I totally disagree. Of all the things to do, that would be the worst.
I really don't understand the rational behind this. All it does is to shrink to pool of shares. So we get higher earnings per share, which is to be expected with less shares outstanding. It does nothing to increase the valuation of the company. It does nothing to increase the competitiveness of the company.
It's also temporary. There's no guarantee that doing this will keep the share price up. Often it drops back down again after some time.
And as a result, the money they purchased the stock with, and retired, is now gone in a puff of smoke.
I know you disagree.
I was reiterating my point to Dr. Millmoss since he seemed to have missed it.
The increase in EPS is a meaningless effect, so that has nothing to with it. And, yes, in a perfect world, it would be irrelevant from a valuation standpoint. But you do not seem to understand that, so would dividends. It is called the Miller Modigliani Theorem (won a Nobel prize too, but that is beside the point). You can look it up: http://en.wikipedia.org/wiki/Modigliani-Miller_theorem
It is well-known in the empirical finance literature that share repurchases have, one average, substantial positive signaling effects. (I can give you tons of references, but this one is not too bad: http://hbswk.hbs.edu/archive/2233.html).
Long-run valuation effects of such corporate decisions (including dividends) are notoriously difficult to measure, since the 'power' of the statistical tests involved is often quite low. The reason is, all sorts of confounds (i.e., other corporate actions) creep in and you cannot control for it well. So that caveat is not particularly useful either.
I was reiterating my point to Dr. Millmoss since he seemed to have missed it.
The increase in EPS is a meaningless effect, so that has nothing to with it. And, yes, in a perfect world, it would be irrelevant from a valuation standpoint. But you do not seem to understand that, so would dividends. It is called the Miller Modigliani Theorem (won a Nobel prize too, but that is beside the point). You can look it up: http://en.wikipedia.org/wiki/Modigliani-Miller_theorem
It is well-known in the empirical finance literature that share repurchases have, one average, substantial positive signaling effects. (I can give you tons of references, but this one is not too bad: http://hbswk.hbs.edu/archive/2233.html).
Long-run valuation effects of such corporate decisions (including dividends) are notoriously difficult to measure, since the 'power' of the statistical tests involved is often quite low. The reason is, all sorts of confounds (i.e., other corporate actions) creep in and you cannot control for it well. So that caveat is not particularly useful either.
I never said that I favored dividends. I just said that I wasn't opposed to modest ones?if the company was manufacturing enough cash to pay for them, and had no debt. but we know that often, the companies that can least afford it, pay dividends.
As for the article about buybacks, well, it agrees with everything I have said. Buybacks are bad. Apple is not a company that should do a share buyback. They don't fit ANY of the categories mentioned in the article. And even for those that do, it's a bad idea.
Frankly, I don't know why you referenced that article, as it kills your argument for a buyback. I'm going to bookmark it as a backup for my arguments against them.
I never said that I favored dividends. I just said that I wasn't opposed to modest ones—if the company was manufacturing enough cash to pay for them, and had no debt. but we know that often, the companies that can least afford it, pay dividends.
As for the article about buybacks, well, it agrees with everything I have said. Buybacks are bad. Apple is not a company that should do a share buyback. They don't fit ANY of the categories mentioned in the article. And even for those that do, it's a bad idea.
Frankly, I don't know why you referenced that article, as it kills your argument for a buyback. I'm going to bookmark it as a backup for my arguments against them.
If you think the article said buybacks are 'bad,' you didn't read it very carefully.
Let me summarize it for you. It said four things: (i) EPS increases from buybacks are irrelevant (apropos of an earlier point you made); (ii) Buybacks can create value if they send the right signals by conveying optimism about a company's future cash flow prospects, or if they result in a leverage increase ('debt as discipline'); (iii) But it is not so simple, since there are -- as with anything -- good buybacks and bad buybacks; it can send the wrong signal if the market believes that it foreshadows lack of growth prospects (However, if you believe that to be the case for Apple, then the same argument applies even more so in the case of dividends!); (iv) Buybacks work best when management pledges not to tender their own shares.
Please do not oversimplify to buttress your view. I am trying to be fair here.
Actually, a massive amount of empirical evidence in finance shows that buybacks, on average, have positive announcement effects, just as dividend initiations/increases do. I did not give you a link for that, since I thought it was fairly obvious. But here goes (it is a well-cited study published in a top journal, offers an excellent literature review, and suggests that if anything, markets, on average, under-react to buyback announcements): http://forum.johnson.cornell.edu/fac...20Programs.pdf
Also, you should, in all fairness, address the two other caveats I raised: Dividends can be equally meaningless (i.e., value-neutral), and the long-run valuation effects of any such decisions are fraught with measurement problems.
I think you will be interested in this from Forbes, again, something they send me in the e-mail. Two links. The first explains it, and the second is at the bottom of the first. That's the link to the listings.
Sure, they consider debt... but where is the cash on the balance sheet factored into performance? Unless I missed something, this only backs up my point. Apple didn't get their 40% annualized yield by investing cash in short term securities.
If you think the article said buybacks are 'bad,' you didn't read it very carefully.
Let me summarize it for you. It said four things: (i) EPS increases from buybacks are irrelevant (apropos of an earlier point you made); (ii) Buybacks can create value if they send the right signals by conveying optimism about a company's future cash flow prospects, or if they result in a leverage increase ('debt as discipline'); (iii) But it is not so simple, since there are -- as with anything -- good buybacks and bad buybacks; it can send the wrong signal if the market believes that it foreshadows lack of growth prospects (However, if you believe that to be the case for Apple, then the same argument applies even more so in the case of dividends!); (iv) Buybacks work best when management pledges not to tender their own shares.
Please do not oversimplify to buttress your view. I am trying to be fair here.
Actually, a massive amount of empirical evidence in finance shows that buybacks, on average, have positive announcement effects, just as dividend initiations/increases do. I did not give you a link for that, since I thought it was fairly obvious. But here goes (it is a well-cited study published in a top journal, offers an excellent literature review, and suggests that if anything, markets, on average, under-react to buyback announcements): http://forum.johnson.cornell.edu/fac...20Programs.pdf
Also, you should, in all fairness, address the two other caveats I raised: Dividends can be equally meaningless (i.e., value-neutral), and the long-run valuation effects of any such decisions are fraught with measurement problems.
I read the article very carefully. Parts I even read twice. I know that they didn't intend the article to be negative, but it ended up that way. When you have more caveats about something than good points, the argument fails. And it sure did there!
I'll have to read that PDF, but as it's long, obviously I can't read it now.
I've always found those defending this practice to be struggling to support the bankrupt view.
Companies who feel the need to spend shareholder dollars for a buyback would do better to invest that money in something to help the company compete,, whether it's R&D, marketing, or something else.
I'll tell you what might impress me. If all the top managers went and took out large bank loans backed by their homes, artwork, yachts and other items of high worth, and bought large amounts of the companys' stock themselves.
But the idea of them spending money that isn't theirs to prove a point is to me, meaningless.
I never said that dividends weren't meaningless. That's why I'm not an active supporter of them, just a passive acceptor if it's done.
Sure, they consider debt... but where is the cash on the balance sheet factored into performance? Unless I missed something, this only backs up my point. Apple didn't get their 40% annualized yield by investing cash in short term securities.
I don't think the cash factors into it very highly. most of that is from continuing businesses, as it should be.
I'm not going to say that Cook and the rest are liars about where their investments lie.
I'll tell you what might impress me. If all the top managers went and took out large bank loans backed by their homes, artwork, yachts and other items of high worth, and bought large amounts of the companys' stock themselves.
That would be the dumbest thing that they could do, since it compounds their lack of diversification: both their wealth capital and their human capital are tied up in the asset. (Think Enron).
You wouldn't want to do it to your family with respect to, say, a business you started.
(Paradoxically, once they've become so poorly diversified, they could also, over time (if they survive) end up becoming risk-averse in their decision-making: the downsides of losing both your job and your financial wealth are too high.)
That would be the dumbest thing that they could do, since it compounds their lack of diversification: both their wealth capital and their human capital are tied up in the asset. (Think Enron).
You wouldn't want to do it to your family with respect to, say, a business you started.
(Paradoxically, once they've become so poorly diversified, they could also, over time (if they survive) end up becoming risk-averse in their decision-making: the downsides of losing both your job and your financial wealth are too high.)
I was just making a point. Of course I don't expect an executive to invest to show their confidence in their company.
But investing MY money is ok? If I'm a shareholder, that cash is mine. They are taking no risks. Why should a stock buyback be thought of as confidence? If it doesn't work, they move on.
I was just making a point. Of course I don't expect an executive to invest to show their confidence in their company.
But investing MY money is ok? If I'm a shareholder, that cash is mine. They are taking no risks. Why should a stock buyback be thought of as confidence? If it doesn't work, they move on.
As a public (actually, institutional, since they tend to be 70+% in most large companies) shareholder, you are more-than-likely better diversified both across financial assets and because of the fact that you have no human capital tied up in the asset.
For instance, while I have a fair amount of Apple, it is less than 10% of my personal portfolio. (It used to be more like 5%, but Apple's being on a tear and all......)
As a public (actually, institutional, since they tend to be 70+% in most large companies) shareholder, you are more-than-likely better diversified both across financial assets and because of the fact that you have no human capital tied up in the asset.
For instance, while I have a fair amount of Apple, it is less than 10% of my personal portfolio. (It used to be more like 5%, but Apple's being on a tear and all......)
It's a lot more of mine. I have always found that I do much better with the fewest items. I've never ascribed to the "basket" theory.
I predict that AAPL will exceed $300 per share and market cap will exceed that of MSFT by the end of July 2010. Apple's traditionally conservative guidance for Q3 seems to be conservatively based on not selling any more iPads during the quarter than were already sold as of the announcement. My guess is that the 3G version will ultimately prove to be much more popular than the Wifi-only version and that Q3 iPad sales will exceed 2 million units. Here in eastern Europe, where most people cannot afford a MacBook, many acquaintances are planning to buy an iPad.
Quote:
Originally Posted by melgross
They could buy Palm and secure their 400 patents. Palm is now getting cheaper again. It's one month of cash for them, maybe less. It could head off a purchase from another company who might know what to do with them.
I think buying Palm to pad their patent portfolio might make a lot of sense. Apple could buy Palm for not much more than $1B. I'm sure Palm also have some good engineers and engineering managers.
Quote:
Originally Posted by melgross
There have been rumors of Apple considering building a manufacturing plant here that was highly automated. That's a possibility. Manufacturing some products here is beginning to pay.
After Steve's experience with the NeXT factory, I cannot foresee Apple building a manufacturing plant. Outsourcing manufacturing works very well for Apple.
I predict that AAPL will exceed $300 per share and market cap will exceed that of MSFT by the end of July 2010. Apple's traditionally conservative guidance for Q3 seems to be conservatively based on not selling any more iPads during the quarter than were already sold as of the announcement. My guess is that the 3G version will ultimately prove to be much more popular than the Wifi-only version and that Q3 iPad sales will exceed 2 million units. Here in eastern Europe, where most people cannot afford a MacBook, many acquaintances are planning to buy an iPad.
I've seen estimates for this quarter's sales as high as $16 billion. A $61 billion year is not out of reach.
Quote:
After Steve's experience with the NeXT factory, I cannot foresee Apple building a manufacturing plant. Outsourcing manufacturing works very well for Apple.
I wouldn't be too dogmatic about that A number of foreign manufacturers are opening plants up here. A highly automated factory would cost little to run when compared to the older ones Dell has had. With Apple selling premier products, this could work. It's getting so that shipping costs from overseas are becoming a big expense, especially with Apple continually having to air over large numbers of kit.
I'm not talking about moving all their product lines over. But some high margin models would be a good pick.
I wouldn't be too dogmatic about that A number of foreign manufacturers are opening plants up here. A highly automated factory would cost little to run when compared to the older ones Dell has had. With Apple selling premier products, this could work. It's getting so that shipping costs from overseas are becoming a big expense, especially with Apple continually having to air over large numbers of kit.
I'm not talking about moving all their product lines over. But some high margin models would be a good pick.
On either Colbert of Daily Show this week they interviewed the Whamo(?) who have recently moved their manufacturing back to the US from China due to higher shipping costs and Chinese factories charging more for various reasons. This is not an isolated incident.
I agree that Apple is one of the few tech companies that can benefit from this type of manufacturing with their limited product line offering high-proftil and high-volume sales.
Here is the video of NeXT's Factory: The Machine to Build Machines for anyone who may have missed it.
On either Colbert of Daily Show this week they interviewed the Whamo(?) who have recently moved their manufacturing back to the US from China due to higher shipping costs and Chinese factories charging more for various reasons. This is not an isolated incident.
I agree that Apple is one of the few tech companies that can benefit from this type of manufacturing with their limited product line offering high-proftil and high-volume sales.
Here is the video of NeXT's Factory: The Machine to Build Machines for anyone who may have missed it.
And that was a long time ago. Things are much more automated today.
And look at the expenses Apple has with machining each case one at a time! I must admit however, that going to a third party to manufacture them does cost a lot less in China. but if Apple owned the factory, it could cost less here too because they wouldn't have to make a profit on the machining operations, which for certain types of CNC work can cost up to $400 a MINUTE!
And that was a long time ago. Things are much more automated today.
And look at the expenses Apple has with machining each case one at a time! I must admit however, that going to a third party to manufacture them does cost a lot less in China. but if Apple owned the factory, it could cost less here too because they wouldn't have to make a profit on the machining operations, which for certain types of CNC work can cost up to $400 a MINUTE!
After a quarter of a century I hope so.
Apple has already broken ground by having a huge amount of CE that is milled. Even the iPad is milled which was a shock to me. I don't know of a single other tech company that could do a milled case for the consumer. None that I can think of have the volume at the higher-end to make it viable.
I have no idea what the situation is in China v. US for this kind of manufacturing with all costs considered but I have to assume that Apple has worked out numbers to see if and when it could be an option. It's certainly an interesting idea even if it's not a likely one.
Count me was one who is skeptical about the possibility of Apple moving any manufacturing back to the US. As the cost of doing business in China rises as it certainly will, manufacturers will continue to chase low labor costs. My feeling is a lot of that chasing will take manufacturers to India, not back to their home countries in the West. A company would have to revolutionize manufacturing to overcome the far lower costs of labor in the developing world, and even if they did revolutionize manufacturing, they would still be drawn economically to implementing it in low cost of labor markets.
Count me was one who is skeptical about the possibility of Apple moving any manufacturing back to the US. As the cost of doing business in China rises as it certainly will, manufacturers will continue to chase low labor costs. My feeling is a lot of that chasing will take manufacturers to India, not back to their home countries in the West. A company would have to revolutionize manufacturing to overcome the far lower costs of labor in the developing world, and even if they did revolutionize manufacturing, they would still be drawn economically to implementing it in low cost of labor markets.
As yet, India isn't favored as a manufacturing local because of poor infrastructure, and poor education. That will change over the years, but not for a while.
As yet, India isn't favored as a manufacturing local because of poor infrastructure, and poor education. That will change over the years, but not for a while.
As yet, and still, the same was said about China not many years ago. And yet, if you call a support center for a U.S. company there's a good chance you'll end up talking to someone in India. In any event I am referring to the larger historical trend of manufacturing chasing low labor costs. I don't see that trend reversing itself anytime soon.
Comments
I totally disagree. Of all the things to do, that would be the worst.
I really don't understand the rational behind this. All it does is to shrink to pool of shares. So we get higher earnings per share, which is to be expected with less shares outstanding. It does nothing to increase the valuation of the company. It does nothing to increase the competitiveness of the company.
It's also temporary. There's no guarantee that doing this will keep the share price up. Often it drops back down again after some time.
And as a result, the money they purchased the stock with, and retired, is now gone in a puff of smoke.
I know you disagree.
I was reiterating my point to Dr. Millmoss since he seemed to have missed it.
The increase in EPS is a meaningless effect, so that has nothing to with it. And, yes, in a perfect world, it would be irrelevant from a valuation standpoint. But you do not seem to understand that, so would dividends. It is called the Miller Modigliani Theorem (won a Nobel prize too, but that is beside the point). You can look it up: http://en.wikipedia.org/wiki/Modigliani-Miller_theorem
It is well-known in the empirical finance literature that share repurchases have, one average, substantial positive signaling effects. (I can give you tons of references, but this one is not too bad: http://hbswk.hbs.edu/archive/2233.html).
Long-run valuation effects of such corporate decisions (including dividends) are notoriously difficult to measure, since the 'power' of the statistical tests involved is often quite low. The reason is, all sorts of confounds (i.e., other corporate actions) creep in and you cannot control for it well. So that caveat is not particularly useful either.
I know you disagree.
I was reiterating my point to Dr. Millmoss since he seemed to have missed it.
The increase in EPS is a meaningless effect, so that has nothing to with it. And, yes, in a perfect world, it would be irrelevant from a valuation standpoint. But you do not seem to understand that, so would dividends. It is called the Miller Modigliani Theorem (won a Nobel prize too, but that is beside the point). You can look it up: http://en.wikipedia.org/wiki/Modigliani-Miller_theorem
It is well-known in the empirical finance literature that share repurchases have, one average, substantial positive signaling effects. (I can give you tons of references, but this one is not too bad: http://hbswk.hbs.edu/archive/2233.html).
Long-run valuation effects of such corporate decisions (including dividends) are notoriously difficult to measure, since the 'power' of the statistical tests involved is often quite low. The reason is, all sorts of confounds (i.e., other corporate actions) creep in and you cannot control for it well. So that caveat is not particularly useful either.
I never said that I favored dividends. I just said that I wasn't opposed to modest ones?if the company was manufacturing enough cash to pay for them, and had no debt. but we know that often, the companies that can least afford it, pay dividends.
As for the article about buybacks, well, it agrees with everything I have said. Buybacks are bad. Apple is not a company that should do a share buyback. They don't fit ANY of the categories mentioned in the article. And even for those that do, it's a bad idea.
Frankly, I don't know why you referenced that article, as it kills your argument for a buyback. I'm going to bookmark it as a backup for my arguments against them.
I never said that I favored dividends. I just said that I wasn't opposed to modest ones—if the company was manufacturing enough cash to pay for them, and had no debt. but we know that often, the companies that can least afford it, pay dividends.
As for the article about buybacks, well, it agrees with everything I have said. Buybacks are bad. Apple is not a company that should do a share buyback. They don't fit ANY of the categories mentioned in the article. And even for those that do, it's a bad idea.
Frankly, I don't know why you referenced that article, as it kills your argument for a buyback. I'm going to bookmark it as a backup for my arguments against them.
If you think the article said buybacks are 'bad,' you didn't read it very carefully.
Let me summarize it for you. It said four things: (i) EPS increases from buybacks are irrelevant (apropos of an earlier point you made); (ii) Buybacks can create value if they send the right signals by conveying optimism about a company's future cash flow prospects, or if they result in a leverage increase ('debt as discipline'); (iii) But it is not so simple, since there are -- as with anything -- good buybacks and bad buybacks; it can send the wrong signal if the market believes that it foreshadows lack of growth prospects (However, if you believe that to be the case for Apple, then the same argument applies even more so in the case of dividends!); (iv) Buybacks work best when management pledges not to tender their own shares.
Please do not oversimplify to buttress your view. I am trying to be fair here.
Actually, a massive amount of empirical evidence in finance shows that buybacks, on average, have positive announcement effects, just as dividend initiations/increases do. I did not give you a link for that, since I thought it was fairly obvious. But here goes (it is a well-cited study published in a top journal, offers an excellent literature review, and suggests that if anything, markets, on average, under-react to buyback announcements): http://forum.johnson.cornell.edu/fac...20Programs.pdf
Also, you should, in all fairness, address the two other caveats I raised: Dividends can be equally meaningless (i.e., value-neutral), and the long-run valuation effects of any such decisions are fraught with measurement problems.
I think you will be interested in this from Forbes, again, something they send me in the e-mail. Two links. The first explains it, and the second is at the bottom of the first. That's the link to the listings.
http://www.forbes.com/2010/04/20/glo...0-intro_2.html
Sure, they consider debt... but where is the cash on the balance sheet factored into performance? Unless I missed something, this only backs up my point. Apple didn't get their 40% annualized yield by investing cash in short term securities.
If you think the article said buybacks are 'bad,' you didn't read it very carefully.
Let me summarize it for you. It said four things: (i) EPS increases from buybacks are irrelevant (apropos of an earlier point you made); (ii) Buybacks can create value if they send the right signals by conveying optimism about a company's future cash flow prospects, or if they result in a leverage increase ('debt as discipline'); (iii) But it is not so simple, since there are -- as with anything -- good buybacks and bad buybacks; it can send the wrong signal if the market believes that it foreshadows lack of growth prospects (However, if you believe that to be the case for Apple, then the same argument applies even more so in the case of dividends!); (iv) Buybacks work best when management pledges not to tender their own shares.
Please do not oversimplify to buttress your view. I am trying to be fair here.
Actually, a massive amount of empirical evidence in finance shows that buybacks, on average, have positive announcement effects, just as dividend initiations/increases do. I did not give you a link for that, since I thought it was fairly obvious. But here goes (it is a well-cited study published in a top journal, offers an excellent literature review, and suggests that if anything, markets, on average, under-react to buyback announcements): http://forum.johnson.cornell.edu/fac...20Programs.pdf
Also, you should, in all fairness, address the two other caveats I raised: Dividends can be equally meaningless (i.e., value-neutral), and the long-run valuation effects of any such decisions are fraught with measurement problems.
I read the article very carefully. Parts I even read twice. I know that they didn't intend the article to be negative, but it ended up that way. When you have more caveats about something than good points, the argument fails. And it sure did there!
I'll have to read that PDF, but as it's long, obviously I can't read it now.
I've always found those defending this practice to be struggling to support the bankrupt view.
Companies who feel the need to spend shareholder dollars for a buyback would do better to invest that money in something to help the company compete,, whether it's R&D, marketing, or something else.
I'll tell you what might impress me. If all the top managers went and took out large bank loans backed by their homes, artwork, yachts and other items of high worth, and bought large amounts of the companys' stock themselves.
But the idea of them spending money that isn't theirs to prove a point is to me, meaningless.
I never said that dividends weren't meaningless. That's why I'm not an active supporter of them, just a passive acceptor if it's done.
Sure, they consider debt... but where is the cash on the balance sheet factored into performance? Unless I missed something, this only backs up my point. Apple didn't get their 40% annualized yield by investing cash in short term securities.
I don't think the cash factors into it very highly. most of that is from continuing businesses, as it should be.
I'm not going to say that Cook and the rest are liars about where their investments lie.
I'll tell you what might impress me. If all the top managers went and took out large bank loans backed by their homes, artwork, yachts and other items of high worth, and bought large amounts of the companys' stock themselves.
That would be the dumbest thing that they could do, since it compounds their lack of diversification: both their wealth capital and their human capital are tied up in the asset. (Think Enron).
You wouldn't want to do it to your family with respect to, say, a business you started.
(Paradoxically, once they've become so poorly diversified, they could also, over time (if they survive) end up becoming risk-averse in their decision-making: the downsides of losing both your job and your financial wealth are too high.)
That would be the dumbest thing that they could do, since it compounds their lack of diversification: both their wealth capital and their human capital are tied up in the asset. (Think Enron).
You wouldn't want to do it to your family with respect to, say, a business you started.
(Paradoxically, once they've become so poorly diversified, they could also, over time (if they survive) end up becoming risk-averse in their decision-making: the downsides of losing both your job and your financial wealth are too high.)
I was just making a point. Of course I don't expect an executive to invest to show their confidence in their company.
But investing MY money is ok? If I'm a shareholder, that cash is mine. They are taking no risks. Why should a stock buyback be thought of as confidence? If it doesn't work, they move on.
I was just making a point. Of course I don't expect an executive to invest to show their confidence in their company.
But investing MY money is ok? If I'm a shareholder, that cash is mine. They are taking no risks. Why should a stock buyback be thought of as confidence? If it doesn't work, they move on.
As a public (actually, institutional, since they tend to be 70+% in most large companies) shareholder, you are more-than-likely better diversified both across financial assets and because of the fact that you have no human capital tied up in the asset.
For instance, while I have a fair amount of Apple, it is less than 10% of my personal portfolio. (It used to be more like 5%, but Apple's being on a tear and all......
As a public (actually, institutional, since they tend to be 70+% in most large companies) shareholder, you are more-than-likely better diversified both across financial assets and because of the fact that you have no human capital tied up in the asset.
For instance, while I have a fair amount of Apple, it is less than 10% of my personal portfolio. (It used to be more like 5%, but Apple's being on a tear and all......
It's a lot more of mine. I have always found that I do much better with the fewest items. I've never ascribed to the "basket" theory.
They could buy Palm and secure their 400 patents. Palm is now getting cheaper again. It's one month of cash for them, maybe less. It could head off a purchase from another company who might know what to do with them.
I think buying Palm to pad their patent portfolio might make a lot of sense. Apple could buy Palm for not much more than $1B. I'm sure Palm also have some good engineers and engineering managers.
There have been rumors of Apple considering building a manufacturing plant here that was highly automated. That's a possibility. Manufacturing some products here is beginning to pay.
After Steve's experience with the NeXT factory, I cannot foresee Apple building a manufacturing plant. Outsourcing manufacturing works very well for Apple.
I predict that AAPL will exceed $300 per share and market cap will exceed that of MSFT by the end of July 2010. Apple's traditionally conservative guidance for Q3 seems to be conservatively based on not selling any more iPads during the quarter than were already sold as of the announcement. My guess is that the 3G version will ultimately prove to be much more popular than the Wifi-only version and that Q3 iPad sales will exceed 2 million units. Here in eastern Europe, where most people cannot afford a MacBook, many acquaintances are planning to buy an iPad.
I've seen estimates for this quarter's sales as high as $16 billion. A $61 billion year is not out of reach.
After Steve's experience with the NeXT factory, I cannot foresee Apple building a manufacturing plant. Outsourcing manufacturing works very well for Apple.
I wouldn't be too dogmatic about that A number of foreign manufacturers are opening plants up here. A highly automated factory would cost little to run when compared to the older ones Dell has had. With Apple selling premier products, this could work. It's getting so that shipping costs from overseas are becoming a big expense, especially with Apple continually having to air over large numbers of kit.
I'm not talking about moving all their product lines over. But some high margin models would be a good pick.
I wouldn't be too dogmatic about that A number of foreign manufacturers are opening plants up here. A highly automated factory would cost little to run when compared to the older ones Dell has had. With Apple selling premier products, this could work. It's getting so that shipping costs from overseas are becoming a big expense, especially with Apple continually having to air over large numbers of kit.
I'm not talking about moving all their product lines over. But some high margin models would be a good pick.
On either Colbert of Daily Show this week they interviewed the Whamo(?) who have recently moved their manufacturing back to the US from China due to higher shipping costs and Chinese factories charging more for various reasons. This is not an isolated incident.
I agree that Apple is one of the few tech companies that can benefit from this type of manufacturing with their limited product line offering high-proftil and high-volume sales.
Here is the video of NeXT's Factory: The Machine to Build Machines for anyone who may have missed it.
On either Colbert of Daily Show this week they interviewed the Whamo(?) who have recently moved their manufacturing back to the US from China due to higher shipping costs and Chinese factories charging more for various reasons. This is not an isolated incident.
I agree that Apple is one of the few tech companies that can benefit from this type of manufacturing with their limited product line offering high-proftil and high-volume sales.
Here is the video of NeXT's Factory: The Machine to Build Machines for anyone who may have missed it.
And that was a long time ago. Things are much more automated today.
And look at the expenses Apple has with machining each case one at a time! I must admit however, that going to a third party to manufacture them does cost a lot less in China. but if Apple owned the factory, it could cost less here too because they wouldn't have to make a profit on the machining operations, which for certain types of CNC work can cost up to $400 a MINUTE!
And that was a long time ago. Things are much more automated today.
And look at the expenses Apple has with machining each case one at a time! I must admit however, that going to a third party to manufacture them does cost a lot less in China. but if Apple owned the factory, it could cost less here too because they wouldn't have to make a profit on the machining operations, which for certain types of CNC work can cost up to $400 a MINUTE!
After a quarter of a century I hope so.
Apple has already broken ground by having a huge amount of CE that is milled. Even the iPad is milled which was a shock to me. I don't know of a single other tech company that could do a milled case for the consumer. None that I can think of have the volume at the higher-end to make it viable.
I have no idea what the situation is in China v. US for this kind of manufacturing with all costs considered but I have to assume that Apple has worked out numbers to see if and when it could be an option. It's certainly an interesting idea even if it's not a likely one.
Count me was one who is skeptical about the possibility of Apple moving any manufacturing back to the US. As the cost of doing business in China rises as it certainly will, manufacturers will continue to chase low labor costs. My feeling is a lot of that chasing will take manufacturers to India, not back to their home countries in the West. A company would have to revolutionize manufacturing to overcome the far lower costs of labor in the developing world, and even if they did revolutionize manufacturing, they would still be drawn economically to implementing it in low cost of labor markets.
As yet, India isn't favored as a manufacturing local because of poor infrastructure, and poor education. That will change over the years, but not for a while.
As yet, India isn't favored as a manufacturing local because of poor infrastructure, and poor education. That will change over the years, but not for a while.
As yet, and still, the same was said about China not many years ago. And yet, if you call a support center for a U.S. company there's a good chance you'll end up talking to someone in India. In any event I am referring to the larger historical trend of manufacturing chasing low labor costs. I don't see that trend reversing itself anytime soon.