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Apple's voracious appetite for acquisitions outspent Google in 2013

post #1 of 40
Thread Starter 
Apple is quietly investing far more money to acquire talent, technology and production capacity than the market appears to realize, having liberally outspent even Google over the past year.

Tim Cook


Apple's acquisition investments over the past quarter



While the identity of a significant number of Apple's acquisitions remains intentionally shrouded in mystery, the dollar figure of Apple's acquisition investments is publicly accounted in the company's financial statements. Both the tech and business media have sought to identify Apple's acquisition targets, but there hasn't been much attention directed to the significant and rapidly growing sums Apple is investing globally.

The rumored price Apple was believed to have paid for the three companies (Cue, PrimeSense and Topsy) it bought during the most recent Q1 winter quarter was said to be $595 million, nearly $100 million more than what Apple itself reported paying in cash payments related to business acquisitions (two other acquisitions identified during that quarter, Broadmap and Catch, are believed to have been completed before the quarter began).Over the past five quarters Apple has officially reported total acquisition investments of $11.12 billion, in addition to the $1.02 billion in cash "business acquisition" payments

However, in addition to cash "payments made in connection with business acquisitions," Apple also reports even greater investments made in "payments for acquisition of property, plant and equipment" ($1.96 billion in the winter Q1 2014 quarter alone) and for "payments for acquisition of intangible assets," (an additional $59 million during that quarter). Also known as goodwill, "acquisition of intangible assets" refers to the premium price paid in excess of the fair market value of an acquired company's net assets.

This accounting breaks down the price paid for acquisitions into three primary buckets: payments made for a target company's non-depreciating assets (the value of its employees and technology, for example); payments made for property, buildings and equipment (that can easily be depreciated over time); and payments made for goodwill (such as the intangible value of the acquired firm's customers and reputation, which are also not depreciable).

In total, over the past five quarters Apple has officially reported total acquisition investments of $11.12 billion, in addition to the $1.02 billion in cash "business acquisition" payments. Quite clearly, Apple is secretly buying up far more assets in talent, technology and production capacity than the tech and business media are acknowledging (or are perhaps aware of), even though this data is public available.

Apple's acquisition pace rivaling Google's



Google, which has a reputation for spending record-setting amounts to acquire companies in a race against its competitors, reports spending $7.36 billion for "property and equipment" in calendar 2013 and $1.45 billion for acquisitions and "purchases of intangibles and other assets." That compares to Apple's fiscal year spending of $8.17 billion for "property, plant and equipment," $496 million and $911 million (a total of $1.41 billion) for "business acquisitions" and "acquisition of intangible assets," respectively.

Apple 10K 2013


Apple's annual acquisition spending pace has been neck and neck with Google, and that's even before backing out Apple's 2012 winter quarter and substituting its 2013 winter quarter instead in order to match up the period covered with Google's calendar year 2013 figures. Make that adjustment and Apple's acquisition spending for calendar 2013 grows to $7.84 billion for "property, plant and equipment," and $773 million and $832 million (a total of $1.61 billion) for "business acquisitions" and "acquisition of intangible assets," respectively.Who knew Apple had spent more on acquisition investments than Google last year?

Ignoring the accounting buckets that divide the investments into segments that means that during 2013 Apple invested a total of $9.45 billion into acquisitions compared to $8.81 billion by Google.

Who knew Apple had spent more on acquisition investments than Google last year? Apple doesn't publicize these figures because it's not trying to win the race on how much it can pay for acquisitions, just as Cook stated to shareholders last Friday. Cook also said Apple isn't in a race to make the greatest number of acquisitions. But clearly, Apple isn't concerned about the amount of money it is spending as much as it is the return on investment it can gain through those acquisitions.

Apple's acquisition value exceeding Google's



Now consider what value Apple has derived from its recent acquisitions. On Friday, Cook described Touch ID, the fruits of its most expensive recent purchase (the $356 million acquisition of AuthenTec), as "incredibly well received." As a driving force supporting sales of its premium iPhone 5s at the expense of iPhone 5c, Touch ID helped Apple to maintain premium iPhone Average Selling Prices by attracting upscale customers.

Touch ID materially contributed to record iPhone sales despite millions of low end Android shipments that drove the platform's ASP down to being 2.5 times less than the iPhone. The AuthenTec acquisition gave Apple exclusive access to advanced, market leading technology, and Apple delivered the feature about five quarters after acquiring AuthenTec.

A year prior to Apple's acquisition of AuthenTec, Google acquired its most expensive company in the $12.5 billion purchase Motorola Mobility. Spending 35 times as much didn't help Google build its hardware business or improve its ASPs or hardware profit margins. Instead, it simply hemorrhaged over $2.3 billion in losses across seven quarters. Google has now pawned the remains of Motorola off to other companies as scrap.

Motorola's products, even after a year and a half of Google draining its product pipeline and starting from scratch, were never "incredibly well received," despite being designed without a significant profit margin and intended to serve as simply a entrance into the hardware business. While the media focused on the ostensible value of Motorola's patents, the reality is that Google has accomplished nothing with them. Most of Motorola's products weren't even salable and its technology was neither exceptionally advanced nor market leading in any significant respect.

Now consider acquisitions targeting Google's primary business of ads rather than Apple's core competency in selling hardware. In 2010 Apple acquired Quattro Wireless for $275 million to develop iAd, after Google swooped in to pay $750 million for AdMob. Three years later, eMarketer reported that across 2013, Google's AdMob led U.S. mobile ad sales with $3.98 billion in revenues compared to Apple's iAd, which generated an estimated $258 million.



Apple's iAd acquisition has been berated as a failure over the past three years, in stark contrast to the tech media's defense of Google's Motorola purchase. However, iAd isn't bleeding money, even though it is not designed to be, nor is it run as, a profit center to monetize user behavior. Instead, Apple has used its acquisition to monetize iTunes Radio and encroach upon Google's near monopoly in mobile advertising while providing App Store developers with an alternative to Google's AdMob.

Acquisitions vs DIY



Apple's acquisition that resulted in iAd is an example of the company buying an entrance into an entirely new market. It's harder to say how much of Google's current ad empire can be attributed to the acquisition of AdMob. It's possible Google could have built a mobile strategy from scratch, the same way Apple developed hardware products like the iPad without needing to acquire an existing tablet company.

The same comparison can be made with other companies' recent big ticket acquisitions. While Microsoft paid $8.5 billion for Skype and Facebook ponied up $19 billion for WhatsApp, Apple developed its own iMessage and FaceTime services for text, photo, voice and video messaging. This not only allowed Apple to deliver its solutions first, but also resulted in highly integrated products all linked to the same user account, in stark contrast to the integration issues Microsoft and Facebook face.

Conversely, Apple bolstered the internal development of its iOS 6 Maps project with a series of acquisitions, and continues to acquire mapping companies today. But the companies Apple acquired were all relatively small, in stark contrast to Nokia's $8.1 billion acquisition of Navteq in 2007.

Apple Maps


Apple's unique acquisition strategy



Overall, Apple's history of business acquisitions has involved relatively small companies. More often than not, the acquired firms have directly resulted in key new apps, product features and services that have materially benefitted Apple's core business and enabled it to expand into new ones. Despite an impressive list of big ticket acquisitions, it's harder to say the same of Google, particularly in view of the litany of acquisitions that were intended to flesh out its wholly unsuccessful Google Wallet, Google Wave, Google TV and Google+ initiatives.

Google's reputation as a big spender in acquisitions also isn't allowing it to outpace Apple in terms of actual performance. Over the past two years, Google's gross profits have increased by $11.3 billion compared to Apple's profit growth of $25.5 billion, while its operating income has grown $2.3 billion versus Apple's $16.3 billion. Google's revenues grew by $21.4 billion, compared to Apple's revenue growth of $63 billion.

In part, this can be attributed to the fact that Apple has rarely sought to acquire huge companies, and instead has aimed to buy smaller firms that can deliver a technology (or be tasked to work on a new project) that has a high potential for immediate sale or strategic advancement. Included in Apple's accounting of acquisitions are investments made to obtain a portion of a company, whether a team, a facility or manufacturing equipment. This kind of selective investment avoids acquiring unwanted personnel, infrastructure and businesses that are only a distraction and drag on operations.

A recent example of a large capital investment in manufacturing capacity installed within another company's facilities is Apple's $578 million deal to build out sapphire production facilities operated independently by GT Technology. In fiscal 2013, Apple reported $8.2 billion in total capital expenditure payments, a figure that includes product tooling, manufacturing process equipment and other corporate facilities and infrastructure.

In fiscal 2013 Apple also spent just under $500 million to expand and enhance its own retail store facilities, a figure that could be compared to the value of spending the same amount to acquire an existing retail chain and then trying to convert it into something that could effectively sell the company's products.

Apple clearly isn't making acquisitions simply to make news about making acquisitions. In fact, while it quietly invests more than acquisition-happy Google, Apple has largely avoided suffering Google's buyers remorse in being saddled with superfluous employees it must lay off and undesirable infrastructure it has to auction or abandon.
post #2 of 40

If Apple spends more than Google, it means it is more innovative.  I'm glad Apple spends so much more than Google.

post #3 of 40
This just means that Apple is doomed...It has to in some way. Oh and Tim Cook needs to be fired because of this too.

/s

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post #4 of 40
Quote:
Originally Posted by ItsTheInternet View Post



Is this news?

 

Did you know the figures before you read the article?

post #5 of 40
Quote:
Originally Posted by AppleInsider View Post
While the identity of a significant number of Apple's acquisitions remains intentionally shrouded in mystery

 ......

The rumored price Apple was believed to have paid for the three companies 
 

 

Sooo more assumptions that may or may not be tied to public facts (because we all know every company is so black and white transparent with their accounting records...) predicates this entire piece? What is this Android activation math?

 

Then it ends by spinning away others numbers and follows that by directly extrapolating the amount 'allegedly' spent directly to sales and profit impacts? ...Seriously?

 

<insert Tim laugh meme here>

 

Yawn. Next. 

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post #6 of 40
Quote:
Originally Posted by piot View Post
 

 

Did you know the figures before you read the article?

 

I didn't, but that doesn't make something news. I see now this was posted in the AAPL investors forum so that makes more sense. I just saw it on the front page.

post #7 of 40
It's news because it is opening the eyes of people (investors) to the fact that AAPL is spending it's money on acquisitions and other value-adds to the company at a quicker pace than the general media is reporting and/or the general reader is aware.
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post #8 of 40
Great article! M&A's are sexy and all, but when it comes time to actually merge companies together, cultural and operating protocols can make it a very messy affair. The rule of thumb is about 20-30% (if all goes well) of the acquisition costs will need to be spent once the deal is closed to integrate the two entities. Apple has a very unique culture and I would imagine it would be extremely difficult to assimilate another large company without wrenching issues. I think Google learned this the hard way with Motorola.
post #9 of 40
I only wish it had been Apple making that recent spate of robot manufacturing and design company acquisitions instead of Andy Rubin at Google.

Who doesn't like the idea of someday owning a house full of robot assistants with an Apple logo on them? Sigh...

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post #10 of 40
As much as I admire D.E.D.s brilliance when it comes to analyzing technology trends, I'm afraid he is getting a little out of his depth when he ventures into financial analysis. The correct financial term to apply to most of the "investing activities" shown on Apple's cash flow statement is "capital expenditures", not "acquisitions". The vast majority of these capital expenditures represent tooling and other equipment used at Apple's contract manufacturers' facilities. Because Apple sells mainly hardware and Google sells mainly advertising, of course Apple will have much higher capital expenditures than Google. If anything, this puts Apple at a competitive disadvantage vis a vis Google.
post #11 of 40

Apple can't win in the M&A dollar game. Facebook just spent $19B for WhatApp, while Google's losing bid was rumored to be in the $10B range. A few years back, Google threw $12B for Motorola and just sold it for $4B to Lenovo, essentially $8B down the drain with little to show.

 

But it's a silly competition. I don't know how Facebook is going to monetize WhatApp to the tune of $19B, or how Google benefited from the Motorola acquisition except for patents. I like Apple's model of buying small, innovative companies like AuthenTec or Siri and deliver features that competitors rush to copy (hello Samsung, you motherfucker!).

post #12 of 40
Quote:
Originally Posted by piot View Post

Did you know the figures before you read the article?

LOL
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post #13 of 40
Quote:
Originally Posted by SpamSandwich View Post

I only wish it had been Apple making that recent spate of robot manufacturing and design company acquisitions instead of Andy Rubin at Google.

Who doesn't like the idea of someday owning a house full of robot assistants with an Apple logo on them? Sigh...

.... Siri .... 1smoking.gif
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post #14 of 40
Quote:
Originally Posted by cws View Post

As much as I admire D.E.D.s brilliance when it comes to analyzing technology trends, I'm afraid he is getting a little out of his depth when he ventures into financial analysis. The correct financial term to apply to most of the "investing activities" shown on Apple's cash flow statement is "capital expenditures", not "acquisitions". The vast majority of these capital expenditures represent tooling and other equipment used at Apple's contract manufacturers' facilities. Because Apple sells mainly hardware and Google sells mainly advertising, of course Apple will have much higher capital expenditures than Google. If anything, this puts Apple at a competitive disadvantage vis a vis Google.
post #15 of 40
Quote:
Originally Posted by zoffdino View Post
 

Apple can't win in the M&A dollar game. Facebook just spent $19B for WhatApp, while Google's losing bid was rumored to be in the $10B range. A few years back, Google threw $12B for Motorola and just sold it for $4B to Lenovo, essentially $8B down the drain with little to show.

 

But it's a silly competition. I don't know how Facebook is going to monetize WhatApp to the tune of $19B, or how Google benefited from the Motorola acquisition except for patents. I like Apple's model of buying small, innovative companies like AuthenTec or Siri and deliver features that competitors rush to copy (hello Samsung, you motherfucker!).

 

yep, silly is the word, buying companies can be good or bad, it's down to how good the acquirer is at assimilation, rationalization and exploitation, i've seen some real screw ups from the inside, thankfully from the "i told you so" position, simply looking at how many or how much is pointless

 

btw google didn't drop $8b on motorola, it had already sold the home unit for $2.4b, the details of the lenovo sale aren't publicm ,, and there're rumours that through the usual exotic application of tax law so beloved of google, apple and others, it might end up much closer to break even whilst having acquired a nice patent portfolio

post #16 of 40
Quote:
Originally Posted by thataveragejoe View Post
 

 

Sooo more assumptions that may or may not be tied to public facts (because we all know every company is so black and white transparent with their accounting records...) predicates this entire piece? What is this Android activation math?

 

Then it ends by spinning away others numbers and follows that by directly extrapolating the amount 'allegedly' spent directly to sales and profit impacts? ...Seriously?

 

<insert Tim laugh meme here>

 

Yawn. Next. 

 

Read it again, you missed the whole thing. The unknown identity of all of the specific acquisitions Cook referred to by number is quite obviously not relevant when comparing the investments made by Google and Apple to acquire businesses or portions of businesses. The second line of your comment I can’t make any sense of because it is a grammatical mess without any clear logic to follow. Maybe you were shooting for double-speak?

post #17 of 40
Quote:
Originally Posted by cws View Post

As much as I admire D.E.D.s brilliance when it comes to analyzing technology trends, I'm afraid he is getting a little out of his depth when he ventures into financial analysis. The correct financial term to apply to most of the "investing activities" shown on Apple's cash flow statement is "capital expenditures", not "acquisitions". The vast majority of these capital expenditures represent tooling and other equipment used at Apple's contract manufacturers' facilities. Because Apple sells mainly hardware and Google sells mainly advertising, of course Apple will have much higher capital expenditures than Google. If anything, this puts Apple at a competitive disadvantage vis a vis Google.

 

The article doesn’t highlight "most of the 'investing activities'" Apple makes; that would be over $33 Billion for fiscal 2013. It’s looking at investments to "acquire talent, technology and production capacity" as the article clearly highlights. 

 

Another part you failed to read is that Apple is doing better in Google’s business of advertising than Google is doing in Apple’s business of building products. Yet Apple paid relatively little to enter the ad game, while Google has spent incredible billions to fail at hardware. 

post #18 of 40
Quote:
Originally Posted by cws View Post

As much as I admire D.E.D.s brilliance when it comes to analyzing technology trends, I'm afraid he is getting a little out of his depth when he ventures into financial analysis. The correct financial term to apply to most of the "investing activities" shown on Apple's cash flow statement is "capital expenditures", not "acquisitions". The vast majority of these capital expenditures represent tooling and other equipment used at Apple's contract manufacturers' facilities. Because Apple sells mainly hardware and Google sells mainly advertising, of course Apple will have much higher capital expenditures than Google. If anything, this puts Apple at a competitive disadvantage vis a vis Google.

 

Thanks, I was going to chime in about his miscategorization of the expenses.

post #19 of 40
Quote:
Originally Posted by zoffdino View Post

Apple can't win in the M&A dollar game. Facebook just spent $19B for WhatApp, while Google's losing bid was rumored to be in the $10B range. A few years back, Google threw $12B for Motorola and just sold it for $4B to Lenovo, essentially $8B down the drain with little to show.

Supposedly Google never bid on WA. Furthermore, the MM deal also gave them $3B in cash among other valuables making the acquisition anything but $8B down. I'm sure @Gatorguy knows more. Plus he has links!
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post #20 of 40
Quote:
Originally Posted by PhilBoogie View Post

Supposedly Google never bid on WA. Furthermore, the MM deal also gave them $3B in cash among other valuables making the acquisition anything but $8B down. I'm sure @Gatorguy knows more. Plus he has links!

Yassir. I gots da links 1biggrin.gif
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post #21 of 40
Quote:
Originally Posted by wakefinance View Post
 

 

Thanks, I was going to chime in about his miscategorization of the expenses.

 

You know, even if you try to say that Apple’s cap ex invested to "acquire talent, technology and production capacity" isn’t something you want to talk about, you still have to admit that Apple’s "$1.61 billion for 'business acquisitions' and 'acquisition of intangible assets'" in 2013 was larger than Google’s "$1.45 billion for acquisitions and 'purchases of intangibles and other assets.'"

 

That is, if cws and the other eagle eyed "financial expert" critics can understand the concept of two figures where one is larger than the other.  

 

That’s a difference of $161 million. So if you want to keep arguing that the premise of the article is wrong, all I can suggest is that you go back to the second grade and pick up some really remedial math skills. 

post #22 of 40
Quote:
Originally Posted by PhilBoogie View Post


Supposedly Google never bid on WA. Furthermore, the MM deal also gave them $3B in cash among other valuables making the acquisition anything but $8B down. I'm sure @Gatorguy knows more. Plus he has links!

 

Google fans really like to describe Motorola Mobility as anything other than a huge mistake, but they’re forgetting that not only did Motorola burn through more of Google’s cash in less than two years than the Beleaguered Apple lost through the entire decade of the 1990s, but that acquiring Motorola at the delusional whim of Andy Rubin also resulted in significant other operational costs (+$100 million dollars every quarter in write-offs) and INCREDIBLE opportunity costs. 

 

Imagine if Google had invested its $12.5 billion in something that hadn’t lost money for two years and wasted significant and material efforts in executive / operational management; product design and research ("emptying the pipe" for a year and a half while building new products that nobody bought); and large legal expenses in trying to monetize those worthless patents in a massive crapshoot that lost big across the board.

 

People complain about Apple sitting on billions that earn conservative interest returns, but Google not only failed to earn any return on more than 1/4 of its available cash but actually lost lots of money. 

 

No amount of apologetic fandroidism can spin the facts to say anything other than that the acquisition of Motorola was a vast waste of time, money and potential that helped set Google back for two years. And nothing says that better than a comparison of Apple’s iPhone and iPad ecosystem, progressive iOS development and unit profitability compared with Android’s stagnant ecosystem, comatose platform development (witness Android 4.4 KitKat) and its inability to sell hardware even at break even, necessitating desperate price slashing

post #23 of 40
Quote:
Originally Posted by Corrections View Post

You know, even if you try to say that Apple’s cap ex invested to "acquire talent, technology and production capacity" isn’t something you want to talk about, you still have to admit that Apple’s "$1.61 billion for 'business acquisitions' and 'acquisition of intangible assets'" in 2013 was larger than Google’s "$1.45 billion for acquisitions and 'purchases of intangibles and other assets.'"

That is, if cws and the other eagle eyed "financial expert" critics can understand the concept of two figures where one is larger than the other.  

That’s a difference of $161 million. So if you want to keep arguing that the premise of the article is wrong, all I can suggest is that you go back to the second grade and pick up some really remedial math skills. 

No doubt Apple's figure exceeds Google's, but when the article is about acquisitions and pulls evidence from financial statements, I expect “acquisitions” to be used in the financial sense of mergers and acquisitions.
post #24 of 40
Quote:
Originally Posted by umumum View Post

 

btw google didn't drop $8b on motorola, it had already sold the home unit for $2.4b, the details of the lenovo sale aren't publicm ,, and there're rumours that through the usual exotic application of tax law so beloved of google, apple and others, it might end up much closer to break even whilst having acquired a nice patent portfolio

 

I'm not sure why folks are saying the details of the MM sale to Lenovo aren't public- for instance, the Verge says it sold for $2.9B (not $4B) - maybe some of the smaller details are still private.

 

Starting with $12.3B, and adding $2.3B in losses makes the starting tab for Google $14.6B. Minus the set-top box unit for under $2.4B and the MM deal for $2.9B leaves GOOG still $9.3B in the red for the retained patents that Lenovo didn't take, which so far haven't brought in any licensing money (that I'm aware of) or won any lawsuits.

 

Which leaves them with tax write-offs. I don't know what those are worth, but I believe they're based on previous MM losses; a couple more disastrous deals like this, and Google should be rolling in money.

post #25 of 40
Quote:
Originally Posted by zoffdino View Post
 

Apple can't win in the M&A dollar game. Facebook just spent $19B for WhatApp, while Google's losing bid was rumored to be in the $10B range. A few years back, Google threw $12B for Motorola and just sold it for $4B to Lenovo, essentially $8B down the drain with little to show.

 

But it's a silly competition. I don't know how Facebook is going to monetize WhatApp to the tune of $19B, or how Google benefited from the Motorola acquisition except for patents. I like Apple's model of buying small, innovative companies like AuthenTec or Siri and deliver features that competitors rush to copy (hello Samsung, you motherfucker!).

What do you mean by Google has little to show?  A couple of years ago both Apple and Google had similar share prices.  Google is now at a mighty $1200 a share and Apple is at a measly $520 a share.  I'd say shareholders got more value out of Google than they did out of Apple.  Apple's cheap nickel and dime acquisitions will never get investors excited as a company getting blockbuster acquisitions.  Google has left Apple in the dust as far as Wall Street is concerned.

post #26 of 40
Quote:
Originally Posted by Corrections View Post

Google fans really like to describe Motorola Mobility as anything other than a huge mistake, but they’re forgetting that not only did Motorola burn through more of Google’s cash in less than two years than the Beleaguered Apple lost through the entire decade of the 1990s, but that acquiring Motorola at the delusional whim of Andy Rubin also resulted in significant other operational costs (+$100 million dollars every quarter in write-offs) and INCREDIBLE opportunity costs. 

Imagine if Google had invested its $12.5 billion in something that hadn’t lost money for two years and wasted significant and material efforts in executive / operational management; product design and research ("emptying the pipe" for a year and a half while building new products that nobody bought); and large legal expenses in trying to monetize those worthless patents in a massive crapshoot that lost big across the board.

People complain about Apple sitting on billions that earn conservative interest returns, but Google not only failed to earn any return on more than 1/4 of its available cash but actually lost lots of money. 

No amount of apologetic fandroidism can spin the facts to say anything other than that the acquisition of Motorola was a vast waste of time, money and potential that helped set Google back for two years. And nothing says that better than a comparison of Apple’s iPhone and iPad ecosystem, progressive iOS development and unit profitability compared with Android’s stagnant ecosystem, comatose platform development (witness Android 4.4 KitKat) and its inability to sell hardware even at break even, necessitating desperate price slashing

I figured as much, but are they burning through their money? Is there an empty barrel in sight? Or are they making so much a single (or plural) MM acquisition doesn't hurt them over time? YouTube must also cost them more than bringing in cash, though it's probably difficult to segregate the revenue on this.

I read that Page wanted MM because he liked the clamshell phone back in the day. Any other old stuff he is fond of? Any useless acquisitions on the horizon?

'comatose platform' - nice
Edited by PhilBoogie - 3/3/14 at 11:43pm
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post #27 of 40
Quote:
Originally Posted by Corrections View Post

Google fans really like to describe Motorola Mobility as anything other than a huge mistake, but they’re forgetting that not only did Motorola burn through more of Google’s cash in less than two years than the Beleaguered Apple lost through the entire decade of the 1990s, but that acquiring Motorola at the delusional whim of Andy Rubin also resulted in significant other operational costs (+$100 million dollars every quarter in write-offs) and INCREDIBLE opportunity costs. 

Imagine if Google had invested its $12.5 billion in something that hadn’t lost money for two years and wasted significant and material efforts in executive / operational management; product design and research ("emptying the pipe" for a year and a half while building new products that nobody bought); and large legal expenses in trying to monetize those worthless patents in a massive crapshoot that lost big across the board.

People complain about Apple sitting on billions that earn conservative interest returns, but Google not only failed to earn any return on more than 1/4 of its available cash but actually lost lots of money. 

No amount of apologetic fandroidism can spin the facts to say anything other than that the acquisition of Motorola was a vast waste of time, money and potential that helped set Google back for two years. And nothing says that better than a comparison of Apple’s iPhone and iPad ecosystem, progressive iOS development and unit profitability compared with Android’s stagnant ecosystem, comatose platform development (witness Android 4.4 KitKat) and its inability to sell hardware even at break even, necessitating desperate price slashing

While you're absolutely correct, Google has no one to blame but Google. The purchase of MM didn't have to turn out the way it did. To me it seems like that they didn't put much thought into it and lacked a game plan, that is what was the mistake. No vision, no direction.

Seeing as how they fumbled the ball on this, one can't confidently say that they would've done anything better with $12.5 billion.
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post #28 of 40
I am curious why this article didn't include Microsoft, Facebook, or hardware manufacturers like HP and Samsung as well. Apple and Google only compete in one area. It's overly simplistic to present an Apple-vs-Google face off. And what's the value in comparing dollars spent on acquisitions? Is it even a meaningful metric?

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post #29 of 40
Quote:
Originally Posted by Constable Odo View Post

A couple of years ago both Apple and Google had similar share prices.  Google is now at a mighty $1200 a share and Apple is at a measly $520 a share.  I'd say shareholders got more value out of Google than they did out of Apple.  Apple's cheap nickel and dime acquisitions will never get investors excited as a company getting blockbuster acquisitions.  Google has left Apple in the dust as far as Wall Street is concerned.

Don't tell me you're still here, reading up on tech news while you linger on the stock market, thinking there is any correlation between the two.
Don't tell me you held on to AAPL and didn't buy GOOG.
Don't tell me you missed the sign:

Send from my iPhone. Excuse brevity and auto-corrupt.
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Send from my iPhone. Excuse brevity and auto-corrupt.
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post #30 of 40
Quote:
Originally Posted by Constable Odo View Post
 

What do you mean by Google has little to show?  A couple of years ago both Apple and Google had similar share prices.  Google is now at a mighty $1200 a share and Apple is at a measly $520 a share.  I'd say shareholders got more value out of Google than they did out of Apple.  Apple's cheap nickel and dime acquisitions will never get investors excited as a company getting blockbuster acquisitions.  Google has left Apple in the dust as far as Wall Street is concerned.

 

Yes if you are day trading, you can take advantage of irrational lapses in the market to make money. But fooling investors has little to do with the fundamental performance of AAPL and GOOG. 

 

Apple would not have better fundamentals were it to make extraordinary, foolish big ticket acquisitions. Consider AOL, HP/Compaq, HP/Palm, and so on. You can fool people with smoke and mirrors, or you can build for the future. Google’s sideshow around MM may have helped its share price in the short term, but it didn’t make the company stronger, more profitable, or better positioned in any sort of strategic way.

 

If you want Apple to buy up big stupid companies and lay off their people and then spin the remains off as scrap, you shouldn’t be investing in AAPL. You should be investing in Microsoft. How has that worked out long term?

post #31 of 40
Quote:
Originally Posted by Suddenly Newton View Post

I am curious why this article didn't include Microsoft, Facebook, or hardware manufacturers like HP and Samsung as well. Apple and Google only compete in one area. It's overly simplistic to present an Apple-vs-Google face off. And what's the value in comparing dollars spent on acquisitions? Is it even a meaningful metric?

 

Why don’t you compile the numbers, analyze them and submit your findings for us?

post #32 of 40
Quote:
Originally Posted by wakefinance View Post


No doubt Apple's figure exceeds Google's, but when the article is about acquisitions and pulls evidence from financial statements, I expect “acquisitions” to be used in the financial sense of mergers and acquisitions.

 

The article isn’t trying to make a meaningless comparison of numbers in a pointless dick-measuring contest for fan advocacy reasons. 

 

It’s trying to present factual refutation of the widely held notion that Apple isn’t spending money and isn’t investing in acquiring outside talent. Typical M&A isn’t the only way to do that, as it points out. Apple is acquiring production capacity and talent faster in both respects than Google, the company people most often think of as having a liberal acquisiton strategy.

 

Quibbling at the presentation and complaining that you didn’t understand what it was saying at first glance due to your own fixed mindset doesn’t change the facts. Apple’s voracious appetite for acquisitions did indeed outspend even Google in 2013.

 

But more importantly, as the article works to explain, Apple’s acquisitions are not only greater in size and total cost this year, but also appear to be smarter and part of a real strategy, rather than Google’s "spend money like a nouveau riche brat and lose it all because you still have an income" history, evidenced by all the acquisitions that went into failed initiatives that often went nowhere. 

post #33 of 40
Quote:
Originally Posted by Corrections View Post

But more importantly, as the article works to explain, Apple’s acquisitions are not only greater in size and total cost this year, but also appear to be smarter and part of a real strategy, rather than Google’s "spend money like a nouveau riche brat...

I agreed with pretty much everything in that post except for this. Since you neither you nor I nor anyone outside of Apple knows what mystery companies were purchased in the past few months and how much was paid for each I don't think it's reasonable to claim those purchases were smarter or part of a real strategy unlike Google's.
Edited by Gatorguy - 3/4/14 at 9:04am
melior diabolus quem scies
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melior diabolus quem scies
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post #34 of 40
Quote:
Originally Posted by umumum View Post
 

 

yep, silly is the word, buying companies can be good or bad, it's down to how good the acquirer is at assimilation, rationalization and exploitation, i've seen some real screw ups from the inside, thankfully from the "i told you so" position, simply looking at how many or how much is pointless

 

btw google didn't drop $8b on motorola, it had already sold the home unit for $2.4b, the details of the lenovo sale aren't publicm ,, and there're rumours that through the usual exotic application of tax law so beloved of google, apple and others, it might end up much closer to break even whilst having acquired a nice patent portfolio

Google also lost a few billion dollars running Motorola for a few years. When you look at the entire deal, Google immediately sold off one part of Motorola for 2-3 billion (if I remember correctly), lost a few billion running Motorola, sold the rest of the hardware (plus some patents I think), and kept most of the patents. The patents have been worthless so far - they tried to use some of them to sue Apple, but they lost (the patents were standards-essential patents). I would say Google is probably down about $4 billion on the deal - I've seen that estimate somewhere. Can't say for sure, though.

post #35 of 40
Quote:
Originally Posted by Corrections View Post

Why don’t you compile the numbers, analyze them and submit your findings for us?

Don't take it so personally. After all, you didn't write the article.

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #36 of 40
Quote:
Originally Posted by Corrections View Post

Yes if you are day trading, you can take advantage of irrational lapses in the market to make money. But fooling investors has little to do with the fundamental performance of AAPL and GOOG. 

I would not consider two or three years' performance irational lapses in the market, or short term. During the past two years Aapl stock is at almost the same price (about $525) with a ride up to $700 and a fall down to $385 along the way. Google stock was around $600 two years ago and is now $1200. If you bought and held each, one of them doubled and the other made you a few diividend dollars.

Going back to the Google purchase of MM things are a,little better for Apple, but even moreso for Google. IIRC it was announced in mid August 2011? Back then AAPL was about $350 and has now gone to $525. Back then GOOG was about $500 and is now $1200. And no giant swing like with Apple stock either. It may not be the better company, but since the MM purchase at least it has been by far the better investment.



If you go back two more years, however, Google was stuck in a rut, while Apple was the stock on fire (doubling in price). In the two years preceding the MM announcement Google stock hardly moved at all, from about $450 to $500. After the MM announcement wall street seems to have had a change of heart about the stock. My hope is that Apple sees a similar trend in their stock price after their two "lost" years, but from a better catalyst. Or better yet several catalysts.
Edited by AppleDigger - 3/3/14 at 9:06pm
post #37 of 40
Thanks for this article Daniel. Under-the-radar events usually don't get press, but this was interesting.
post #38 of 40
Quote:
Originally Posted by Corrections View Post
 

 

Google fans really like to describe Motorola Mobility as anything other than a huge mistake, but they’re forgetting that not only did Motorola burn through more of Google’s cash in less than two years than the Beleaguered Apple lost through the entire decade of the 1990s, but that acquiring Motorola at the delusional whim of Andy Rubin also resulted in significant other operational costs (+$100 million dollars every quarter in write-offs) and INCREDIBLE opportunity costs. 

 

Imagine if Google had invested its $12.5 billion in something that hadn’t lost money for two years and wasted significant and material efforts in executive / operational management; product design and research ("emptying the pipe" for a year and a half while building new products that nobody bought); and large legal expenses in trying to monetize those worthless patents in a massive crapshoot that lost big across the board.

 

People complain about Apple sitting on billions that earn conservative interest returns, but Google not only failed to earn any return on more than 1/4 of its available cash but actually lost lots of money. 

 

No amount of apologetic fandroidism can spin the facts to say anything other than that the acquisition of Motorola was a vast waste of time, money and potential that helped set Google back for two years. And nothing says that better than a comparison of Apple’s iPhone and iPad ecosystem, progressive iOS development and unit profitability compared with Android’s stagnant ecosystem, comatose platform development (witness Android 4.4 KitKat) and its inability to sell hardware even at break even, necessitating desperate price slashing

Quite. And just imagine what any company that is approached by Google is now going to think. Am I going to get chewed up and spit out in two year's time? To my mind, the Motorola debacle reveals a vacuum right at the heart of Google strategy. 

"If the young are not initiated into the village, they will burn it down just to feel its warmth."
- African proverb
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"If the young are not initiated into the village, they will burn it down just to feel its warmth."
- African proverb
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post #39 of 40
Quote:
Originally Posted by Benjamin Frost View Post

Quite. And just imagine what any company that is approached by Google is now going to think. Am I going to get chewed up and spit out in two year's time? To my mind, the Motorola debacle reveals a vacuum right at the heart of Google strategy. 

I personally don't think of either Apple or Google as making good long-term partners. They'll both figure out their own in-house solutions, or buy one, to replace a business partner/developer solution if there's the right advantage to it.
melior diabolus quem scies
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melior diabolus quem scies
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post #40 of 40
Quote:
Originally Posted by Constable Odo View Post
 

What do you mean by Google has little to show?  A couple of years ago both Apple and Google had similar share prices.  Google is now at a mighty $1200 a share and Apple is at a measly $520 a share.  I'd say shareholders got more value out of Google than they did out of Apple.  Apple's cheap nickel and dime acquisitions will never get investors excited as a company getting blockbuster acquisitions.  Google has left Apple in the dust as far as Wall Street is concerned.

You know, I cry for you every time I read your posts... like I did every time Hachi the dog returned to the train station waiting for his master.  But after the 4th or 5th time, I just had to turn the movie off...too pathetic.  really.

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