Apple manufacturing costs spike to highest-ever levels, seen signaling huge 'iPhone 6' & 'iWatch' la

Posted:
in Future Apple Hardware edited September 2014
Apple's manufacturing and component purchase commitments reached a record $15.4 billion last quarter, leading one analyst to tell investors on Monday that Apple is gearing up for a blockbuster fall with the launch of an "iPhone 6" and rumored "iWatch."

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Amit Daryanani of RBC Capital Markets noted in a research note provided to AppleInsider that Apple's manufacturing and component costs were up 18.5 percent year over year in the June quarter.

In addition, Apple will spend another $5.6 billion on other obligations such as tooling, capital assets, advertising, and research and development, representing a huge 300 percent year over year increase. While R&D spiked $425 million last quarter to reach a record $1.6 billion, Daryanani also took note of the "material spike" in commitments for tooling.

With Apple spending more money than ever on tooling ahead of this fall's anticipated product launches, Daryanani speculates that the company is spending ahead of the debut of not only its next-generation iPhone, but also a new product category that he believes could be the long-rumored "iWatch." Apple is expected to unveil its next iPhone at a media event on Sept. 9, while a separate event to showcase the company's first wearable device is rumored to take place in October.

While Apple's spending and commitments continue to grow, so does the company's cash: As of the end of the June quarter, Apple had $164.5 billion, with $137.7 billion of it held overseas and the remaining $28.6 billion in the U.S. Apple's overall cash balance was up $17.9 billion year over year, a 12 percent increase.

Apple is also guiding for its fiscal 2014 capital expenditures to reach a total of $11 billion, with $4.8 billion left to be spent. Apple expects to spend $500 million to build 20 new retail stores and remodel 15 more, with the remaining $10.5 billion to product tooling, manufacturing, process equipment and other items.

RBC Capital Markets has maintained its $110 price target for shares of AAPL, which it has held since late July. With $164 billion in cash amounting to a whopping $22 per share, and a "busy fall" expected, Daryanani continues to believe that shares of Apple are undervalued at their current levels.
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Comments

  • Reply 1 of 93
    I remember when the rumor was an Apple television.
  • Reply 2 of 93
    im not saying no, I'm just saying this evidence probably wouldn't get someone convicted in court.
  • Reply 3 of 93
    What would we do without the rampant speculation of analysts?
  • Reply 4 of 93
    slurpyslurpy Posts: 5,154member
    BUT BUT ALL THE APPLE HATERS TELL ME THAT APPLE DOESNT INVEST IN R&D
  • Reply 5 of 93
    Originally Posted by SpamSandwich View Post

    What would we do without the rampant speculation of analysts?

     

    Have our own private islands, having sold minuscule portions of our holdings in Apple’s stock, which never went down once.

  • Reply 6 of 93
    eightzeroeightzero Posts: 2,366member

    I very much understand secrecy and "no comment" from AAPL regarding product upgrades and releases, iPhone in particular. You can't tell people "a new, better one is coming" because they won't buy what is on the shelf.

     

    But in the case if iWatch/iTime, this makes less sense. Cook says AAPL is "deeply interested" in wearables, and thus acknowledges that these products exist. It would seem to me that AAPL would want to show off their product as soon as the form is settled on and that they really are going to do it. Since this is a new product - indeed a new product category for them - they would want to build the buzz and make the consumer tarry a moment before buying the competition.

     

    I wonder if we will see a teaser like the MacPro video last year? I would rather expect iWatch/iTime to have a different ad campaign. 

     

    Still, the same was true of iPad - the sooner you tip your hand to your competitor, the easier it is for them to catch up. But "smartwatches" are actually out there for sale, unlike iPads where were when Steve first held one up (then sat down in his chair to play with it in front of us all...)

     

    Time will tell. (!)

  • Reply 7 of 93
    I tried to preempt sog by making a joke that this meant the 5.5" iPhone was coming but he already jumped in and made his usual 5.5" iPhone post.
  • Reply 8 of 93
    normmnormm Posts: 570member
    Quote:

    Originally Posted by eightzero View Post

     

    Still, the same was true of iPad - the sooner you tip your hand to your competitor, the easier it is for them to catch up. But "smartwatches" are actually out there for sale, unlike iPads where were when Steve first held one up (then sat down in his chair to play with it in front of us all...)


    Tablets had been on sale for a decade before Steve sat down with the iPad.

     

    And of course music players were old news when the iPod debuted.  Apple isn't worried about others coming out with smart watches first.  They just want to make sure whatever they come out with is good.

  • Reply 9 of 93
    herbapouherbapou Posts: 2,221member
    Quote:

    Originally Posted by Suddenly Newton View Post



    I remember when the rumor was an Apple television.

     

    imo that thing is still in the works, at least on the set-top box side.  I am expecting both a major Apple TV refresh and an iwatch.

  • Reply 10 of 93
    herbapouherbapou Posts: 2,221member
    Quote:

    Originally Posted by alcstarheel View Post



    I tried to preempt sog by making a joke that this meant the 5.5" iPhone was coming but he already jumped in and made his usual 5.5" iPhone post.

     

    5.5, the number of the beast!

  • Reply 11 of 93
    paxmanpaxman Posts: 4,603member
    Quote:
    Originally Posted by NormM View Post

     

    Tablets had been on sale for a decade before Steve sat down with the iPad.

     

    And of course music players were old news when the iPod debuted.  Apple isn't worried about others coming out with smart watches first.  They just want to make sure whatever they come out with is good.


    Yup. For all the nay sayers and all the predictions we know precious little of the iWatch. We don't even know if one is in the works. The fact that there are lots of watch products out there already, and in spite of regular reports citing Apple speaking to people in the medical field, we know next to nothing. I (and everybody else) suspect that if Apple brings out a wearable product it will be with the intent of disrupting an existing industry in a big way. It all points to personal medicine and potentially medicare in a broader sense, but as I said, as of now we know nothing.

  • Reply 12 of 93
    jkichlinejkichline Posts: 1,336member

    Just cashed out most of my Apple stock because we needed some cash for bills. Started investing at $74/share and cashed out at $101.81 (or $712.67 equivalent).  Almost 10x investment!  I'm sad that we couldn't leave it all in, but the right time to cash out is when the market is up and you need the cash!

     

    I still have a bit in the game and hope it keeps going and will reinvest when I can!

     

    So get in while you can folks.

  • Reply 13 of 93
    solipsismxsolipsismx Posts: 19,566member
    sog35 wrote: »
    Duh!

    This is old news. 
    I read this on the SEC filings WEEKS AGO!!!!

    And that's why i said 5.5 is a lock.

    THAT IS NOT PROOF! YOU MAKING A GUESS BASED ON YOUR DESIRES! THAT IS NOT SCIENTIFIC! YOU ALMOST HAVE A HYPOTHESIS IF YOU WERE TO WORD IT PROPERLY BUT YOU DON'T HAVE PROOF!
  • Reply 14 of 93
    Quote:

     


     

    Quote:

    Originally Posted by NormM View Post

     

    Tablets had been on sale for a decade before Steve sat down with the iPad.

     

    And of course music players were old news when the iPod debuted.  Apple isn't worried about others coming out with smart watches first.  They just want to make sure whatever they come out with is good.


     

    Hah!  But the tablets before the iPad had to be used with stylus and one-contact point as well.  What Steve did that day was eye-opening.  Sure the multi-point contact screen was demonstrated before, but that form-factor and the combination of the UI was just awesome!

  • Reply 15 of 93
    solipsismxsolipsismx Posts: 19,566member
    sog35 wrote: »
    i have no desire for a 5.5 phone.

    it what the market wants. so obvious.
    even internally in April 2013 Apple knew the trend was larger phones.
    [image]

    1) THAT'S NOT PROOF!

    2) Did you even look at what Google says their size breakdown comes out to? A surprisingly small number of handsets are in the 5.5" range which means the market is buying many more smaller devices.
  • Reply 16 of 93
    eightzeroeightzero Posts: 2,366member
    Quote:
    Originally Posted by NormM View Post

     

    Tablets had been on sale for a decade before Steve sat down with the iPad.

     

    And of course music players were old news when the iPod debuted.  Apple isn't worried about others coming out with smart watches first.  They just want to make sure whatever they come out with is good.


     

    Agreed on the music players. I had a discman. But I never saw a tablet before Steve showed up with the iPad. Or I guess I should say a tablet that actually worked.

  • Reply 17 of 93
    solipsismxsolipsismx Posts: 19,566member
    sog35 wrote: »
    Samsung alone has sold over 100,000,000 phones 5 inches or bigger in the last 3 years

    the hunger for large phones is undeniable

    According to your statement the hunger was also there last year but there was no 5.5" iPhone last year. Why not?
  • Reply 18 of 93
    SpamSandwichSpamSandwich Posts: 31,191member
    Quote:
    Originally Posted by SolipsismX View Post





    THAT IS NOT PROOF! YOU MAKING A GUESS BASED ON YOUR DESIRES! THAT IS NOT SCIENTIFIC! YOU ALMOST HAVE A HYPOTHESIS IF YOU WERE TO WORD IT PROPERLY BUT YOU DON'T HAVE PROOF!

     

    Someone please change sog35's nick to SOB...

  • Reply 19 of 93
    calicali Posts: 3,495member
    More proof......

    ;)
  • Reply 20 of 93
    Quote:

    Originally Posted by NormM View Post

     

    Tablets had been on sale for a decade before Steve sat down with the iPad.

     

    And of course music players were old news when the iPod debuted.  Apple isn't worried about others coming out with smart watches first.  They just want to make sure whatever they come out with is good.


     

    My impression was always that Apple products reflected the question "with all these half-hearted attempts, what would this product category look like if it were actually done right?"  And then they make that.  And then everyone else claims it was obvious, where obviously it wasn't.

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