or Connect
AppleInsider › Forums › Investors › AAPL Investors › Notes of interest from Apple's Q1 2011 conference call
New Posts  All Forums:Forum Nav:

Notes of interest from Apple's Q1 2011 conference call - Page 3

post #81 of 129
Quote:
Originally Posted by Atanner View Post

Why would a bank pay 3% interest to Apple when they can borrow money from the Federal Reserve at .25%? I'm surprised Apple gets 1%.

If Steve would have signed up for direct deposit of his salary, maybe he would have qualified for a higher rate.

Life is too short to drink bad coffee.

Reply

Life is too short to drink bad coffee.

Reply
post #82 of 129
Quote:
Originally Posted by melgross View Post

Well! Not too bad. Almost $27 billion in revenue. I was thinking almost 27.5, so i wasn't off by too much.

This means that Apple, with its guidance of $22 billion next quarter could have its first $100 billion fiscal year for 2011, and pretty much definitely have one for calendar year 2011. That would beat analysts predictions of $86 to $94 billion. I'm assuming that the March quarter will show at $24 billion or so.

As that's the worst quarter for Apple, all others would be over $25 billion, and possibly by a good margin.

$60 billion in cash. They generated much more cash than I, or I think anyone thought. it means they could generate an average of $6 to $7 billion this year per quarter. What to do. What to do.

You are incorrect, if you read the financial statement the $27 bill qtr ended on Dec 25 2010, so to assume a $100 bill 2011 calendar year assume that qtr ending Dec 25th 2011 is similar to the one just ended. By the way I love Apple.
post #83 of 129
Quote:
Originally Posted by melgross View Post

The same tired article?

Do you guys have problems understanding these articles? It very clearly says this in the very beginning;



So, who should apologize?


Do you guys have problems understanding these articles.
How come you can make this nasty comment and not be flagged ?
post #84 of 129
Yep guys looks like I will be banned soon.
Why / Because I wrote a post about daharder, the AI moderators are too gutless to kick him off, he posts nasty obnoxious stuff, yet is immune.
I post once and have been warned, go figger.
I guess melgross (moderator) will expunge this post so you won't get the chance to read it, wonderful thing censorship.

EDIT:

I'll let this absurd post stand as it is so allow others to shake their heads over it.
post #85 of 129
I keep thinking that other companies will look at Apple's performance and decide to change how they do business. Apple have proved that a focus on design, attention to detail and high standard of quality can sell. I have seen not a single company in any of the Apple market spaces that comes close. Nor have I seen one that seems to "get" what Apple is doing. Remember how the boys and girls at RIM didn't believe the iPhone would function as Steve demonstrated? This was the iPhone 1 for crying out loud. Then they got one and were stunned to see what was inside. It like they are members of a cargo cult and Apple is the "God" who uses advanced technology.

Just wow.
post #86 of 129
Quote:
Originally Posted by melgross View Post

$60 billion in cash........ What to do. What to do.

Great question.

Simple answer. Return $55B (~$60/share) to shareholders in the form of a special dividend. Damn shareholder tax consequences. Start cash pile from scratch.

I surmise that the stock (less the obvious arithmetic effect of smaller cash balance) will zoom.
post #87 of 129
Quote:
Originally Posted by Atanner View Post

Why would a bank pay 3% interest to Apple when they can borrow money from the Federal Reserve at .25%? I'm surprised Apple gets 1%.

That's just plain foolish.

I can get 1.3% myself with Amex. Or 1.43% with Upromise. Or 1.75% with a couple of online banks:
http://www.bromoney.com/savings-account-interest-rates

You don't think Apple could do better?

Or let's talk about CDs. I can get 2.61% on a 5 year CD. Granted, if Apple needed the money sooner, they'd lose a quarter's worth of interest, but they'd still be ahead of the game if they held on to it for at least a few months.

Something doesn't add up. There must be something in the way Apple is reporting the interest income.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
post #88 of 129
Quote:
Originally Posted by ghostface147 View Post

Feels pretty good actually. Taxes are a bitch though.

Cash is post-tax, FYI. (Although, not necessarily US).
post #89 of 129
Quote:
Originally Posted by AppleInsider View Post

Apple's Mac business

Mac sales were a record 4.13 million for the quarter, with portables leading the way, accounting for $3.7 billion in revenue on sales of 2.9 million.

Desktop Macs earned Apple another $1.7 billion for the three-month period, on sales of 1.2 million.

Is my math correct: $5.4B ÷ 4.13M units = $1300 average per Mac?

Quote:
Apple's next (Q2 2011) fiscal quarter

Apple has projected revenue of about $22 billion and diluted earnings per share of about $4.90.

Anyone what they earned that quarter YoY? It could give us some insight into new product updates coming.

Quote:
The next generation of Android tablets: "There's nothing shipping yet, and so I don't know. Generally, they lack performance specs, they lack prices, they lack timing. And so today they're vapor. We'll assess them as they come out, however, we're not sitting still. And we have a huge first mover advantage...

LOL I love how Apple has come into a decade old market and have absolutely no challengers.
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?"
Reply
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?"
Reply
post #90 of 129
Quote:
Originally Posted by Paul94544 View Post

If you are a cell phone carrier and you need an OS to compete with the iPhone would you really trust a software company to develop the OS for it. OR would you prefer to develop it yourself?

In an ideal world of course you would prefer to have it in house - you would then not be beholden to the software company. You would have complete control of the software and be able to customize it for you own phones and not be at the mercy of said software company.

It must be rather galling to be forced to use someone else's OS for your phones. And be completely at the mercy of their development timelines and strategic objectives. As long as that OS is kept up to date and adds new fetaures on time and make sense you should be okay but still!

and to top it off that software company is giving the OS away to your nasty rivals too jeez, But again you really should have seen the iOS coming shouldn't you and not have painted yourself in this tight corner in the first place. well thats what come from gettin' complacent! Innovate or die

Agree. To elaborate further, all these handset manufacturers that turned to Android did so really out of desperation because they felt they just had to be in the smartphone space no matter what. Even though if they just turned their heads a little bit to look at the Windows PC market they'd immediately realize that as hardware manufacturers using a common platform they will be fighting tooth and nail among themselves for the few profit scraps that are left over from Apple and to some extent Blackberry. Nokia is right, turning to Android is like pissing in your pants to keep yourself warm in winter. It is in Google's interest to encourage cutthroat price competition among the Android handset mfrs because driving down the price of Android handsets can only help in growing their mobile advertising platform. What a bunch of sorry patsies these Android phone makers are. Kudos to HP for learning its Windows lesson well and choosing to acquire its own mobile OS. It might not work out in the end, but at least they buy themselves a shot at getting a decent return for their efforts as opposed to going with Android and its guarantee of subsistence profits.
post #91 of 129
Quote:
Originally Posted by mstone View Post

One of the things that is different about the PC Mac comparison is that almost from the very beginning people were making PCs at home from parts which were readily available, as was a copy of DOS. This was not possible with Apple computers for which parts and ROMs were tightly controlled, which may have been Apple's mistake. Because of that grass roots PC following and eventually IT departments who were able to repair and trouble shoot PCs without a certified dealer's help, Microsoft based computers became widespread very quickly.

The difference now is that you can't make your own smartphone from parts and you can't make a call without a carrier. Since the iPhone is no more expensive than the alternative, Android, it is all about the best phone for the money.

There's another thing you can't do now even if you're a big company: buy many of even the standardized key parts in quantity, because Apple is locking up the supply with mass future orders. Like 10" screens in 2010 - which make you have to pretend 7" was what you really wanted in the first place. Or flash memory in 2007-8.

Quote:
Originally Posted by jason98 View Post

I wonder who they are going to buy. Got to be Nokia for all their IP.

Quote:
Originally Posted by penchanted View Post

I keep trying to envision a sensible large purchase for Apple; the only thing that I can ever come up with is Sony. But, really, Apple likely doesn't want Sony, just Sony Music Entertainment and Sony Pictures Entertainment. Not to mention that such a purchase might create problems dealing with other content providers.

Quote:
Originally Posted by melgross View Post

The problem with most big companies is that they're in businesses Apple doesn't want to be in, or that conflict with their plans and needs, or with that of other companies Apple is partners with. Usually, the bigger the company, the more this will be true.

Quote:
Originally Posted by poke View Post

Cook mentioned that they're investing in a particular area of technology, much like they have in processor development and flash storage, but wouldn't say what it was. I think it's likely he was talking about display technology.

Quote:
Originally Posted by SpamSandwich View Post

They'd be wise to secure the most wide-ranging collection of multi-touch and telephony patents available... Clearly the future is iPhone and iPad.

Expanding the patent portfolio makes some sense, but otherwise, like melgross and penchanted I've always found most of the speculation about Apple acquiring other high-profile companies (Adobe, Sony, Nokia, RIM, etc.) who also market to end-users tough to swallow. Clash of corporate cultures, loss of synergies, span of control issues, product lines and divisions to simply close down, etc., etc.). I also don't see how getting into the cellco (or cable) or dramatic content creation businesses really benefits them, and might even hobble them.

Netflix is frequently mentioned, but their access to the product of all the studios the do have is not secure (or so I've read), and they might lose more rights from media companies who are already leery of Apple's leverage over their businesses. A gaming company might fit in the mix somewhere, though (I never play, so whadda' I know?).

And I've always thot that convergence is going to soon involve higher quality cameras that are also everything else other Apple Mobiles are. But that might not require a camera company acquisition. Tons of companies have shown there's not much barrier to entry into the digital camera biz. Olympus, though, might be a reasonably pure play. How would you like a micro 4/3 camera with interchangeable lenses (plus other sophisticated phone-size P&S cameras) and ubiquitous internet connectivity that would send your RAW shots and 1080p video over LTE 4G to Aperture running on your iPad 3 or the successor to today's MB Airs? Where you'd have access to all your other media for editing in soundtracks and more? As well as the cameras having their own apps and other iOS 6 features. Nikon would be less tidy to swallow, but one never knows - if they're looking in that direction.

In any case, you have to think of Apple as a global company now, and thus their acquisitions are likely to made with an eye toward companies and technologies which advance them globally, not just in the US or a few countries.

Infrastructure probably makes the most immediate sense, though, i.e., PA-Semi and Intrinsity show their mindset. Apple's always liked control over their own software AND hardware, and they're in a position to gain more. So, yeah, an innovative display tech company or a maker of the type of silicon acting as MB Air drives, e.g. Or a company making, as alluded to above, key camera parts, if not a camera company. Or bleeding edge manufacturers of the other key parts in their mobile products, e.g., batteries, radios, etc. (assuming there's ways to differentiate themselves by doing so as there was with the A4, otherwise, why bother? Except to avoid supply bottlenecks - but any such company they buy is going to have to have a strong R&D effort or they'll be marginalized in time for that component line).

Other plays in the component area, though, might raise anti-trust concerns and involve behemoths, e.g., Intel or NVidia. I don't know enough about AMD's breadth, patent hand or true viability to comment on them, but the ATI properties seem to have value. Still, there are issues with any of these.

They could probably also buy as much of the companies that assemble their products as China and others will allow, but that also poses problems. Consider Foxconn (spelling?) and its workers jumping from windows (in which company or a similar one, forgive my lack of research, they may already have a stake). Apple as key stockholder would probably be under conflicting pressures from labor activists and the whole Chinese gov't-industrial establishment in terms of wages and working conditions and either shrink their own margins, be the target of political action and public relations warfare, or in time cause general inflation in China's electronics (and eventually other) industries.

And just to cover the bases, they still seemed disinclined to dive deeply into any area of enterprise computing as closing down XServe indicates.

Happy quandries to have enough cash to worry about, in any case. We shall see.

Quote:
Originally Posted by Haggar View Post

If Apple is not worried about "cannibalization" then they should have no problem selling that midrange Mac tower that people have been asking for.

You MMRM (Mythical Mid-Range Mac) guys love to keep suffering, as you keep the faint candle of hope burning, don't you? (And I know because I was one for a long time.)

Look at the sales trends - that's where Apple goes - not into static mature slow growth or declining areas. If they finally give us one, it would have to be as a gift to long-suffering Mac geeks, not a real business decision.

Quote:
Originally Posted by Postulant View Post

I wonder what it feels like to have 60 billion in cash...

Probably what the Apple executive suite and board feels like: "King of the (tech) World!!"

Quote:
Originally Posted by melgross
$60 billion in cash........ What to do. What to do.

Quote:
Originally Posted by anantksundaram View Post

Great question.

Simple answer. Return $55B (~$60/share) to shareholders in the form of a special dividend. Damn shareholder tax consequences. Start cash pile from scratch.

I surmise that the stock (less the obvious arithmetic effect of smaller cash balance) will zoom.

You may know (far) more about technology and using it than I do, and you do have SOME fiscal knowledge, so no personal offense, but tell me you're not running a company I may be invested in or co-ordinating fiscal, tax or monetary policy for a government. Dear God(dess)(e)(s). Not enough storage space on AI's servers to deconstruct such economic/market/management malarkey.

Quote:
Originally Posted by mstone View Post

If you look at it in comparison to movie theaters during the depression of 1929 there are similarities. In the case of movie theaters, they had just introduced sound at that time and people although hurting from the economic situation afforded themselves a single luxury of going to the movies once a week. While other businesses failed, movie theaters with sound stayed open.

Similarly Apple introduced a revolutionary advancement in cell phone technology and although we find ourselves in a similar economic condition, we afford ourselves the simple luxury of this new gadget.

History. Context. A fresh take. Yaay! (Those things are often rarer than hen's teeth around here.)

An iPhone, a Leatherman and thou...  ...life is complete.

Reply

An iPhone, a Leatherman and thou...  ...life is complete.

Reply
post #92 of 129
Quote:
Originally Posted by solipsism View Post

anyone what they earned that quarter yoy?

In billion $
1/09 11.880 2.255
2/09 9.084 1.620
3/09 9.734 1.828
4/09 12.207 2.532
1/10 15.683 3.378
2/10 13.499 3.074
3/10 15.700 3.253
4/10 20.343 4.308
1/11 26.741 6.004
post #93 of 129
Quote:
Originally Posted by AppleInsider View Post

About half of Macs sold were to customers who never owned a Mac before.

This is the most important piece of information in this article.
post #94 of 129
Very impressive results. However some things that struck me:

1. The iPhone has a higher average selling price than the iPad. Does it really cost more to produce or is the profit lower.
2. High sales of the iPods doesn't actually achieve much in revenue compared to the iPhone.
3. Almost 40% of the revenue comes from the iPhone.

I would like to see how much profit each product actually brings in because if the iPhone has the highest profit margin then it's possible half the company's profit is just from one product. If it were to go out of fashion (and at some point everything does), that would put a huge dent in the value of AAPL.
post #95 of 129
Quote:
Originally Posted by solipsism View Post


LOL I love how Apple has come into a decade old market and have absolutely no challengers.

The reason for this I think is that the other companies in the tech sector are only now finally managing to skid to a halt in the directions they were going. The inertia must have been horrific. Now they have to totally alter course (being the bunch of creative and original folks they all seem to be) and reverse engineer everything Apple does then get a production line going. All the meanwhile spouting about vaporware to try to appease stock holders and stave of defections in their user base. The snag is the technologies and worse perhaps the components are not there!

Only Google was able to have an inside track on the change of direction and we all know why! Imagine where AAPL would be now had Apple's board been differently configured!
From Apple ][ - to new Mac Pro I've used them all.
Long on AAPL so biased
Google Motto "You're not the customer. You're the product."
Reply
From Apple ][ - to new Mac Pro I've used them all.
Long on AAPL so biased
Google Motto "You're not the customer. You're the product."
Reply
post #96 of 129
Quote:
Originally Posted by melgross View Post

The problem with most big companies is that they're in businesses Apple doesn't want to be in, or that conflict with their plans and needs, or with that of other companies Apple is partners with. Usually, the bigger the company, the more this will be true.

I think Apple wants to be in a strong bargaining position for IP/innovative companies it really wants - especially with both Microsoft and Google out trying to hoard as many smaller firms as they can to reinforce their own IP or prevent the others from getting it. Both of these firms recognize Apple's buying power, and it seems like Apple goes after one firm - or seems to, and then turns around and buys another once they get Google focussed on and trying to outbid them.
If you are going to insist on being an ass, at least demonstrate the intelligence to be a smart one
Reply
If you are going to insist on being an ass, at least demonstrate the intelligence to be a smart one
Reply
post #97 of 129
Quote:
Originally Posted by mstone View Post

One of the things that is different about the PC Mac comparison is that almost from the very beginning people were making PCs at home from parts which were readily available, as was a copy of DOS. This was not possible with Apple computers for which parts and ROMs were tightly controlled, which may have been Apple's mistake. Because of that grass roots PC following and eventually IT departments who were able to repair and trouble shoot PCs without a certified dealer's help, Microsoft based computers became widespread very quickly.

The difference now is that you can't make your own smartphone from parts and you can't make a call without a carrier. Since the iPhone is no more expensive than the alternative, Android, it is all about the best phone for the money.

MediaTek is one those companies which is trying to do a white box model and is eventually sweeping out the low cost market where Nokia prevails.
As, you pointed out the smartphone cannot exist on it's own it needs a regulatory clearances, Mobile Identifier numbers etc .., for basic functioning & will make it always tied to the vendor.
post #98 of 129
Quote:
Originally Posted by anantksundaram View Post

Great question.

Simple answer. Return $55B (~$60/share) to shareholders in the form of a special dividend. Damn shareholder tax consequences. Start cash pile from scratch.

I surmise that the stock (less the obvious arithmetic effect of smaller cash balance) will zoom.

You're confused. The cash is included in the share price. If Apple distributed most of that to shareholders (say $55 B as you suggest), then the share price would drop by that amount - not zoom.

Given their results for the past 10 years, I'd say that Apple probably has a better idea what to do with that cash than some anonymous poster on AI.

Quote:
Originally Posted by anantksundaram View Post

Cash is post-tax, FYI. (Although, not necessarily US).

Yes, but dividends are taxable to the recipient.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
post #99 of 129
Quote:
Originally Posted by jragosta View Post

You're confused. The cash is included in the share price. If Apple distributed most of that to shareholders (say $55 B as you suggest), then the share price would drop by that amount - not zoom.

Given their results for the past 10 years, I'd say that Apple probably has a better idea what to do with that cash than some anonymous poster on AI.

The cash is not included in the share price. It is at most an abstraction attached to the value of the company, but is not otherwise reflected in the price of the shares. By the same token, debt is not subtracted from a company's share price, but may come into consideration in valuing the company if debt service becomes a major financial issue.

Quote:
Yes, but dividends are taxable to the recipient.

I once knew a person who refused a promotion because they didn't want to pay higher taxes. I will leave you to ponder the logic.
Please don't be insane.
Reply
Please don't be insane.
Reply
post #100 of 129
Quote:
Originally Posted by Dr Millmoss View Post

I once knew a person who refused a promotion because they didn't want to pay higher taxes. I will leave you to ponder the logic.

Ive experienced a similar thing. Received a raise that put me into a higher tax bracket that ended up netting me less profit than before the pay increase.
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?"
Reply
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?"
Reply
post #101 of 129
Quote:
Originally Posted by solipsism View Post

Ive experienced a similar thing. Received a raise that put me into a higher tax bracket that ended up netting me less profit than before the pay increase.

Marginal tax rates working as they do, I don't know how that's possible.
Please don't be insane.
Reply
Please don't be insane.
Reply
post #102 of 129
Quote:
Originally Posted by White Rabbit View Post

You are incorrect, if you read the financial statement the $27 bill qtr ended on Dec 25 2010, so to assume a $100 bill 2011 calendar year assume that qtr ending Dec 25th 2011 is similar to the one just ended. By the way I love Apple.

Oh boy! If someone has already explained this to you, if I'm understanding what you're saying, thensorry for the post, but I haven't read ahead of your post yet.

The quarter ending in December is called the December quarter, because quarters are named by the last month. That December quarter also happens to be the FIRST quarter of the new fiscal year for Apple. The March quarter, which we are presently in, is the SECOND quarter of the fiscal year. When someone therefor refers to Apple's fiscal year, they are talking about the December quarter, the March quarter, The June Quarter, and the last quarter of their fiscal year, the September quarter.

If one is talking about calendar years, of course, they begin with the March quarter. I mentioned both.
post #103 of 129
Quote:
Originally Posted by anantksundaram View Post

Great question.

Simple answer. Return $55B (~$60/share) to shareholders in the form of a special dividend. Damn shareholder tax consequences. Start cash pile from scratch.

I surmise that the stock (less the obvious arithmetic effect of smaller cash balance) will zoom.

Nah, way too much. I want to see what they intend. As I mentioned to out friend earlier, they seem to have been trying to hire an expert in mergers and Acquisitions. Apparently, they do have some ideas of a move this year. i'd like to see if that's put on hold with Jobs gone for now, or they move ahead.

I think Apple should maintain a reserve of $20 billion, at least, after any action taken. I'm not so greedy.
post #104 of 129
Quote:
Originally Posted by jragosta View Post

That's just plain foolish.

I can get 1.3% myself with Amex. Or 1.43% with Upromise. Or 1.75% with a couple of online banks:
http://www.bromoney.com/savings-account-interest-rates

You don't think Apple could do better?

Or let's talk about CDs. I can get 2.61% on a 5 year CD. Granted, if Apple needed the money sooner, they'd lose a quarter's worth of interest, but they'd still be ahead of the game if they held on to it for at least a few months.

Something doesn't add up. There must be something in the way Apple is reporting the interest income.

It doesn't add up because a big company can't invest its cash the way a small investor can.

In addition, that 1% was just a supposition on his part.
post #105 of 129
Quote:
Originally Posted by solipsism View Post

Is my math correct: $5.4B ÷ 4.13M units = $1300 average per Mac?

Sorta. Apple doesn't get that with most units sold, because their retailers get their cut. How much? only Apple has all the figures.

Quote:
Anyone what they earned that quarter YoY? It could give us some insight into new product updates coming.

Revenue of $13.50 billion, net profit of $3.07 billion.

All the reports are here:

http://www.apple.com/investor/
post #106 of 129
Quote:
Originally Posted by timgriff84 View Post

Very impressive results. However some things that struck me:

1. The iPhone has a higher average selling price than the iPad. Does it really cost more to produce or is the profit lower.
2. High sales of the iPods doesn't actually achieve much in revenue compared to the iPhone.
3. Almost 40% of the revenue comes from the iPhone.

I would like to see how much profit each product actually brings in because if the iPhone has the highest profit margin then it's possible half the company's profit is just from one product. If it were to go out of fashion (and at some point everything does), that would put a huge dent in the value of AAPL.

iPhones have the radios and extra antennas that iPads don't. I can only assume that those costs and additional FCC testing, which manufacturers pay for, are a good reason for the price differential.

iPod sales are being taken over not just by iPhones, but also by iPad Touches, which are now 50% of the total. iPod Touch sales were up 27% YOY, while ipod sales as a whole were down 7% YOY. That 7% reduction in sales includes the increase of 27% for the Touch, so other iPod sales have dropped even more. Because of that, sales dollars and profits from iPod sales have been increasing even while the numbers have been decreasing. They didn't decrease as much as most analysts thought they would this past quarter because of the Touch sales increase.
post #107 of 129
Quote:
Originally Posted by Dr Millmoss View Post

The cash is not included in the share price. It is at most an abstraction attached to the value of the company, but is not otherwise reflected in the price of the shares. By the same token, debt is not subtracted from a company's share price, but may come into consideration in valuing the company if debt service becomes a major financial issue.

Very true. But investors are not robots, and despite what is often said, markets aren't all that efficient. So investors do look at debt and cash, and make decisions partly based on that. If more decide to buy then sell on that, then the stock goes up. Therefor, in that sense, cash is part of the price of the stock. If Apple gives almost all of it away, the stock will likely drop some. The company is worth less then. And, it takes away a lot of the maneuverability they may have.

When MS was considering spending a rather large sum to buy Yahoo, one of the biggest detriments to that purchase was the consideration of the amount of extra debt MS would have had to take on. If they had their full hoard, that wouldn't have been an issue, and the deal might have gone through, despite the objections of its founder. I'm not saying the deal was a good one (though it would have been for Apple if MS did follow through), but merely that it hurt the hand they had to play.
post #108 of 129
Quote:
Originally Posted by melgross View Post

Very true. But investors are not robots, and despite what is often said, markets aren't all that efficient. So investors do look at debt and cash, and make decisions partly based on that. If more decide to buy then sell on that, then the stock goes up. Therefor, in that sense, cash is part of the price of the stock. If Apple gives almost all of it away, the stock will likely drop some. The company is worth less then. And, it takes away a lot of the maneuverability they may have.

When MS was considering spending a rather large sum to buy Yahoo, one of the biggest detriments to that purchase was the consideration of the amount of extra debt MS would have had to take on. If they had their full hoard, that wouldn't have been an issue, and the deal might have gone through, despite the objections of its founder. I'm not saying the deal was a good one (though it would have been for Apple if MS did follow through), but merely that it hurt the hand they had to play.

As I said, an abstraction. Funny, but I've never suggested a step nearly as radical as the $50b distribution someone proposed here recently. I'm going to stick with my 1% annual dividend, which I think it totally reasonably and very doable without taking away any maneuverability. Dividends are attractive to investors. Note what happened to GE when they were forced to cut their dividends a couple of years ago, and then what happened when they reinstated it. Down and up.

Some years back, AAPL was selling for somewhere very close to the value of their cash-on-hand, which meant at the time that Apple's business (and everything else they owned) was seen by investors as a net liability. I've seen too many bizarre stock valuations over the years to put much regard into how cash or debt figures into market valuations. Too many other factors are more important. The bottom line is, cash doesn't mean anything to an investor unless they are going to get a taste of it.
Please don't be insane.
Reply
Please don't be insane.
Reply
post #109 of 129
Quote:
Originally Posted by Dr Millmoss View Post

As I said, an abstraction. Funny, but I've never suggested a step nearly as radical as the $50b distribution someone proposed here recently. I'm going to stick with my 1% annual dividend, which I think it totally reasonably and very doable without taking away any maneuverability. Dividends are attractive to investors. Note what happened to GE when they were forced to cut their dividends a couple of years ago, and then what happened when they reinstated it. Down and up.

I know your ideas here, we've discussed them often enough. It was anantksundaram's idea, and it was that idea I was responding to.

GE had problems, and that was why the dividend was cut. The thought that their problems were severe enough to need to cut the dividend was the reason the stock went down, and reinstating it was thought to be because the company's troubles were over, which was why the stock went up again. The dividend move, by itself had little to do with it. It's just an indicator of company health for those who offer it. And because of that, it can be dangerous.

Nevertheless, as you know, i now think that Apple is getting so much cash per quarter that a dividend can't hurt. With that large cash generation, I think that more than 1% is called for.

I was thinking that this year, Apple would generate $6 to $7 billion in excess cash per quarter, but after the $9.8 billion generated this past quarter, and the high sales, I'm raising that to $7 to $8 billion a quarter, likely nearer to the high figure. That comes to $32.26 a share approx. a year. 1% dividend is approx. $3.40 going by current pricing, approx. It wouldn't even be noticed. It would do nothing to take the position down. It's a rounding error.

We would need a higher dividend, or an annual cash giveback, or some combination thereof. That's assuming that Apple doesn't make a very large purchase, or several smaller ones that add up, and need to rebuild their position.

Quote:
Some years back, AAPL was selling for somewhere very close to the value of their cash-on-hand, which meant at the time that Apple's business (and everything else they owned) was seen by investors as a net liability. I've seen too many bizarre stock valuations over the years to put much regard into how cash or debt figures into market valuations. Too many other factors are more important. The bottom line is, cash doesn't mean anything to an investor unless they are going to get a taste of it.

We disagree, to a certain extent, there. Remember that Apple wasn't considered viable some years back, and that affected the thinking. A good cash position doesn't help if the company is thought to be a few quarters away from going out of business. Then, in investors minds, the company IS worth its cash position.
post #110 of 129
Quote:
Originally Posted by melgross View Post

I know your ideas here, we've discussed them often enough. It was anantksundaram's idea, and it was that idea I was responding to.

GE had problems, and that was why the dividend was cut. The thought that their problems were severe enough to need to cut the dividend was the reason the stock went down, and reinstating it was thought to be because the company's troubles were over, which was why the stock went up again. The dividend move, by itself had little to do with it. It's just an indicator of company health for those who offer it. And because of that, it can be dangerous.

Nevertheless, as you know, i now think that Apple is getting so much cash per quarter that a dividend can't hurt. With that large cash generation, I think that more than 1% is called for.

I was thinking that this year, Apple would generate $6 to $7 billion in excess cash per quarter, but after the $9.8 billion generated this past quarter, and the high sales, I'm raising that to $7 to $8 billion a quarter, likely nearer to the high figure. That comes to $32.26 a share approx. a year. 1% dividend is approx. $3.40 going by current pricing, approx. It wouldn't even be noticed. It would do nothing to take the position down. It's a rounding error.

We would need a higher dividend, or an annual cash giveback, or some combination thereof. That's assuming that Apple doesn't make a very large purchase, or several smaller ones that add up, and need to rebuild their position.

Interesting! Not so long ago, I was a radical voice in the wilderness suggesting 1% (which would have been far less than 1% now) and was virtually tarred and feathered for making it. Now you're getting ahead of me!

As for my example, yes it's a reflection of the health of the company -- which is my point. When GE wasn't confident about future profits, they cut the dividend. When their business stabilized and they regained confidence, they reinstated it. I've asked this before, but what does it say about Apple's confidence that $60b isn't enough to hold in reserves?

Quote:
We disagree, to a certain extent, there. Remember that Apple wasn't considered viable some years back, and that affected the thinking. A good cash position doesn't help if the company is thought to be a few quarters away from going out of business. Then, in investors minds, the company IS worth its cash position.

I wasn't thinking of the '90s, I was recalling the early 2000s, when Apple was profitable. Not wildly so, but also not skating on the edge of solvency. Partly this was a function of the bursting of the tech bubble, but just the same, investors were valuing AAPL substantially below enterprise value, near cash value. Anyone who knew that was irrationally pessimistic, and had a bit of money to spend, and some nerve, made out.
Please don't be insane.
Reply
Please don't be insane.
Reply
post #111 of 129
Quote:
Originally Posted by Dr Millmoss View Post

Interesting! Not so long ago, I was a radical voice in the wilderness suggesting 1% (which would have been far less than 1% now) and was virtually tarred and feathered for making it. Now you're getting ahead of me!

As for my example, yes it's a reflection of the health of the company -- which is my point. When GE wasn't confident about future profits, they cut the dividend. When their business stabilized and they regained confidence, they reinstated it. I've asked this before, but what does it say about Apple's confidence that $60b isn't enough to hold in reserves?

It says what Apple has been saying; they're looking at making one or more big moves, and for that, they need the cash. At least, that's what it tells me. If there was something about Apple's current rosy position that smelled, then that would be something else. But I've poured over their financials carefully, and can't find anything that doesn't look kosher.

At the beginning of the recession Jobs was asked about the cash. He was, I thought, pretty honest about it. He said that they wanted a big reserve during this bad recession, and that they weren't going to cut their R&D as other companies were so they could come out with great new products before any other competitor could. They were right on both counts.

But now it's much higher, and going higher at a more rapid pace. Unless they're waiting for MS stock to drop so that they can buy them, I don't think they'll need the $90 billion they'll possibly have at the end of the 2011 fiscal year, or the $100 billion they might have at the end of the 2011 calendar year.

Quote:
I wasn't thinking of the '90s, I was recalling the early 2000s, when Apple was profitable. Not wildly so, but also not skating on the edge of solvency. Partly this was a function of the bursting of the tech bubble, but just the same, investors were valuing AAPL substantially below enterprise value, near cash value. Anyone who knew that was irrationally pessimistic, and had a bit of money to spend, and some nerve, made out.

Even in the early 2000's, there were questions about Apple. The industry was rising at a fast pace, and Apple was just treading water. They weren't increasing in size while everyone else was. Their marketshare had dropped from over 10% to 2.8%, and wasn't really going anywhere. The new iMacs stopped the erosion, but didn't really add much to sales. It wasn't until the end of the first year of the iPod and the iTunes Music Store that Apple seemed ok.
post #112 of 129
Quote:
Originally Posted by melgross View Post

It says what Apple has been saying; they're looking at making one or more big moves, and for that, they need the cash. At least, that's what it tells me. If there was something about Apple's current rosy position that smelled, then that would be something else. But I've poured over their financials carefully, and can't find anything that doesn't look kosher.

At the beginning of the recession Jobs was asked about the cash. He was, I thought, pretty honest about it. He said that they wanted a big reserve during this bad recession, and that they weren't going to cut their R&D as other companies were so they could come out with great new products before any other competitor could. They were right on both counts.

But now it's much higher, and going higher at a more rapid pace. Unless they're waiting for MS stock to drop so that they can buy them, I don't think they'll need the $90 billion they'll possibly have at the end of the 2011 fiscal year, or the $100 billion they might have at the end of the 2011 calendar year.

I trust that the financials look as good on close examination as they appear in general. I'm not suggesting that Apple has secretly declared this to be their "rainy day fund," only that this is the logic I hear so often on these boards. Anyhow, I guess you're saying that I don't get to do the boo-yah dance for predicting that Apple would be in this neighborhood a year or more ago, and that they still would not have spent any appreciable amount of the cash by now.

Quote:
Even in the early 2000's, there were questions about Apple. The industry was rising at a fast pace, and Apple was just treading water. They weren't increasing in size while everyone else was. Their marketshare had dropped from over 10% to 2.8%, and wasn't really going anywhere. The new iMacs stopped the erosion, but didn't really add much to sales. It wasn't until the end of the first year of the iPod and the iTunes Music Store that Apple seemed ok.

In the early 2000s there was questions about everything. But Apple was profitable, the stock had more than quintupled in two years, and just split. The picture was rosy. Then it spent the next three years in the doldrums trading at close to cash value.
Please don't be insane.
Reply
Please don't be insane.
Reply
post #113 of 129
Quote:
Originally Posted by Dr Millmoss View Post

I trust that the financials look as good on close examination as they appear in general. I'm not suggesting that Apple has secretly declared this to be their "rainy day fund," only that this is the logic I hear so often on these boards. Anyhow, I guess you're saying that I don't get to do the boo-yah dance for predicting that Apple would be in this neighborhood a year or more ago, and that they still would not have spent any appreciable amount of the cash by now.

No, I'm not saying that. Post a video.

But, these kinds of predictions are 50/50. Pretty good odds. I admit that I didn't have any idea as to what they would do. It's always possible that they're laying up for a REALLY big move, and are building up their position first. If that's the case, I hope the value of whatever they're looking at is ramping up more slowly.

I just hope they don't have the depression mentality as my parents had.

Quote:
In the early 2000s there was questions about everything. But Apple was profitable, the stock had more than quintupled in two years, and just split. The picture was rosy. Then it spent the next three years in the doldrums trading at close to cash value.

I had the stock the last time it split before the most recent one. i sold it later as the price began to drop. But i haven't sold it since mid 2004. I've actually bought more.

but I do remember talk about Sun buying Apple at that time, or IBM, or Sony, etc. I don't remember Apple being thought of as doing well post 2000, for several years.
post #114 of 129
Quote:
Originally Posted by melgross View Post

No, I'm not saying that. Post a video.

You mean you can't hear it clear to New York? Man, I must be losing my step!

Quote:
But, these kinds of predictions are 50/50. Pretty good odds. I admit that I didn't have any idea as to what they would do. It's always possible that they're laying up for a REALLY big move, and are building up their position first. If that's the case, I hope the value of whatever they're looking at is ramping up more slowly.

Well, I don't know about that. I didn't feel like I was shooting in the dark. The cash account had already been building noticeably for years. At this point I'd wager that it gets to $100b within a year or so. The chances that they'll spend any appreciable part of it before then seems slim to none.

Quote:
I just hope they don't have the depression mentality as my parents had.

Or that they're fixing to put up that neon sign, "Over $100 Billion Saved!"

Quote:
I had the stock the last time it split before the most recent one. i sold it later as the price began to drop. But i haven't sold it since mid 2004. I've actually bought more.

but I do remember talk about Sun buying Apple at that time, or IBM, or Sony, etc. I don't remember Apple being thought of as doing well post 2000, for several years.

Sun was in the mix during the late '90s, but not for long. In fact one of the reasons I bought in 1997 was I figured the downside risk was mitigated by the interest of Sun and possibly others. Instead Apple started showing some legs. They weren't doing great until 2003 or so, but they weren't on a death watch anymore either.
Please don't be insane.
Reply
Please don't be insane.
Reply
post #115 of 129
Quote:
Originally Posted by melgross View Post

Nah, way too much. I want to see what they intend. As I mentioned to out friend earlier, they seem to have been trying to hire an expert in mergers and Acquisitions. Apparently, they do have some ideas of a move this year. i'd like to see if that's put on hold with Jobs gone for now, or they move ahead.

They hired an M&A specialist a while back:
http://www.appleinsider.com/articles...n_tactics.html

I wouldn't doubt they are looking for more talent in this area.


Quote:
I think Apple should maintain a reserve of $20 billion, at least, after any action taken. I'm not so greedy.

$20-25B seems about right to me. I never gave their cash reserves that much thought until they hit $30B or so.
post #116 of 129
Quote:
Originally Posted by melgross View Post

.. Unless they're waiting for MS stock to drop so that they can buy them, I don't think they'll need the $90 billion they'll possibly have at the end of the 2011 fiscal year, or the $100 billion they might have at the end of the 2011 calendar year.

Whoa. AAPL buy MSFT. My how the tables have turned. My brain just exploded. Seriously though, would that be an awesome hedge, for AAPL to buy some MSFT? I wonder if that would run afoul of anti-trust regs!
"Overpopulation and climate change are serious shit." Gilsch
"I was really curious how they had managed such fine granularity of alienation." addabox
Reply
"Overpopulation and climate change are serious shit." Gilsch
"I was really curious how they had managed such fine granularity of alienation." addabox
Reply
post #117 of 129
Quote:
Originally Posted by White Rabbit View Post

Yep guys looks like I will be banned soon.
Why / Because I wrote a post about daharder, the AI moderators are too gutless to kick him off, he posts nasty obnoxious stuff, yet is immune.
I post once and have been warned, go figger.
I guess melgross (moderator) will expunge this post so you won't get the chance to read it, wonderful thing censorship.

EDIT:

I'll let this absurd post stand as it is so allow others to shake their heads over it.


you are 100% correct White Rabbit

gutless is putting it very lightly. the mods allow ENTIRE discussions to be dominated by these OBVIOUS trolls. it is now the norm as opposed to the exception. it should be embarrassing to AI, BUT THEY GET MAD AT US WHEN WE COMPLAIN! it's completely ridiculous, and severely diminishes AI. and i know we're not the only ones noticing/bothered by this.
post #118 of 129
Quote:
Originally Posted by solipsism View Post

Ive experienced a similar thing. Received a raise that put me into a higher tax bracket that ended up netting me less profit than before the pay increase.

The food stamps stopped too right?
From Apple ][ - to new Mac Pro I've used them all.
Long on AAPL so biased
Google Motto "You're not the customer. You're the product."
Reply
From Apple ][ - to new Mac Pro I've used them all.
Long on AAPL so biased
Google Motto "You're not the customer. You're the product."
Reply
post #119 of 129
Quote:
Originally Posted by Aquatic View Post

Whoa. AAPL buy MSFT. My how the tables have turned. My brain just exploded. Seriously though, would that be an awesome hedge, for AAPL to buy some MSFT? I wonder if that would run afoul of anti-trust regs!

OMG WTF would they want them for?
From Apple ][ - to new Mac Pro I've used them all.
Long on AAPL so biased
Google Motto "You're not the customer. You're the product."
Reply
From Apple ][ - to new Mac Pro I've used them all.
Long on AAPL so biased
Google Motto "You're not the customer. You're the product."
Reply
post #120 of 129
Quote:
Originally Posted by digitalclips View Post

OMG WTF would they want them for?

Taxidermy?
Please don't be insane.
Reply
Please don't be insane.
Reply
New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: AAPL Investors
AppleInsider › Forums › Investors › AAPL Investors › Notes of interest from Apple's Q1 2011 conference call