But just go back 2.5 years. What if iPhone and multi-touch was a flop? Then there would likely have been a slowing growing cash pile, or a declining cash pile.
I don't think it would be declining. They were growing at good rates before iPhone too, and iPod revenue seems stable. Now, if the original iPod flopped, then the story today might have been different. Apple would have been around, but without an inexpensive hook to get people into buying more expensive devices, I don't know if Apple would have grown as quickly.
I don't think they have so much invested into any given product that a failed product would hurt them badly.
In light of recent news about the poisoning of workers in China and from earlier reports about the strike of workers there, some of the funds must be used to improve the safety of workers there. Although Apple does not own the companies, they do reap the benefits from manufacturing and assembling their products in China. As part of their Green policy they should make sure that all the companies that they do business with also do the same.
Most of the components used in any computer or advanced electronic device is made outside the US. Some of the funds should also be used here, to create or support development computer and advanced electronic components manufacturing in the US.
Put more into R&D and keep a large reserve for rainy days.
How would this work and how would this benefit's Apple's goals since Sprint is CDMA?
They still have the Nextel iDen baggage too. In all the years Sprint owned Nextel, they did squat to consolidate the Nextel users and network to CDMA, at least up until late last year, when my parents switched to iPhone.
Fortunately, none of these people have anything to do with any decision Apple will make.
While I don't agree with any of the suggestions here, and some are pretty harebrained, I can't think of one myself that would make sense right now.
Whatever it would be, if Apple would do it, it would have to do with their supplies, not other products. Apple is frantic about acquiring steady supplies at good prices. Any major acquisition would have to do with that. Remember three years ago, I think it was, when they ere going to invest, with Samsung, in a new chip plant? That only dropped after Samsung got caught in one of the price fixing schemes the chip industry gets involved in every few years. So maybe Micron. That would solve the memory supply problem, and give them a new plant along with IBM. It could also allow them to make their own ARM's.
I hear you, and thankfully you are correct, these decisions are not made by AI readers. But then again, human beings are human beings, and it's in the nature of of human beings to do things just because they can. Impulsively, if you will. My fear is that of all that spare cash will start to speak for itself. This happened to Microsoft during the '90s -- they were placing bets left and right without any obvious strategic plan behind it. None of that paid off AFAIK, and look where they are today.
Also, Apple has made strategic investments in parts suppliers in the past, and I'd expect them to continue to do so. These investments have been in the several hundred million dollar range however, which obviously begs the questions of what they'd do with the $40 billion they've got to work with today, and far more than that in a year's time.
Quote:
Originally Posted by iBill
I don't believe Apple will make such a mistake as what you describe. They're just too well run for that (imo). If you take a realistic look over the management of the corporation over the last several years, I think you see a picture of exquisite operation. Not flawless, but not too far short of it.
Specifically, I think it very unlikely that Apple would drop a large portion of their warchest on a large acquisition. Primarily because it would be very difficult to guarantee the kind of return on that investment that it would require to justify the cost. Even in cases where you would think there is symmetry and strategic purpose (for example Adobe). There is just so much baggage that comes along with a large organization, and the tremendous amount of effort required to consolidate operations. In doing so, Apple would both spend a great deal of their capital and incur significant costs in time and labor on top of that. In all but the rarest of circumstances is a large acquisition worth the expense. In my view, it's more often a sign of corporations that have stagnated and that can no longer innovate.
Keep in mind also that having such a large amount of capital on hand is a tremendous benefit to Apple. Harkening back to a time when Apple's position was a bit more precarious, having a large cash position made hostile takeovers more difficult. As that is no longer a real threat, the large cash position gives Apple leverage over component supplies, and makes smaller, strategic acquisitions more easily manageable. It as well gives them resources to fight legal battles, fund marketing initiatives and invest in retail expansion and other infrastructure.
The Apple management is very good, but they are not infallible. As I mentioned above, a lot of people were saying much the same thing about Microsoft 15 years ago. They started believing their own hype and this I think led them to make big investments in other industries that I'm sure they were convinced gave them strategic advantages, and of course that illusive thing called synergy. Didn't work out. So I agree with your analysis of acquisitions.
Preventing hostile takeovers doesn't require mountains of cash. They are usually prevented by "poison pill" provisions in the corporate bylaws. Having about a quarter of your market cap represented in cash (and no debt) is actually an inducement to such a bid, since it's effectively an instant discount on the takeover price. Not that I think anyone would try to take Apple. It would just cost too much and take too long.
As far as leverage with their suppliers, Apple's already got it, and they certainly don't need tens of billions to fight legal battles. Again it seems the scale of this sum of money just doesn't compute with everyone.
Subsidize the increased costs with their earned interest? Heheh, that'll be nice. iMac white Core 2 Duos (some of them) were assembled in the USA I think, I saw one that was labeled assembled in the USA.
In my opinion, AAPL is being too conservative with its cash. With $40B in the bank, I'd expect them to be aggressive in using it (even more than they are). While they have continued to expand by opening retail stores, develop new products, etc, it is evident that AAPL is still growing the cash account. Given that AAPL has both relatively small (Mac) and large (iPod/iPhone) markets across its product lines, I'd think they should open the spigot and let the cash flow a bit more. And if I were an investor, I'd be raising my eyebrow at their $0 debt. Debt is a double-edged sword in that yes, debt creates obligation to others, but is also a sign of healthy growth and business expansion. To me, this says that AAPL could be doing so much more with what they have. Whats the point of hording all that cash if it's just going to sit there? With $40B in reserves, you'd think that AAPL should be around $300 or higher per stock, but its not. I think the reasons I state above contribute at least somewhat to their seemingly under-valued stock- investor apprehension.
My $.02
I agree with your $.02 and raise you $.05. All of this hemming and hawing we get from Steve about what Apple plans to do with the money does not inspire confidence. Apple needs a massive security blanket? Why, Steve, why? Apple's management has done such a brilliant job over the past 7-8 years. I wish they'd remove this blot on their reputation by coming clean with the stockholders.
Why not pump $40B into grants to public schools. Gates is already pumping billions in Windows-tainted funds into schools, so the grants race is on! Schools need computers, network infrastructure, and training - might as well be from Apple.
Why not pump $40B into grants to public schools. Gates is already pumping billions in Windows-tainted funds into schools, so the grants race is on! Schools need computers, network infrastructure, and training - might as well be from Apple.
Apple already does do deals with schools to supply Macs. There are counties and I think even a whole state that are doing a Mac program. Apple isn't altruistic and being a publicly traded company giving away money without a proper business plan to make money from it would be a bad idea. The stockholders would have a major issue with it the value of the company would drop substantially overnight. Plus, I believe the Gates Foundation is based on Bill Gate's holdings not Microsoft's cash holdings.
But Apple's expansion of online retailing will be limited to digital goods, for which they already have a foundation in the iTunes Store. E-books, e-textbooks, e-magazines, e-periodicals, and e-newspapers are just the next steps. Apple is not interested in the rest of Amazon's physical goods business.
Another major avenue for its cash horde is in physical retail stores for selling all its gadgets. Apple has pretty much covered the US and the UK (a little less) with stores. It's fairly into it in Canada, Australia, and Japan. It's got lots of room to expand in Europe and it just announced it's expanding to 25 stores in China. And it's still working through resellers everywhere else.
And going with Jobs' "think big", there's still a long way to go with evolving iPhone, iPod touch, and iPad (and I should add AppleTV). As the CPUs can do more and batteries allow them to last longer, more and more of the stuff that people want to do will get added into these products.
Canada is doing OK. Eh?
BTW, our prices primarily reflect the US/Canada exchange rate.
Right now you could purchase a 17-inc MacBook Pro (listed on your U.S. Apple Store for $2499 US) in Canada for $37 US less, i.e., $2,462 US. But you have to hurry. Our dollar is going up.
And for those that would like to know more about us as seen in the eyes of a well recognized American:
Canada is on par with the UK, tying for the #2 position in population per Apple Store. I didn't know they had that many.
A lot of us here north of your border are unaware as well.
Unfortunately, we only have one flagship store* of any consequence. It is in Montreal, whereas, it should be in Toronto. Not that their product line is any larger. Having been in a couple of dozen stores from London through the U.S. to Beijing, you really can't see any difference in appearances, products, quality or services.
If Apple were to breakdown sales geographically, Toronto†, in particular is one on their biggest consumers. And by far.
Apple already does do deals with schools to supply Macs. There are counties and I think even a whole state that are doing a Mac program. Apple isn't altruistic and being a publicly traded company giving away money without a proper business plan to make money from it would be a bad idea. The stockholders would have a major issue with it the value of the company would drop substantially overnight. Plus, I believe the Gates Foundation is based on Bill Gate's holdings not Microsoft's cash holdings.
Right on all counts. Gates set up the foundation with several billions his own MSFT holdings. Incidentally, you don't need billions to create your own charitable foundation. Lots of people do it for far less than a million. They become the presidents of their own charitable trusts. They can travel on the trust's funds so long as they are following the IRS rules.
Yeah like manufacturing the next QUARTER BILLION iThingys with replaceable batteries and upgradeable memory so they can be useful for more than two years. Apple's environmental programs are the proverbial lipstick on a pig. Which reminds me, I need to go to ebay to find another battery for my Motorola Razor - which I love and want to keep using.
You don't know anything about their program, that's clear.
You can also replace the batteries. They aren't glued to the inside. Plenty of companies sell replacement batteries, and you can do it yourself. If you're too lazy, or afraid to, Apple will do it.
Guys like you make me laugh. Before you come on and make incorrect statements, learn something about the facts first.
Comments
But just go back 2.5 years. What if iPhone and multi-touch was a flop? Then there would likely have been a slowing growing cash pile, or a declining cash pile.
I don't think it would be declining. They were growing at good rates before iPhone too, and iPod revenue seems stable. Now, if the original iPod flopped, then the story today might have been different. Apple would have been around, but without an inexpensive hook to get people into buying more expensive devices, I don't know if Apple would have grown as quickly.
I don't think they have so much invested into any given product that a failed product would hurt them badly.
Most of the components used in any computer or advanced electronic device is made outside the US. Some of the funds should also be used here, to create or support development computer and advanced electronic components manufacturing in the US.
Put more into R&D and keep a large reserve for rainy days.
- Buy Sprint / Nextel
I think your name might be more appropriately titled illogic.
In a year or two, people will be asking what if they came out with a really BIG iPad?
I heard they were going to make a telephone that doesn't need wires.
- Buy Sprint / Nextel
How would this work and how would this benefit's Apple's goals since Sprint is CDMA?
I heard they were going to make a telephone that doesn't need wires.
How would this work and how would this benefit's Apple's goals since Sprint is CDMA?
They still have the Nextel iDen baggage too. In all the years Sprint owned Nextel, they did squat to consolidate the Nextel users and network to CDMA, at least up until late last year, when my parents switched to iPhone.
Fortunately, none of these people have anything to do with any decision Apple will make.
While I don't agree with any of the suggestions here, and some are pretty harebrained, I can't think of one myself that would make sense right now.
Whatever it would be, if Apple would do it, it would have to do with their supplies, not other products. Apple is frantic about acquiring steady supplies at good prices. Any major acquisition would have to do with that. Remember three years ago, I think it was, when they ere going to invest, with Samsung, in a new chip plant? That only dropped after Samsung got caught in one of the price fixing schemes the chip industry gets involved in every few years. So maybe Micron. That would solve the memory supply problem, and give them a new plant along with IBM. It could also allow them to make their own ARM's.
I hear you, and thankfully you are correct, these decisions are not made by AI readers. But then again, human beings are human beings, and it's in the nature of of human beings to do things just because they can. Impulsively, if you will. My fear is that of all that spare cash will start to speak for itself. This happened to Microsoft during the '90s -- they were placing bets left and right without any obvious strategic plan behind it. None of that paid off AFAIK, and look where they are today.
Also, Apple has made strategic investments in parts suppliers in the past, and I'd expect them to continue to do so. These investments have been in the several hundred million dollar range however, which obviously begs the questions of what they'd do with the $40 billion they've got to work with today, and far more than that in a year's time.
I don't believe Apple will make such a mistake as what you describe. They're just too well run for that (imo). If you take a realistic look over the management of the corporation over the last several years, I think you see a picture of exquisite operation. Not flawless, but not too far short of it.
Specifically, I think it very unlikely that Apple would drop a large portion of their warchest on a large acquisition. Primarily because it would be very difficult to guarantee the kind of return on that investment that it would require to justify the cost. Even in cases where you would think there is symmetry and strategic purpose (for example Adobe). There is just so much baggage that comes along with a large organization, and the tremendous amount of effort required to consolidate operations. In doing so, Apple would both spend a great deal of their capital and incur significant costs in time and labor on top of that. In all but the rarest of circumstances is a large acquisition worth the expense. In my view, it's more often a sign of corporations that have stagnated and that can no longer innovate.
Keep in mind also that having such a large amount of capital on hand is a tremendous benefit to Apple. Harkening back to a time when Apple's position was a bit more precarious, having a large cash position made hostile takeovers more difficult. As that is no longer a real threat, the large cash position gives Apple leverage over component supplies, and makes smaller, strategic acquisitions more easily manageable. It as well gives them resources to fight legal battles, fund marketing initiatives and invest in retail expansion and other infrastructure.
The Apple management is very good, but they are not infallible. As I mentioned above, a lot of people were saying much the same thing about Microsoft 15 years ago. They started believing their own hype and this I think led them to make big investments in other industries that I'm sure they were convinced gave them strategic advantages, and of course that illusive thing called synergy. Didn't work out. So I agree with your analysis of acquisitions.
Preventing hostile takeovers doesn't require mountains of cash. They are usually prevented by "poison pill" provisions in the corporate bylaws. Having about a quarter of your market cap represented in cash (and no debt) is actually an inducement to such a bid, since it's effectively an instant discount on the takeover price. Not that I think anyone would try to take Apple. It would just cost too much and take too long.
As far as leverage with their suppliers, Apple's already got it, and they certainly don't need tens of billions to fight legal battles. Again it seems the scale of this sum of money just doesn't compute with everyone.
MOVE ALL MANUFACTURING FROM CHINA TO AMERICA!
Subsidize the increased costs with their earned interest? Heheh, that'll be nice. iMac white Core 2 Duos (some of them) were assembled in the USA I think, I saw one that was labeled assembled in the USA.
In my opinion, AAPL is being too conservative with its cash. With $40B in the bank, I'd expect them to be aggressive in using it (even more than they are). While they have continued to expand by opening retail stores, develop new products, etc, it is evident that AAPL is still growing the cash account. Given that AAPL has both relatively small (Mac) and large (iPod/iPhone) markets across its product lines, I'd think they should open the spigot and let the cash flow a bit more. And if I were an investor, I'd be raising my eyebrow at their $0 debt. Debt is a double-edged sword in that yes, debt creates obligation to others, but is also a sign of healthy growth and business expansion. To me, this says that AAPL could be doing so much more with what they have. Whats the point of hording all that cash if it's just going to sit there? With $40B in reserves, you'd think that AAPL should be around $300 or higher per stock, but its not. I think the reasons I state above contribute at least somewhat to their seemingly under-valued stock- investor apprehension.
My $.02
I agree with your $.02 and raise you $.05. All of this hemming and hawing we get from Steve about what Apple plans to do with the money does not inspire confidence. Apple needs a massive security blanket? Why, Steve, why? Apple's management has done such a brilliant job over the past 7-8 years. I wish they'd remove this blot on their reputation by coming clean with the stockholders.
Why not pump $40B into grants to public schools. Gates is already pumping billions in Windows-tainted funds into schools, so the grants race is on! Schools need computers, network infrastructure, and training - might as well be from Apple.
Apple already does do deals with schools to supply Macs. There are counties and I think even a whole state that are doing a Mac program. Apple isn't altruistic and being a publicly traded company giving away money without a proper business plan to make money from it would be a bad idea. The stockholders would have a major issue with it the value of the company would drop substantially overnight. Plus, I believe the Gates Foundation is based on Bill Gate's holdings not Microsoft's cash holdings.
image: http://i840.photobucket.com/albums/z...sFeb262010.jpg
Canada is on par with the UK, tying for the #2 position in population per Apple Store. I didn't know they had that many.
Canada is on par with the UK, tying for the #2 position in population per Apple Store. I didn't know they had that many.
A lot of us here north of your border are unaware as well.
Unfortunately, we only have one flagship store* of any consequence. It is in Montreal, whereas, it should be in Toronto. Not that their product line is any larger. Having been in a couple of dozen stores from London through the U.S. to Beijing, you really can't see any difference in appearances, products, quality or services.
If Apple were to breakdown sales geographically, Toronto†, in particular is one on their biggest consumers. And by far.
*http://www.apple.com/ca/retail/saintecatherine/
†http://www.apple.com/ca/retail/storelist/
Apple already does do deals with schools to supply Macs. There are counties and I think even a whole state that are doing a Mac program. Apple isn't altruistic and being a publicly traded company giving away money without a proper business plan to make money from it would be a bad idea. The stockholders would have a major issue with it the value of the company would drop substantially overnight. Plus, I believe the Gates Foundation is based on Bill Gate's holdings not Microsoft's cash holdings.
Right on all counts. Gates set up the foundation with several billions his own MSFT holdings. Incidentally, you don't need billions to create your own charitable foundation. Lots of people do it for far less than a million. They become the presidents of their own charitable trusts. They can travel on the trust's funds so long as they are following the IRS rules.
...
Nice chart. Thanks!
Nice chart. Thanks!
You're welcome.
Chris - Where did you get those figures? I'm amazed that DVD sales dwarf box office.
Do you have anything similar for the music industry?
And do you have any domestic vs. exports figures? My understanding is that Hollywood is one of the US's biggest exporters. Is that true?
Especially considering one movie alone has surpassed $2 Billion in sales.
The DVD figures he's citing are sales. Not profits.
Film distribution stats:
2010 Partials:
http://www.imdb.com/boxoffice/alltim...ion=world-wide
Here are the industry numbers 2009 total:
http://www.the-numbers.com/market/Distributors2009.php [well over $10 Billion]
2010 Numbers will surpass 2009 numbers.
Yeah like manufacturing the next QUARTER BILLION iThingys with replaceable batteries and upgradeable memory so they can be useful for more than two years. Apple's environmental programs are the proverbial lipstick on a pig. Which reminds me, I need to go to ebay to find another battery for my Motorola Razor - which I love and want to keep using.
You don't know anything about their program, that's clear.
You can also replace the batteries. They aren't glued to the inside. Plenty of companies sell replacement batteries, and you can do it yourself. If you're too lazy, or afraid to, Apple will do it.
Guys like you make me laugh. Before you come on and make incorrect statements, learn something about the facts first.