Apple's spending on acquisitions surged to $525 million last quarter

Posted:
in General Discussion edited February 2014
While investors continue to fret over what Apple plans to do with its $159 billion in cash and investments, the company is quietly spending far more than previously on its secretive acquisitions, exceeding a half-billion dollars last quarter alone.

Acquisitions


Apple revealed in its quarterly 10-Q filing with the U.S. Securities and Exchange Commission that it spent $525 million on acquisitions in the three-month period that ended Dec. 28, 2013. That was up from $284 million spent by the company in the same period a year prior.

Apple's spending spree in the company's first quarter of fiscal 2014 was highlighted this week by analyst Maynard Um of Wells Fargo. He believes the acquisitions made in the quarter include:
  • Personal assistant app Cue, said to be bought for at least $35 million, and first revealed by AppleInsider in October
  • 3D motion sensor firm PrimeSense, in a November deal rumored to be worth $360 million
  • Topsy, a social media analytics firm, was rumored in December to have been purchased for over $200 million
However, the rumored prices on this trio of acquisitions approach $600 million, which would suggest that either Apple paid less than was reported, or some of the deals were actually completed prior to the quarter.Apple's $525 million spent on acquisitions in the December quarter is believed to have included the purchase of three companies.

Separately, Apple was confirmed last quarter to have acquired digital mapping firm BroadMap, and note-taking start-up Catch, but both of those purchases were reportedly completed in the first half of 2013, and the deals would not be reflected in Apple's December quarter spending.

In the past, Apple's acquisitions have sometimes led directly to new products, services and functionality from the company. For example, Apple's 2012 purchase of AuthenTec led to that company's fingerprint scanning hardware appearing in the iPhone 5s as Touch ID, while Apple's 2008 acquisition of Lala paved the way for iTunes Match and cloud-streaming music.

Apple made a number of acquisitions in 2013, a good portion of which were related to mapping, signaling that the company is acquiring talent in an effort to bolster its own Maps product for iOS and OS X. Among those purchases was public transit and navigation firm HopStop, crowd-sourced mapping data startup Locationary, and indoor GPS company WifiSLAM.
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Comments

  • Reply 1 of 103
    jungmarkjungmark Posts: 6,705member
    Apple should spend $12.5 billion for HTC, strip for parts and sell it off, taking billions in losses. WS loves that! /s
  • Reply 2 of 103
    macxpressmacxpress Posts: 4,896member
    Quote:

    Originally Posted by jungmark View Post



    Apple should spend $12.5 billion for HTC, strip for parts and sell it off, taking billions in losses. WS loves that! /s

     

    Or they could buy HTC and sell a "cheap" iPhone. WS probably loves that too. 

     

    /s

  • Reply 3 of 103
    > Apple's $525 billion spent on acquisitions in the December quarter is believed to have included the purchase of three companies.

    Holy $*)#

    $525 Billion with a B!

    :)
  • Reply 4 of 103
    Quote:

    Originally Posted by MikhailT View Post



    > Apple's $525 billion spent on acquisitions in the December quarter is believed to have included the purchase of three companies.



    Holy $*)#



    $525 Billion with a B!



    image

     

    ... and we thought Google was blowing through cash!

  • Reply 5 of 103
    Quote:



    Originally Posted by macxpress View Post

     

     

    Or they could buy HTC and sell a "cheap" iPhone. WS probably loves that too. 

     

    /s


     

     

    Quote:
    Originally Posted by jungmark View Post



    Apple should spend $12.5 billion for HTC, strip for parts and sell it off, taking billions in losses. WS loves that! /s

     

     

    C'mon, everyone know that Apple is Wall Streets pariah!

  • Reply 6 of 103
    Lets put this into perspective. If you had $1000 in the bank, this is equivalent to you spending $3.30 in 3 months! Basically Apple bought a coffee at Starbucks (Grande size I'll grant you).
  • Reply 7 of 103

    Surged?!!  Apple spends a measly $525 million dollars in a quarter with $159 billion in the bank.  Amazon spends that much on company expansion in a month with around $6 billion in cash reserves.  Apple is such a tightwad of a company and that's why its share price is in the toilet while the rest of the stock market is on a tear.  Look at the stock market today and which tech stock is in the red.  Apple, of course, while Google and Amazon are taking off.  Tim Cook needs to get a clue on how to put some shareholder value into Apple.  It really is sickening.  

     

    Wall Street does not give brownie points to companies that hoard massive amounts of cash because it's considered wasteful.  Either put the money to work or give it to shareholders.  Google's already up about $24 and when earnings are announced the stock will jump another $100.  That's a powerhouse company.  Apple is now considered an also-ran tech company that can't even hold a lousy $500 a share level.  Apple's acquisitions appear to be useless from a value standpoint.  It seems like a no-win situation for Apple shareholders.

  • Reply 8 of 103
    Originally Posted by JamesMac View Post

    Lets put this into perspective. If you had $1000 in the bank, this is equivalent to you spending $3.30 in 3 months! Basically Apple bought a coffee at Starbucks (Grande size I'll grant you).

     

    Some people call that frugality. Wall Street strips naked and holds out their hands.

  • Reply 9 of 103
    rogifanrogifan Posts: 10,669member
    People that are so obsessed with Apple's share price should get out and put their money in Google and Amazon instead. Just don't come here with your temper tantrums when those stocks bubbles break.
  • Reply 10 of 103
    mjtomlinmjtomlin Posts: 1,876member
    Quote:

    Originally Posted by Constable Odo View Post

     

    Surged?!!  Apple spends a measly $525 million dollars in a quarter with $159 billion in the bank.  Amazon spends that much on company expansion in a month with around $6 billion in cash reserves.  Apple is such a tightwad of a company and that's why its share price is in the toilet while the rest of the stock market is on a tear.  Look at the stock market today and which tech stock is in the red.  Apple, of course, while Google and Amazon are taking off.  Tim Cook needs to get a clue on how to put some shareholder value into Apple.  It really is sickening.  

     

    Wall Street does not give brownie points to companies that hoard massive amounts of cash because it's considered wasteful.  Either put the money to work or give it to shareholders.  Google's already up about $24 and when earnings are announced the stock will jump another $100.  That's a powerhouse company.  Apple is now considered an also-ran tech company that can't even hold a lousy $500 a share level.  Apple's acquisitions appear to be useless from a value standpoint.  It seems like a no-win situation for Apple shareholders.


     

    You're either a moron, or have been hiding under a rock...

     

    http://qz.com/77761/apples-payout-to-shareholders-will-be-the-worlds-largest-ever/

  • Reply 11 of 103
    melgrossmelgross Posts: 31,743member
    mjtomlin wrote: »
    You're either a moron, or have been hiding under a rock...

    http://qz.com/77761/apples-payout-to-shareholders-will-be-the-worlds-largest-ever/
    The hiding under a rock comment is fine. But the moron comment is not. I'd like to see an apology for that to him.
  • Reply 12 of 103
    Quote:

    Originally Posted by mjtomlin View Post

     

     

    You're either a moron, or have been hiding under a rock...

     

    http://qz.com/77761/apples-payout-to-shareholders-will-be-the-worlds-largest-ever/


     

    Hmmm... from the link (which seems to underscore Odo's point):

     

    "Of course, that might be cold comfort to shareholders who thought they were waiting for the next iPhone rather than the next dividend check. Since Apple’s market capitalization peaked on Sept. 19, 2012, at about $658 billion, its market value has shrunk by 25%, vaporizing roughly $162 billion in paper wealth for shareholders."

  • Reply 13 of 103
    melgrossmelgross Posts: 31,743member
    I've felt for a long time that Apple is not using their money as well as they should. In fact, as a shareholder, I'd like to see them pay those taxes to bring home some of that money from overseas, or use their low borrowing rates against it, and make some more meangful purchases here, and to use more of it abroad to make more purchases there. They had $15 billion in cash flow last quarter, and now have almost $158 billion in cash, and that includes disbursements for dividends, and stock buybacks.

    I really do understand the need to hold cash for a rainy day, as a former business owner, but enough is enough. What are they planning here? Are they planning anything?

    I read that Apple is spending on R&D, new server farms, buying up technology companies, etc. But by the rapidly expanding cash position, it's clearly minuscule. They can build ten new $1 billion server farms a year and not cut into that cash.

    They have been so many companies that Apple could/should have bought over the years that I would have urged them to buy at the time if I could have, and posted about, that would have made a vast difference to their business, that it's frustrating.

    When Google put themselves up for sale for $5 billion, Apple could have afforded to buy them, and Google would have been happy with that. Imagine what the tech world would have been like if Apple owned Google?

    Apple could have bought Navigon when they were up for sale, instead of Nokia buying them. That was right before the iPhone came out. What would have happened if Apple had its own, well established mapping unit, in 2007, and never needed Google maps?

    How about buying Nuance before they came out with Siri? Both Google and Microsoft rely on Nuance, as does Apple, for their own voice operated systems. How would things turn out if there was nowhere for them to have gone?

    How about Skype? Apple could have gotten that for $3.4 billion, well under what Microsoft later paid for it. Think of Apple owning that, and the services, instead of Microsoft incorporating it into their own systems.

    There have been quite a few companies that Apple could have easily acquired if they got off their duffs and realized that they could add to their services, while at the same time keep it from their competitors.

    There are companies that Apple could have aquired that Google has.

    Frankly, I'm beginning to wonder if Apple ever had the gumption to move when it needed to in a big way, and this includes the Jobs era. It's coming back to bite them in the posterior.
  • Reply 14 of 103
    Quote:
    Originally Posted by melgross View Post



    I've felt for a long time that Apple is not using their money as well as they should. In fact, as a shareholder, I'd like to see them pay those taxes to bring home some of that money from overseas, or use their low borrowing rates against it, and make some more meangful purchases here, and to use more of it abroad to make more purchases there. They had $15 billion in cash flow last quarter, and now have almost $158 billion in cash, and that includes disbursements for dividends, and stock buybacks.



    I really do understand the need to hold cash for a rainy day, as a former business owner, but enough is enough. What are they planning here? Are they planning anything?



    [snipped]



    Frankly, I'm beginning to wonder if Apple ever had the gumption to move when it needed to in a big way, and this includes the Jobs era. It's coming back to bite them in the posterior.

     

    Tim Cook (and Jobs for that matter) is a products guy. If that is his comfort zone then I don't see him straying too far afield from that.

     

    I think we have to wait yet another year to get an idea of where Cook and Company is going. If we don't see any clear indications by this time next year then I'd say Apple will be getting into deep waters.

  • Reply 15 of 103
    rogifanrogifan Posts: 10,669member
    How many large scale acquisitions/mergers have worked out in the past? It seems like more often than not they don't. I think there there is a frustration right now amongst fans and investors for Apple to do something, anything. And Apple is basically saying we know what we're doing, have patience. People's patience is running out. I'm all for Apple making an acquisition if it makes sense (personally I think Square would be a good fit for Apple's future mobile payment plans). But I don't think they should make a large acquisition just for the sake of it, just because they're swimming in cash and people are antsy for them to "do something". For me personally, I don't have enough invested in Apple stock to really matter so I'm willing to be patient and see what Apple delivers later this year.
  • Reply 16 of 103
    Quote:
    Originally Posted by Tallest Skil View Post

     
    Originally Posted by JamesMac View Post

    Lets put this into perspective. If you had $1000 in the bank, this is equivalent to you spending $3.30 in 3 months! Basically Apple bought a coffee at Starbucks (Grande size I'll grant you).

     

    Some people call that frugality. Wall Street strips naked and holds out their hands.


    Frugality is not always good business. Sometimes, you have to spend a lot upfront to get back even more later.

  • Reply 17 of 103
    Quote:

    Originally Posted by JamesMac View Post



    Lets put this into perspective. If you had $1000 in the bank, this is equivalent to you spending $3.30 in 3 months! Basically Apple bought a coffee at Starbucks (Grande size I'll grant you).

    Yes, you also have to wonder what the acquisitions have to do with their cash reserve. In those 3 months they made $13 billion in profit, about 86 times more than the $150 million they spent on acquisitions. They actually generated $23 billion from cash flow in the quarter which I think is what gets added to the cash hoard, about 150 times the acquisition sum. It's not like they dipped into any cash reserves.

     

    So, in your analogy you had $1000 in the bank at the start of the quarter, added $200 during the quarter from your salary and bought a coffee.

  • Reply 18 of 103
    Quote:

    Originally Posted by island hermit View Post

     

    Tim Cook (and Jobs for that matter) is a products guy. If that is his comfort zone then I don't see him straying too far afield from that.


    And, imho, Oppenheimer does not have a financial savvy to run a company of this size. They desperately need a new CFO who thinks like a strategist.

  • Reply 19 of 103
    melgrossmelgross Posts: 31,743member
    Tim Cook (and Jobs for that matter) is a products guy. If that is his comfort zone then I don't see him straying too far afield from that.

    I think we have to wait yet another year to get an idea of where Cook and Company is going. If we don't see any clear indications by this time next year then I'd say Apple will be getting into deep waters.

    As I said, this goes back to the Jobs philosophy. It has nothing to do with Cook particularly. He's pretty much continuing on with Jobs's policies.

    People need to stop blaming Cook for Apple's problems. I don't see Apple operating any differently now. New product categories will still take five, six, or even seven years to make an appearance.

    They need to drop some of Jobs's policies. And the one they need to drop the most is the one of only buying smaller companies for purely technical purposes, or for incomplete software that Apple can enlarge upon. They need to buy bigger companies with well developed services, or even products.

    Apple now needs to operate like a giant company, which it is. Giant companies rarely can grow quickly without buying into other areas. They also have to change some of their philosophy about product pricing. We see that the 5c didn't sell well. I can understand that. For the first time, Apple is telling people; "Hey, we've got a cheaper phone out, and everyone will know you bought that!"

    Previously, people could buy the top line phone a year or two later, while knowing that it had been the top line phone, and people who didn't know when they bought it, could think they bought it at the full price, when it first came out. It's a matter of prestige. People actually do think that way. But the 5C doesn't offer that prestige. If Apple could have made it more cheaply, and sold it for $449 instead, the bigger differential might have made a difference, but the differential wasn't enough to make up for that fact that people would be saying; "I see you bought Apple's cheaper model." That even seems to be the case overseas.

    We need new thinking, not more regurgitated Steve Jobs thought. That era is over.
  • Reply 20 of 103
    melgrossmelgross Posts: 31,743member
    rogifan wrote: »
    How many large scale acquisitions/mergers have worked out in the past? It seems like more often than not they don't. I think there there is a frustration right now amongst fans and investors for Apple to do something, anything. And Apple is basically saying we know what we're doing, have patience. People's patience is running out. I'm all for Apple making an acquisition if it makes sense (personally I think Square would be a good fit for Apple's future mobile payment plans). But I don't think they should make a large acquisition just for the sake of it, just because they're swimming in cash and people are antsy for them to "do something". For me personally, I don't have enough invested in Apple stock to really matter so I'm willing to be patient and see what Apple delivers later this year.

    Large scale acquisitions are not what you think they are. If Apple, a $180 billion a year company, buys a $3 billion a year company for $8 billion, that's not considered to be a large scale acquisition.

    A large scale acquisition is when a $30 billion a year company buys a $20 billion a year company. Or. $100 billion a year company buys $70 billion a year company. No one is advocating that. At least, I'm not.
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