Solar farm, 'spaceship' campus to help Apple expenses reach $8B
Apple's capital expenditures in its 2012 fiscal year are projected to increase by $3.4 billion, as the company gears up for major projects like its new solar farm in North Carolina, and a new corporate campus in Cupertino, Calif.
Last week, Apple issued its annual 10-K filing with the U.S. Securities and Exchange Commission. On Monday, analyst Maynard Um with UBS offered a closer look at the findings.
In particular, Apple expects to increase its capital expenditures 73 percent year over year in fiscal 2012. That will bring its projected expenses to $8 billion, significantly higher than the $1.2 billion the company projected back in 2009.
Um believes that a significant chunk of Apple's spending increase will be related to new construction projects the company is planning. For example, last week it was revealed that the company is planning to build a solar farm across from its massive data center in Maiden, N.C.
Apple's solar farm will be placed on 171 acres of vacant land on Startown Road. It will power the $1 billion data center that opened earlier this year and helps to power Apple's online services, including iCloud and iTunes.
Another major upcoming project for Apple that Um believes will contribute to increased expenses in 2012 is the company's new 13,000-employee campus in Cupertino. Work on the campus, dubbed a "spaceship" by late Apple co-founder Steve Jobs at a city meeting in June, is expected to begin in 2012, in preparation for an opening in 2015.
Other capital expenditure increases from Apple in 2012 will come from new retail expansions by the company. Apple has said it plans to build 40 new stores next year, with two-thirds of those overseas, helping to increase its retail capital expenses from $614 million to $900 million.
Last week, Apple issued its annual 10-K filing with the U.S. Securities and Exchange Commission. On Monday, analyst Maynard Um with UBS offered a closer look at the findings.
In particular, Apple expects to increase its capital expenditures 73 percent year over year in fiscal 2012. That will bring its projected expenses to $8 billion, significantly higher than the $1.2 billion the company projected back in 2009.
Um believes that a significant chunk of Apple's spending increase will be related to new construction projects the company is planning. For example, last week it was revealed that the company is planning to build a solar farm across from its massive data center in Maiden, N.C.
Apple's solar farm will be placed on 171 acres of vacant land on Startown Road. It will power the $1 billion data center that opened earlier this year and helps to power Apple's online services, including iCloud and iTunes.
Another major upcoming project for Apple that Um believes will contribute to increased expenses in 2012 is the company's new 13,000-employee campus in Cupertino. Work on the campus, dubbed a "spaceship" by late Apple co-founder Steve Jobs at a city meeting in June, is expected to begin in 2012, in preparation for an opening in 2015.
Other capital expenditure increases from Apple in 2012 will come from new retail expansions by the company. Apple has said it plans to build 40 new stores next year, with two-thirds of those overseas, helping to increase its retail capital expenses from $614 million to $900 million.
Comments
Sweet, we have figures on how much this will cost Apple, but I wonder how many jobs this will create temporary and otherwise. The places are not built and maintained by themselves.
It will be very interesting to see to what extent the solar farm reduces the carbon footprint of the server farm, and how it impacts the running of it over time.
Just as my grandma says - money makes money.
I wish my wife thought the same. She's more of the opinion that money needs spending immediately.
Sweet, we have figures on how much this will cost Apple, but I wonder how many jobs this will create temporary and otherwise.
As few as possible, hopefully. Gotta keep expenses low so the profits will be high. Apple's first responsibility is to its stockholders. The local economy is not even on their list of corporate priorities.
If so, another competitive advantage
My hope is that the solar farm will reap substantial cost savings over time. Substantial enough to impact Apple iCloud operating expenses. It can't only be about being greener
If so, another competitive advantage
Apple has a huge horde of cash, and in 'normal' economic times they can usually get some solid returns from it. In today's environment it makes sense to build a solar farm if you have a ton of cash. The returns are small, but compared to what Apple is getting just sitting on the cash, it is greater.
If the price of energy continues to rise, Apple will have made a great investment.
For example $2.4B could pay for 2-3 large chip fabs (not that Apple makes its own chips). Or 2-3 more huge data centers (perhaps Siri and iCloud will need that capacity?) But for big expenditures like that, that are taking place NOW within this fiscal year, we should have already seen building permits, etc.
Perhaps Apple has decided to invest some of their cashstash overseas, and it is off the radar? Or perhaps they are building a TV manufacturing facility. LOL
Can't wait to find out.
These numbers make no sense, and a better analysis would reveal something very interesting in Apple's future:$2.4 B is a very serious amount of money. Apple did not make an error here, so they must have a plan, but as usual it is "secret".
For example $2.4B could pay for 2-3 large chip fabs (not that Apple makes its own chips). Or 2-3 more data centers (perhaps Siri and iCloud will need that capacity?) But for big expenditures like that, that are taking place NOW within this fiscal year, we should have already seen building permits, etc.
Perhaps Apple has decided to invest some of their cashstash overseas, and it is off the radar?
LOL. Can't wait to find out.
Is it possible it could be a purchase of content rights? That would double Netflix's budget.
Is it possible it could be a purchase of content rights? That would double Netflix's budget.
I think content rights would be OpEx but I don't know for sure.
If the price of energy continues to rise, Apple will have made a great investment.
Not necessarily. Without government subsidies, photovoltaic systems are rarely noted as being good investments.
It is entirely possible that Apple is profiting off of tax dollars, and as such, is making higher net returns than they would without the subsidies.
But North Carolina is not noted for clear, sunny skies. My guess is that the investment was driven by tax considerations more than any real environmental concern or any real prospect of any return on investment.
"Missing" capital expenses: $2.4 B
Can't wait to find out.
Most likely explantion is additional server farms around the globe. I think the delays recently seen in Siri responsiveness show that the NC data center isn't big enough for even today's load, never mind about a year from now. Since cloud services are now a fundamental part of Apple's business, it makes sense for them to own their server farms rather than renting them. Thus big money shifted from OpEx to CapEx.
Not necessarily. Without government subsidies, photovoltaic systems are rarely noted as being good investments.
It is entirely possible that Apple is profiting off of tax dollars, and as such, is making higher net returns than they would without the subsidies.
But North Carolina is not noted for clear, sunny skies. My guess is that the investment was driven by tax considerations more than any real environmental concern or any real prospect of any return on investment.
ALL corporate decisions are driven by tax considerations including subsidies if any. Domestic oil companies (just to take one example
It may make sense to do solar in NC as the costs have come way down on photovoltaic, while transmission losses and costs have stayed high and are increasing. To ship megawatts from Arizona to NC may not be as cost effective as a less efficient installation in NC right next door to the consumer. Just saying.
Not necessarily. Without government subsidies, photovoltaic systems are rarely noted as being good investments.
I never said without subsidies. Apple was (and so was I in my thought) including government subsidies. Solar is getting near cost effective without subsidies in the most ideal places now, but it probably is not in SC due to not only less sun, but also cheaper existing power sources.
It may make sense to do solar in NC as the costs have come way down on photovoltaic, while transmission losses and costs have stayed high and are increasing. To ship megawatts from Arizona to NC may not be as cost effective as a less efficient installation in NC right next door to the consumer. Just saying.
But a more efficient installation in NC would have been even better. Solar voltaic systems are not cost efficient, especially in a climate like that, unless the installer can get the government to hand them some cheese.
Some people think that giving taxpayer money to inefficient industries is a path to national wealth, while others disagree, and claim that socializing costs in order to create private wealth is a bad thing.
These numbers make no sense, and a better analysis would reveal something very interesting in Apple's future:
Solar Farm: 171 acres at $1 M per acre (outside cost) = $171M
New Campus: < $1 B spread over 3 years = $333M
Additional Retail: $286 M
Total known additional capex for 2012: $790 M
Total additional shown in 2012 10-K filing: $3,400 M
"Missing" capital expenses: $2.4 B
Horace Dediu of Asymco.com has done a detailed analysis of Apple's Capex and come to the conclusion that Apple is planning to double production of iOS devices in 2012.
http://www.asymco.com/2011/10/27/the...s-ios-volumes/
For example $2.4B could pay for 2-3 large chip fabs (not that Apple makes its own chips).
$2.4B wouldn't even build one fab.
Samsung, Intel and TSMC drop $5bn+ on new fabs these days, and that cost is ever increasing.