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Solar farm, 'spaceship' campus to help Apple expenses reach $8B

post #1 of 30
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Apple's capital expenditures in its 2012 fiscal year are projected to increase by $3.4 billion, as the company gears up for major projects like its new solar farm in North Carolina, and a new corporate campus in Cupertino, Calif.

Last week, Apple issued its annual 10-K filing with the U.S. Securities and Exchange Commission. On Monday, analyst Maynard Um with UBS offered a closer look at the findings.

In particular, Apple expects to increase its capital expenditures 73 percent year over year in fiscal 2012. That will bring its projected expenses to $8 billion, significantly higher than the $1.2 billion the company projected back in 2009.

Um believes that a significant chunk of Apple's spending increase will be related to new construction projects the company is planning. For example, last week it was revealed that the company is planning to build a solar farm across from its massive data center in Maiden, N.C.

Apple's solar farm will be placed on 171 acres of vacant land on Startown Road. It will power the $1 billion data center that opened earlier this year and helps to power Apple's online services, including iCloud and iTunes.



Another major upcoming project for Apple that Um believes will contribute to increased expenses in 2012 is the company's new 13,000-employee campus in Cupertino. Work on the campus, dubbed a "spaceship" by late Apple co-founder Steve Jobs at a city meeting in June, is expected to begin in 2012, in preparation for an opening in 2015.

Other capital expenditure increases from Apple in 2012 will come from new retail expansions by the company. Apple has said it plans to build 40 new stores next year, with two-thirds of those overseas, helping to increase its retail capital expenses from $614 million to $900 million.
post #2 of 30
The investors speculate about Apples war chest of 80+ billion in their accounts, it's now being put to use by the company to expand its physical infrastructure. And to think they don't have to get loans or investors as joint collaborators for this expansion. Apple is in a very good position liquid wise, and they're making very wise choices with that resource.
post #3 of 30
Just as my grandma says - money makes money.
post #4 of 30
Sweet, we have figures on how much this will cost Apple, but I wonder how many jobs this will create temporary and otherwise. The places are not built and maintained by themselves.
post #5 of 30
Quote:
Originally Posted by Rtapps View Post

Sweet, we have figures on how much this will cost Apple, but I wonder how many jobs this will create temporary and otherwise. The places are not built and maintained by themselves.

It will be very interesting to see to what extent the solar farm reduces the carbon footprint of the server farm, and how it impacts the running of it over time.
post #6 of 30
Quote:
Originally Posted by acslater017 View Post

Just as my grandma says - money makes money.

I wish my wife thought the same. She's more of the opinion that money needs spending immediately.
post #7 of 30
Quote:
Originally Posted by Rtapps View Post

Sweet, we have figures on how much this will cost Apple, but I wonder how many jobs this will create temporary and otherwise.

As few as possible, hopefully. Gotta keep expenses low so the profits will be high. Apple's first responsibility is to its stockholders. The local economy is not even on their list of corporate priorities.


post #8 of 30
My hope is that the solar farm will reap substantial cost savings over time. Substantial enough to impact Apple iCloud operating expenses. It can't only be about being greener

If so, another competitive advantage

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post #9 of 30
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Originally Posted by Red Oak View Post

My hope is that the solar farm will reap substantial cost savings over time. Substantial enough to impact Apple iCloud operating expenses. It can't only be about being greener

If so, another competitive advantage

Apple has a huge horde of cash, and in 'normal' economic times they can usually get some solid returns from it. In today's environment it makes sense to build a solar farm if you have a ton of cash. The returns are small, but compared to what Apple is getting just sitting on the cash, it is greater.

If the price of energy continues to rise, Apple will have made a great investment.
post #10 of 30
These numbers make no sense, and a better analysis would reveal something very interesting in Apple's future:

Solar Farm: 171 acres at $1 M per acre (outside cost) = $171M
New Campus: < $1 B spread over 3 years = $333M
Additional Retail: $286 M
Total known additional capex for 2012: $790 M

Total additional shown in 2012 10-K filing: $3,400 M

"Missing" capital expenses: $2.4 B

$2.4 B is a very serious amount of money. Apple did not make an error here, so they must have a plan, but as usual it is "secret".

For example $2.4B could pay for 2-3 large chip fabs (not that Apple makes its own chips). Or 2-3 more huge data centers (perhaps Siri and iCloud will need that capacity?) But for big expenditures like that, that are taking place NOW within this fiscal year, we should have already seen building permits, etc.

Perhaps Apple has decided to invest some of their cashstash overseas, and it is off the radar? Or perhaps they are building a TV manufacturing facility. LOL

Can't wait to find out.

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post #11 of 30
Quote:
Originally Posted by JONOROM View Post

These numbers make no sense, and a better analysis would reveal something very interesting in Apple's future:

Solar Farm: 171 acres at $1 M per acre (outside cost) = $171M
New Campus: < $1 B spread over 3 years = $333M
Additional Retail: $286 M
Total known additional capex for 2012: $790 M

Total additional shown in 2012 10-K filing: $3,400 M

"Missing" capital expenses: $2.4 B

$2.4 B is a very serious amount of money. Apple did not make an error here, so they must have a plan, but as usual it is "secret".

For example $2.4B could pay for 2-3 large chip fabs (not that Apple makes its own chips). Or 2-3 more data centers (perhaps Siri and iCloud will need that capacity?) But for big expenditures like that, that are taking place NOW within this fiscal year, we should have already seen building permits, etc.

Perhaps Apple has decided to invest some of their cashstash overseas, and it is off the radar?

LOL. Can't wait to find out.

Is it possible it could be a purchase of content rights? That would double Netflix's budget.
post #12 of 30
Here's a poke in the eye of all the dolts who regularly complain about how Apple does not invest in the US..... both these initaitives will create thousands of new jobs in this country.
post #13 of 30
Quote:
Originally Posted by Pendergast View Post

Is it possible it could be a purchase of content rights? That would double Netflix's budget.

I think content rights would be OpEx but I don't know for sure.

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post #14 of 30
Quote:
Originally Posted by BeltsBear View Post


If the price of energy continues to rise, Apple will have made a great investment.

Not necessarily. Without government subsidies, photovoltaic systems are rarely noted as being good investments.

It is entirely possible that Apple is profiting off of tax dollars, and as such, is making higher net returns than they would without the subsidies.

But North Carolina is not noted for clear, sunny skies. My guess is that the investment was driven by tax considerations more than any real environmental concern or any real prospect of any return on investment.
post #15 of 30
Quote:
Originally Posted by JONOROM View Post


"Missing" capital expenses: $2.4 B

Can't wait to find out.

Most likely explantion is additional server farms around the globe. I think the delays recently seen in Siri responsiveness show that the NC data center isn't big enough for even today's load, never mind about a year from now. Since cloud services are now a fundamental part of Apple's business, it makes sense for them to own their server farms rather than renting them. Thus big money shifted from OpEx to CapEx.

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post #16 of 30
Quote:
Originally Posted by ConradJoe View Post

Not necessarily. Without government subsidies, photovoltaic systems are rarely noted as being good investments.

It is entirely possible that Apple is profiting off of tax dollars, and as such, is making higher net returns than they would without the subsidies.

But North Carolina is not noted for clear, sunny skies. My guess is that the investment was driven by tax considerations more than any real environmental concern or any real prospect of any return on investment.

ALL corporate decisions are driven by tax considerations including subsidies if any. Domestic oil companies (just to take one example ) benefit enormously from special tax treatment and subsidies. Energy tax incentives and subsidies are a reasonable part of any nation's energy policy.

It may make sense to do solar in NC as the costs have come way down on photovoltaic, while transmission losses and costs have stayed high and are increasing. To ship megawatts from Arizona to NC may not be as cost effective as a less efficient installation in NC right next door to the consumer. Just saying.

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post #17 of 30
Glad they are spending the money, and doing so here in the US. Maybe Steve's true last words were "you can't take it with you, so enjoy it and make it worth while".
post #18 of 30
Quote:
Originally Posted by ConradJoe View Post

Not necessarily. Without government subsidies, photovoltaic systems are rarely noted as being good investments.

I never said without subsidies. Apple was (and so was I in my thought) including government subsidies. Solar is getting near cost effective without subsidies in the most ideal places now, but it probably is not in SC due to not only less sun, but also cheaper existing power sources.
post #19 of 30
Quote:
Originally Posted by JONOROM View Post

It may make sense to do solar in NC as the costs have come way down on photovoltaic, while transmission losses and costs have stayed high and are increasing. To ship megawatts from Arizona to NC may not be as cost effective as a less efficient installation in NC right next door to the consumer. Just saying.

But a more efficient installation in NC would have been even better. Solar voltaic systems are not cost efficient, especially in a climate like that, unless the installer can get the government to hand them some cheese.

Some people think that giving taxpayer money to inefficient industries is a path to national wealth, while others disagree, and claim that socializing costs in order to create private wealth is a bad thing.
post #20 of 30
Originally Posted by JONOROM
These numbers make no sense, and a better analysis would reveal something very interesting in Apple's future:
Solar Farm: 171 acres at $1 M per acre (outside cost) = $171M
New Campus: < $1 B spread over 3 years = $333M
Additional Retail: $286 M
Total known additional capex for 2012: $790 M

Total additional shown in 2012 10-K filing: $3,400 M

"Missing" capital expenses: $2.4 B

Horace Dediu of Asymco.com has done a detailed analysis of Apple's Capex and come to the conclusion that Apple is planning to double production of iOS devices in 2012.

http://www.asymco.com/2011/10/27/the...s-ios-volumes/
post #21 of 30
Quote:
Originally Posted by JONOROM View Post

For example $2.4B could pay for 2-3 large chip fabs (not that Apple makes its own chips).

$2.4B wouldn't even build one fab.

Samsung, Intel and TSMC drop $5bn+ on new fabs these days, and that cost is ever increasing.
post #22 of 30
Quote:
Originally Posted by Secular Investor View Post


Horace Dediu of Asymco.com has done a detailed analysis of Apple's Capex and come to the conclusion that Apple is planning to double production of iOS devices in 2012.

http://www.asymco.com/2011/10/27/the...s-ios-volumes/

OK, thanks for the link - great to see Asymco's analysis. However, I don't have a clue why he thinks production of iOS devices would require Apple to increase Capex. Duh, Apple doesn't manufacture anything themselves. How basic is that?

It looks to me more like purchase of lots of servers. Are those typically Capex? They only last a few years.

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post #23 of 30
Apple will never build a foundry, their business model is to invest in machinery equipment operated by overseas partners like Foxxcon. Building their own fab goes against the way they have been doing business all these years and may be counter productive. That money is probably set aside for product expansion or some legal content negotiations.
post #24 of 30
Quote:
Originally Posted by JONOROM View Post

OK, thanks for the link - great to see Asymco's analysis. However, I don't have a clue why he thinks production of iOS devices would require Apple to increase Capex. Duh, Apple doesn't manufacture anything themselves. How basic is that?

It looks to me more like purchase of lots of servers. Are those typically Capex? They only last a few years.

Apple profitably uses some of they huge cash mountain to finance and own a lot of the specialised machines and equipment used in producing Apple products. It reduces their outsourcees finance requirements and costs and therefore Apple's costs and it gives them ownership and control of the machines so the competition can't use them!

Yes, servers do count as Capex amortised over three years. If you read through the article and comments you will see that they discuss costs for servers but come to the conclusion that only a small part of the budget for machinery and equipment is for servers and that most of the budget is for manufacturing equipment and machines.
post #25 of 30
Quote:
Originally Posted by zindako View Post

That money is probably set aside for product expansion or some legal content negotiations.

Naw. It has already been earmarked for thermonuclear war with Google.






That is, if you can believe what Steve has said. He has been lauded for saying one thing and doing another more than once by posters here.


post #26 of 30
Quote:
Originally Posted by ConradJoe View Post

Naw. It has already been earmarked for thermonuclear war with Google.






That is, if you can believe what Steve has said. He has been lauded for saying one thing and doing another more than once by posters here.


The cost of the litigation in the IP thermonuclear war is petty cash for Apple but is going to be very, very expensive for robber baron Google and their hoard of copycat pirates.

Let all the pirates walk the plank
post #27 of 30
Quote:
Originally Posted by Red Oak View Post

My hope is that the solar farm will reap substantial cost savings over time. Substantial enough to impact Apple iCloud operating expenses. It can't only be about being greener

If so, another competitive advantage

i think apple's stock holders are perfectly content at the moment.
post #28 of 30
Quote:
Originally Posted by zindako View Post

The investors speculate about Apples war chest of 80+ billion in their accounts, it's now being put to use by the company to expand its physical infrastructure. And to think they don't have to get loans or investors as joint collaborators for this expansion.

This is the way a good business is run.

Common sense says that if you make investments with the cash you have on hand, you will more easily handle the downside risks. Too many businesses now seem to be making investments with credit, and then needing a bailout when that investment fails.

That's why Apple's financial footing is rock-solid.
post #29 of 30
This building is actually an elaborate front for a large underground 'umbrella corporation' esque bunker city. Come December 20th 2012 all VIP's will relocate here before the apocalypse.
post #30 of 30
Quote:
Originally Posted by Secular Investor View Post

Apple profitably uses some of they huge cash mountain to finance and own a lot of the specialised machines and equipment used in producing Apple products. It reduces their outsourcees finance requirements and costs and therefore Apple's costs and it gives them ownership and control of the machines so the competition can't use them!

Wow, I knew Apple's financing of suppliers' equipment was unusual, but I never imagined that Apple actually OWNED all that equipment sitting in some supplier's factory!

In fact, I still find it hard to believe. That is kind of like owning the engine in your employee's car, as a way to help him get to work. And when you fire the employee you have to take the engine out. And the engine weighs many tons. And there are dozens or hundreds of them. And they are somewhere in China. And possession is 9/10 of the law. Etc etc.

I believe that Apple probably financed the equipment as part of an contract/agreement for exclusive Apple-related utilization. Despite what he says, I don't think Apple actually owns it.

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