lot more than 60B to pay the labor costs to build and staff such facilities here.
There's a reason they are not located locally to begin with.
You'd need a whole lot more than 60B to pay the labor costs to build and staff such facilities here.
There's a reason they are not located locally to begin with.
Some people don't get it: if it made economic sense to bring those jobs back to the US our economy and standard of living would be significantly worse than it currently is.
http://news.cnet.com/8301-31001_3-20...=2547-1_3-0-20
Would it make any sense for Apple to acquire Warner Music Group and/or EMI. This would surely help them get a subscription-based music service off the ground. But it also might inflame fears that Apple has to much control over media.
Anyone have any thoughts?
You'd need a whole lot more than 60B to pay the labor costs to build and staff such facilities here.
There's a reason they are not located locally to begin with.
Some people don't get it: if it made economic sense to bring those jobs back to the US our economy and standard of living would be significantly worse than it currently is.
Pessimists like you two are the real reason manufacturing left this country in the first place.
Pessimists like you two are the real reason manufacturing left this country in the first place.
It has nothing to do with pessimism. It's simple math. It is cheaper to ship raw materials to Asia, use their labor to manufacture, then ship back here.
The labor portion of the cost within the US is just not competitive. Not because of wages alone, but also the corporate taxes that must be paid on behalf of that labor... As well as unproductive labor contracts negotiated by unions and corporations together.
Now consider the "environmental" tax imposed by US legislation... The increased costs associated with building facilities here and managing various manufacturing processes.
I'm not arguing the morality of it, just stating the facts. It is MUCH cheaper to go overseas. So much so that even a company willing to shoulder the extra cost of doing business within the US just cannot compete.
As long as the Chinese people/government is willing to allow themselves to earn less and to "poison the earth" with lax environmental policies, they will attract the manufacturing facilities and jobs that cannot compete under US law.
As long as the Chinese people/government is willing to allow themselves to earn less and to "poison the earth" with lax environmental policies, they will attract the manufacturing facilities and jobs that cannot compete under US law.
And if China addresses these issues, manufacturing will find a new home in some other emerging economy (e.g., India).
And if China addresses these issues, manufacturing will find a new home in some other emerging economy (e.g., India).
Yes, absolutely.
The manufacturing will always go to wherever the overall product can be made for the least amount of money.
Just came across this:
http://news.cnet.com/8301-31001_3-20...=2547-1_3-0-20
Would it make any sense for Apple to acquire Warner Music Group and/or EMI. This would surely help them get a subscription-based music service off the ground. But it also might inflame fears that Apple has to much control over media.
Anyone have any thoughts?
I don't think it makes any sense for Apple to own a content producer. It may get their foot in a door for new content services they may wish to deliver, but it also makes them instant competitors with all of the other content producers -- and nobody likes to do deals with competitors. Cracks open one door, and slams shut a lot of others.
Also, the music business is a relatively low ROI industry, especially compared to the returns Apple is seeing in its markets currently. This points out one of the biggest problems with Apple acquiring other large companies, especially outside of their own industry. Few if any of them have the growth potential of the markets Apple is already creating and exploiting. What you get very likely is a drag on earnings, and that's almost a best-case scenario.
Acquisitions have to produce more than the sum of the parts, or they're not worthwhile. They also have to be undertaken between willing partners with similar corporate cultures. I don't see anything out there that matches those criteria.
If Apple is going to spend any significant fraction of their cash hoard, I'd prefer to see them do it building some sort of infrastructure that nobody else offers or can offer. They might need to acquire some smaller companies in order to obtain expertise (as they have before), but for Apple to do what it does best, buying into legacy technology is not the way forward.
If Apple intends to stay in the Pro arena, they could buy Avid which owns a lot of IP in both video and music areas. They could integrate that IP into Final Cut Studio and Logic Studio and otherwise gradually move Avid software products to Mac-only over a 3-5 year period.
They would also end up with a new Pro HW business (control surfaces, digital audio consoles, MIDI interfaces). These are low-volume but likely have good margins.
However, this would be pocket change for Apple and not any type of grand scheme for using addressing the massive amount of cash.
Pessimists like you two are the real reason manufacturing left this country in the first place.
Ha ha ha ha! The reason is cost, not pessimism. And cost is related to a bunch of things. One of such things is housing bubble inflation, which as you might recall was only made possible by the US government meddling with loan policy (barney frank & co). Another of such things is currency manipulation in China, which is also largely a product of US foreign policy.
So people like you (possibly) who vote for career politicians are actually the ones to blame. The Democrats are responsible for the domestic catastrophe and the Republicans for the foreign policy catastrophe, so there's really nowhere to hide. I am involved in some manufacturing myself, and let me tell you, there is nothing more that manufacturers would love than to produce domestically, but excessive litigation, red tape, and a long history of bad governance make it virtually impossible to compete.
On topic:
If I were Apple, and had all this money, I would start getting more involved in things like NFC and DASH7, which are enablers for -- seriously -- a whole new plateau of iPhone apps, especially of the consumer-oriented type that Apple likes. If Apple doesn't, others will.