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Notes of interest from Apple's Q1 2010 conference call - Page 2

post #41 of 44
Quote:
Originally Posted by Dr Millmoss View Post

Capital is for expansion, not hoarding. In Apple's case, I don't believe that they could responsibly use anywhere close to as much cash as they have accumulated for any imaginable amount of R&D, or for responsible acquisition that would expand their business.

How do you know it's mere hoarding as opposed to saving for a strategic purpose? There are many multi-billion dollar ventures for massively tapping new markets. The problem, of course, is making that money back.

However, you don't make any money back from dividends either. I'd rather see Apple invest in a game changing event than a dividend.

Examples include a second internet that folks have hinted that Google might do someday for the ability to more rapidly push their own content. That would require purchases of companies that provide last mile solutions OR develop a new last mile solution like Clear/Xohm might have done. Or perhaps a mesh network solution.

Even the ability to threaten to do this has huge strategic advantages. Like Google's $4.6B bid on the 700Mhz spectrum. That's 10% of Apple current cash holdings. Billions more if the threat had to be carried through...and with another $15-20B in the bank the incumbents had to seriously consider if they really pissed Google off what it might do or more importantly do to them. So they caved on the net neutrality points Google cared about even though it was strategically inadvisable to do so from their perspective.

Besides, even if they are mearly hoarding they have plenty of company. The 500 largest non-financial firms were holding $995B in reserves. Tech companies are traditionally hoarders:

"At the end of the second quarter, the 54 biggest information-technology firms held $280 billion -- or 27% of their assets -- in cash, according to the Journal's analysis, a higher percentage than any other industry group. Cash balances grew further in the third quarter for the 34 companies in that group that have reported results.

Consider Google. The search giant's cash and short-term investments rose 53% to $22 billion in the third quarter from a year earlier, accounting for 58% of its total assets.

The cash provides "operating and strategic flexibility," Google Chief Executive Eric Schmidt told analysts last month. "We're very happy to have it sit in our bank account and earn a modest interest rate.""

http://online.wsj.com/article/SB125712303877521763.html

Quote:
BTW, it's worth reminding people who aren't AAPL investors that those of us who are AAPL investors have seen zero return in two years. The grim reality is that while Apple has grown profits substantially and fattened its wallet immeasurably over that period, that long-term investors have seen exactly squat as a result.

Then I recommend you sell. Did you notice that there has been some minor economic fluctuations the last couple years? What is it they call that?
post #42 of 44
Excellent post, Vinea.
Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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post #43 of 44
Quote:
Originally Posted by solipsism View Post

Excellent post, Vinea.

Except that it ignored my challenge completely. Par for the course.
Please don't be insane.
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Please don't be insane.
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post #44 of 44
Quote:
Originally Posted by Dr Millmoss View Post

Except that it ignored my challenge completely. Par for the course.

If you had a challenge I might have addressed it. Are you referring to responsibly use the money?

This is addressed by Google's statement regarding their "hoard".

"The cash provides "operating and strategic flexibility," Google Chief Executive Eric Schmidt told analysts last month."

As well as what they did with it. Like the $4B+ bid on spectrum to keep Verizon and AT&T honest and the tens of billions to make the threat worth taking seriously. AT&T regularly spends tens of billions on wireless infrastructure. With the cash hoard, Google was a credible threat.

Plus they get to do strategic buys without breaking a sweat. Like buy admob for $750M.

Or threaten to leave the Chinese search market.

Cisco has $35B cash on hand.

Look at this chart:

http://ycharts.com/companies/search?...c=cash_on_hand

What you're whining about is a complete non-issue in the tech world. MS has around $36B. Oracle $20B. IBM around $14B. Nokia $10B. Heck even Yahoo and Amazon have $4B.

Apple plays with the big dogs, all of whom have massive war chests.

Don't like cash hoarding? Sell all your tech stocks. Good luck with that strategy.

What's par for the course is you make some unsubstantiated assertion (with great authority) that I dismember with links to data that disproves your assertion.
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