With more than $70B in cash, Apple could buy Nokia, RIM, HTC & Motorola - Page 2

FoxConn is just an assembly plant. The LCD plants are all in Asia, as are all the other components. Are you saying they replace FoxCNN as an assembly plant in the US - not really skilled - or that they replace the entire channel with their own factories all the way back.

not going to happen. I think that if American jobs are to come "home' Governments in the West have to force the issue with protectionist measures. Even that would collapse the economy for while. It is a problem, but there are no solutions.

A-greed.

But the report doesn't say that. The report also suggests virtually unlimited growth by Apple ("Apple's cash will continue to grow dramatically"), which is also ridiculous.

All of this is obvious, sure, but a balanced report would demand its inclusion.

This boat sailed away LONG AGO.

The loss of profits is the least of Apple's concerns in moving jobs back.

The lack of infrastructure, the impossibility of scaling to the extent companies like Foxconn have in less than a decade, and the absolute lack of any institutional knowledge on how to manufacture products like these at the scale the Chinese do is an absolute killer.

What the Chinese firms have is not just cheap labor (initially that was indeed the case) but rather 30+ years of investment in infrastructure (both in terms of the manufacturing facilities themselves, as well as government provided infrastructure, like easy access to plentiful and stable power and water) and over 30 years of experience and knowledge in building products at this scale.

The only way Apple could pull this off is if they created a new product which they KNOW will not sell in the millions (kinda like the iPod Boombox), which they built in the US, and then spent the next 10-15 years trying to expand those facilities (and even then, reaching Foxconn like scales will be close to impossible).

Finally, over those 10-15 years, the Asian markets combined will probably be a much larger market for Apple, merely because of the large number of people there and the growing middle classes in China and India.

That boat has sailed folks. It is literally impossible for Apple to move production back to the US, even if they were willing to lose 10's of billions of dollars on it.

And a big part of why they make better products is their relationship with Foxconn. Apple came to realize that while they had tremendous skills in design they didn't have a good handle on controlling manufacturing processes and that there were other firms out there who did. Working with Foxconn they outsourced their manufacturing while producing products with incredible build quality and remarkably low prices.

Apple sell tremendous quantities of their product outside the USA, in Europe and in Asia particularly. Do you think we are going to pay more for a 'made in USA' sign? Are you willing to pay more for a German made TV?

Apple isn't a charity, it's a business. It's contribution to the world is in making beautiful products that enrich our lives, not in enriching one set of manufacturing workers over another.

While your first paragraph is possibly correct, the second one is wrong.

There are 5 job seekers for every job opening in the market currently. So no, it isn't just a problem of people unwilling to do jobs "beneath" them.

For all of the weeping and wailing and gnashing of teeth over the manufacturing employment decline there are a few things to keep in mind:

1. I'm fairly certain there was the same angst when agricultural employment dropped (over the years) from about 90% of the workforce to about 5%) while we maintained the ability to produce enough food to feed the US and other nations.

2. There's nothing particularly magical or special about manufacturing as a job.

3. A big part of the reason for manufacturing employment reduction, bigger than outsourcing I've read, is productivity improvement (chiefly through technology and automation). The average individual manufacturing worker produces about 3X as much as they did like 40 years ago.

Cute.

What advantage would ARM provide Apple? ARM is nothing but the owner of various intellectual properties which Apple can easily (and currently does) licence. (Interesting aside...ARM is essentially nothing more than what our favorite "open" fanbois like to call a "patent troll"). Buying ARM would give Apple no competitive advantage over what they have now.

The only way they could use it as a competitive advantage is if Apple stopped licencing ARM designs to other manufacturers, but that would put Apple into a legal and regulatory hell-hole which I doubt they want to enter.

The report does say could buy out, not should, or will.

The other stat was that Apple had 75% of the profits of the industry. If sales of smartphone's double in 4 years ( IDC's cautious estimate), and Apple's keeps those margins, it will increase it's cash reserves dramatically. I think the original report said to 130B.

Emphasis on the tense.

1) Apple would almost certainly have been dead in the water if they were manufacturing in the US in the late 90's when Michael Dell infamously said that Steve Jobs should simply give the money back to the shareholders.

2) Apple has built its cash reserve in a ridiculously short period of time. Basically, in the past 4 years since the creation of the iPhone (and now the iPad). I think very few grasp how extraordinary Apple's growth has been (we have seen more extraordinary growth in stock prices, but those have only been bubbles. This is clearly not one, since the growth is in their actual cash positions, not market values).

3) There is no certainty that this will last. I am sure people were saying similar things about Microsoft in the 90s, and now the company is considered "beleagured". Apple is in an even more preacrious position because MS dominated the enterprise market, which is extremely conservative, while Apple plays in the consumer market, which is far more fickle. Besides, Apple has no monopoly like MS does (the closest is the iPod, but that is a dying market). Apple could very well lose it all.

Yeah and with the prices and quality that would bring there wouldn't any iPhone in the market place and no cash.

Stop dreaming and start buying what is already manufactured here, cars, food, etc. I bet some of you dreamers drive around in foreign cars...right?

Insane...

I think Apple should buy ARM and ATT. It's a win-win situation. That way, Apple will have their own custom chip and cellular business. Sweet dominator.

Manufacturing is mechanical labor: it has to go to China and robots. America should concentrate on creative work, inventions and innovations.

What good would either do? What is gained? Why would a manufacturer want a carrier in one country only- and what "synergy" would work here. If they bought AT&T they have to make it exclusive and not work with other manufacturers, which will destroy half it's business.

Nokia would make sense, for the patents, and some of the manufacturing, carrier goodwill, supply chain expertise. They can churn out phones, unlike Apple. But even that makes not that much sense.

Regarding overseas manufacturing, I think if the US had a more capitalist economy, there would be more innovation and work to do than anyone could manage. There would be like 10 Apples.

Really? The evidence is that capitalists are sending jobs over-seas. Although I dont agree with the solutions presented here, certainly no single company can afford to build in the US, the problems are very real and they are the problems of capitalism and globalisation. Capital follows cheap labour.

Seriously?

Apple contracts 400,000 people... at one single factory in China. Total employment is around 1,000,000 people. Where in the U.S. do you propose to put that? What do you think wages will be when you try to hire that many people in a metro area? And do you really think you'll avoid unionization?

However "nice" it would be, we're talking about the difference between paying $2/hour and paying $50/hour for labor, even if you could find 400,000 workers in one place (unless you want to get rid of economies of scale, too, and just plunk a few thousand here, a few thousand there).

Your heart is in the right place. But you don't understand the sheer scale of the operation. This isn't about whether a new car factory employs 2,000 people in Alabama or Seoul.

Manufacturing on this scale doesn't work in any highly developed economy. It would be "nice" if it did. But you might as well wish for magic unicorns.

Why? All those companies combined aren't worth the money!

unless you are one of the many Americans who could use a job to help pay for rent, mortgage, college, health care needs? Not everyone needs a super high paying job, sometimes just a job that pays will do!

Not to mention the dominance of consumer apathy on the issue and their desire for cheap gadgets. That and building manufacturing to adequately compete with a place like Foxconn is a long term extremely expensive proposition with no guarantees that it will work. That's the last things investors want to see - their investments are focused on the short term and on making as much money as possible.

As asdasd said:

That's about the only thing that can change the mentality - the government has to create an environment where it is much more financially viable for companies to produce locally than it is to import. That is very difficult thing to do and I wager almost impossible given the influence that large multi-national corporations have with our politicians. They can just buy their success.

Because not every job can be 'upper class'. We need manufacturing jobs. There's a reason 10% of the country is unemployed...

Not really fair - ARM don't primarily license individual patents, they license entire CPU cores. A troll patents something extremely broad and then goes hunting for people who are unknowingly 'infringing', you couldn't accidentally copy ARM's core.

So sick of hearing this...

Maybe the CEOs, Wall Street, and Bankers could only make 10 million a year instead of 30 million. This is the same excuse that rich people always use against the unions. And it ridiculous.

You can;t blame regular middle class people for wanting to raise a family and be regular middle class people. I know unions have their owns issues so I'm not discounting them, but do we really need people making 30 or 40 million a year every year?

How many jobs does $30 million create?

That is the thing. The *government* is the one who is pushing these jobs overseas because they are forcing these companies hands. Companies have to not only stay competitive in the US markets but the world markets.

Mandates by the federal government essentially make this impossible.

So let's imagine a scenario where something is done -- say 10,000% import tariffs -- to force companies to move manufacturing back to the U.S.

What do you think that would do to exports, now that costs go through the roof?

Now that exports are gone and U.S. companies are addressing a much smaller part of the global market, what happens to economies of scale?

The abstract goal of more jobs in the U.S. is desirable. But since there's no way for the government to lower costs here (unless you want to outlaw unions and get rid of the minimum wage), you're left with artificially raising the cost of manufacturing elsewhere. Think that through and it's pretty clear it's worse than doing nothing.

At the risk of repeating myself, Apple could not buy them all out, because government(s) would not permit it. I'm sorry you felt compelled to restate the obvious, as well, but hype does get to people.

Seriously dude? This is the same thinking that has getting us into the mess we are in.

"We need gov't to get out of business way..."

How's about screw big business, Wall Street, and the bankers. They are the source of most of the world's problems. Rich getting richer and screwing over the rest of the planet.

This argument is so tired it's beyond me. Shouldn't you be watching Fox news or something?

Not true - the main reason to go to China is cheap labour not taxes, or whatever regulation you think is causing the problem. I doubt if most of Apple's tax is paid in the US, anyway.

The middle class actually control more wealth now then they did 30 years ago when adjusted for inflation.

A common mistake by the "progressive" is that the "rich" gets "richer" at the expense of the other classes. This logic is fundamentally flawed. The "rich" create their wealth.

Think of it this way.
Originally you were getting 50% of a 12oz soda. Now you are getting 25% of a 2-litter soda.
Sure your "share" of the soda appears less but you certainly get a lot more soda.

I am so sick of hearing people bitching a moan about someone else getting "rich". Guess what, that person getting "rich" doesn't prevent you from doing the same.

About 300, factoring in benefits and other overhead.

Of course, if spending $30m creating those jobs created more than $30m in profit, companies would do it right now, regardless of CEO pay. And if the return is less than the cost, the companies will just bank it or return it to shareholders, regardless of CEO pay.

The fundamental misapprehension here is that companies say "we've got $30m to spend, should we hire people or give it to the CEO." The actual question is, "should we give it to the CEO or keep it in the bank?" The issue of hiring is a totally separate question driven by ROI analysis of specific product lines and projects. If you make more money by hiring people, you hire. If not, you don't.

People seems to believe that Apple have huge margins on their products.
The truth is that many other tech companies have higher margins, for example Intel.

Apple have about 22% margins on their product. The problem is that Apples cash gives apple a huge profit too. Together with the cash profit, they get an average margin over 32% on their products.

People should talk to all fAndroids. Apple at least creates loads of jobs in the USA. Supporting Samsung,HTC and other non US companies only creates more non US jobs. I am not saying that all should buy Apple products, I just don't understand the blind hatred against everything Apple do.

Most Mac people I know uses windows/google everyday without hating them.

I agree they will never do it, but wouldn't it be nice if Apple moved to Detroit and did build factories there?

In terms of the unions, maybe they could make a deal, pay people a reasonable wage that doesn't completely devalue their life (like we do all over the rest of the planet) and maybe Apple's profits could be 10 billion instead of 70 billion, and the top executives could only make 10 million a year each instead of who knows what they're making now.

I am sorry that you can't understand hypothetical situations. The report is dealing with Apple's cash - it points out that Apple could, with cash alone, buy a number of companies.

Since this is a hypothetical situation, as reasonably understood by anybody of average IQ, the report does not deal with the regulatory authorities because it is not saying that Apple will or should buy these companies. It is merely a way to comparing Apple's cash to the rest of the industry.

This the the 3rd time this has been pointed out to you.

And.....why is labor cheaper?

During the great depression FDR instituted wage controls. This left many owners of buildings with elevators with 2 options, upgrade to automated elevators or continue to employ the elevator operators. In the end it was more expensive to employ the elevator operators so they simple fired them all and upgraded their elevators. Now these elevator operators wanted to continue to work. They *wanted* their original wage but FDR said they couldn't. So their jobs just vanished in favor of the cheaper alternative.

So you end up with people who want to work and employees who want to hire people but FDRs mandate simple outsourced (to automation) those jobs.

We have 10% unemployment. I would gladly hire people in America but sadly there is no incentive to work nor are the wages that I would pay them be "acceptable" so I will continue to hire people in India.

Then there is the entire work ethic issue but that is another discussion entirely.

Dude? What?!

Anyone on the planet, and I mean anyone, who is rich, has become richer at the expense of someone or something else. Period.

You're logic sounds a little nuts. Could you explain more?

Here's a little chart to show how the middle and lower class are consistently getting poorer.

http://news.yahoo.com/s/yblog_theloo...-to-record-low

... and we all know the rich are definitely getting richer and using that money to buy influence in government to again, get even richer.

http://www.economist.com/blogs/freee...itical_economy

Its pretty simple - the "rich" create wealth.

While it may appear that the "poor" control less wealth in terms of the overall percentage they control, the entire pie is a lot larger than it was 30 years ago.

The GDP in 1970 was ~1 trillion.
The GDP in 2010 was ~15 trillion.

~1 trillion in 1970 is ~5 trillion in 2010.

So as you see adjusted for inflation the GDP grew significantly.

Apple needs to stop outsourcing parts and assembly. It is not good when competition knows exactly what you do and copy your stuff. Just look at Samsung. They use the same parts in their Tablets and phones. Let Apple design an A5 chip and make copies of it.

The same with FoxConn. The pirated apple products are manufactured at the same plant. Even Apples competitors manufacture in the same plant.
In the morning: Apple stuff. Afternoon HP copies of Apple stuff. Evening: Pirated copies of Apple stuff.

One reason why Nokia did make such huge profits with cheap phones are because they have their own manufacturing plants. This is the reason why Apple should buy Nokia.

Maybe, however it is not true that all people who get rich to benefit other people. Some are mere profit seekers and rentiers.

I doubt that, even if middle income groups were richer than 30 years ago ( per capita) that the growth has been all that spectacular. Compare it to any other 30 year period in the last 120.

Bernie Madoff, for instance.