Okay. I worked out that if apple gets 5% to 10% interest on that 7.5 billion in cash, that means that they get
$375 to $750 MILLION dollars each year as pure profit (before tax).
compare this to $320million in profits made Q3 '05
financial wizards please enlighten us.
WHERE would apple report its interest earnings?
because, let's say Q4 '05, the interest from their 7.5billion cash reserve is say around $100-200 million.
my questions is:
1. where are (before/after tax) interest from cash reserves reported? is this just reported as how much the cash reserve increases by, minus of course the profits that go into the cash reserve?
confused
.................
edit: i'll control-c out of this loop in a while, but a final guesstimate. macobserver reports: "The company is now sitting on $7.562 billion in cash, up $450 million from the previous quarter"
so, therefore if apple made $320 million in net profits, this would mean that they made an (before/after tax?) interest of 450-320 = $130 million dollars from their cash reserves alone.
well, another great moment that will go down as a key part of the history of Steve Jobs. Make the 'riskiest' move around the highest point in Apple history. Few business leaders have that sort of balls, really, most would prefer to ride out the wave as much as possible and not take such risks...
That's actually the best time to do it.
If they did it when sales and reputation were at a nadir then it would have been said that this is the last thrash of a dying firm, and that Apple was desperate and had no answer for their problems.
But as Jobs said, going into this change when they are at the strongest that they have been for many years, with tremendous brand recognition,is the best time they could do it.
I mentioned on another thread here, that now I could see why they intro'ed 10.4 when they did, bugs and all. (as we see now, MANY bugs).
It was so that they could get it out of the way before and during the dev conf before they announced the changeover. Then after that was over they worked on getting the bugs out that they most likely would hsve fixed first if they weren't making this change. It all makes sense.
Okay. I worked out that if apple gets 5% to 10% interest on that 7.5 billion in cash, that means that they get
$375 to $750 MILLION dollars each year as pure profit (before tax).
compare this to $320million in profits made Q3 '05
financial wizards please enlighten us.
WHERE would apple report its interest earnings?
because, let's say Q4 '05, the interest from their 7.5billion cash reserve is say around $100-200 million.
my questions is:
1. where are (before/after tax) interest from cash reserves reported? is this just reported as how much the cash reserve increases by, minus of course the profits that go into the cash reserve?
confused
If a company could get 5-10% interest on their money today, there would be NO investment in capital improvements or risk taking (new plant and equipment, etc) at all. Apple might get 2-3% interest. Some of it is investments as well.
Okay. I worked out that if apple gets 5% to 10% interest on that 7.5 billion in cash, that means that they get
$375 to $750 MILLION dollars each year as pure profit (before tax).
compare this to $320million in profits made Q3 '05
financial wizards please enlighten us.
WHERE would apple report its interest earnings?
because, let's say Q4 '05, the interest from their 7.5billion cash reserve is say around $100-200 million.
my questions is:
1. where are (before/after tax) interest from cash reserves reported? is this just reported as how much the cash reserve increases by, minus of course the profits that go into the cash reserve?
confused
.................
edit: i'll control-c out of this loop in a while, but a final guesstimate. macobserver reports: "The company is now sitting on $7.562 billion in cash, up $450 million from the previous quarter"
so, therefore if apple made $320 million in net profits, this would mean that they made an (before/after tax?) interest of 450-320 = $130 million dollars from their cash reserves alone.
..................
Interest from investments falls under the head of revenue/income. Net profit includes this interest.
Apple has always made shitloads in interest. For several quarters in the 2002-2003 era, the only reason Apple reported a profit was because of interest.
edit:
Increases in cash other than from net profits could be accounted for by capital gains, which are not counted as revenue and are generally not taxable.
If a company could get 5-10% interest on their money today, there would be NO investment in capital improvements or risk taking (new plant and equipment, etc) at all. Apple might get 2-3% interest. Some of it is investments as well.
hi mel, good point re: buggy 10.4.0 and intel transition
re: interest:
see my edit above,
if my calculations are right, apple got an interest of 1.83% after tax on their cash reserves for Q3 '05. which means that they are getting 7%-8% after tax interest per year, which makes sense for a reasonably conservative investment portfolio.
hence,
i think your point about "if a company could get 5-10% interest there would be no investment in capital and risk-taking" may be off the mark.
there are companies that make 5-10% in after-tax profits each year purely through investments. those would be investment firms
apple however is a technology/digital lifestyle company, hence they make money through innovative computer-oriented hardware and software. they are making investments in capital (eg new retail stores) and research and development (eg. Tiger, Macintel). The bonus is that all these costs are offset by revenues and so the interest on the cash reserve is the icing on the cake, which is why their cash hoard continues to grow.
hi mel, good point re: buggy 10.4.0 and intel transition
re: interest:
see my edit above,
if my calculations are right, apple got an interest of 1.83% after tax on their cash reserves for Q3 '05. which means that they are getting 7%-8% after tax interest per year, which makes sense for a reasonably conservative investment portfolio.
hence,
i think your point about "if a company could get 5-10% interest there would be no investment in capital and risk-taking" may be off the mark.
there are companies that make 5-10% in after-tax profits each year purely through investments. those would be investment firms
apple however is a technology/digital lifestyle company, hence they make money through innovative computer-oriented hardware and software. they are making investments in capital (eg new retail stores) and research and development (eg. Tiger, Macintel). The bonus is that all these costs are offset by revenues and so the interest on the cash reserve is the icing on the cake, which is why their cash hoard continues to grow.
Nice talking to you again.
Remember that I said that they had investments as well. They stated that, and I read it in the quarterly reports they send me. Their interest income can't be much above prime, and no doubt is less. Prime is somewhwre around 3% right now, and that's only because Greenspan has been raising it as of late.
Investment income is something else, and without knowing what it is, I can't speak ro it. It could be money market, though with the market where it's been, that might not be good. It could be currency hedging. It could be Treasury notes, bonds, derivitives. In short, it could be almost anything.
heh cool. thanks skeptic and melgross for tha info... this financial interest (dodgy pun intended) thing is fairly new for me, following on from the geek/tech/science thing.
i'll try and read up more when i have the time. overall, great news from apple, makes me happy, although personally, i've just given up on a new iBook released before paris expo 2005. maybe i'll get an imac g5, it costs the same as an iBook 14" COMBO drive !!
i'm 26 now but i expect to do some hard time ala bernie ebbers before i reach 50
having a geek/hacker mentality like a lot of us, when dealing with financial stuff, not always a good thing
heh cool. thanks skeptic and melgross for tha info... this financial interest (dodgy pun intended) thing is fairly new for me, following on from the geek/tech/science thing.
i'll try and read up more when i have the time. overall, great news from apple, makes me happy, although personally, i've just given up on a new iBook released before paris expo 2005. maybe i'll get an imac g5, it costs the same as an iBook 14" COMBO drive !!
i'm 26 now but i expect to do some hard time ala bernie ebbers before i reach 50
having a geek/hacker mentality like a lot of us, when dealing with financial stuff, not always a good thing
You can do both. I have. I bought my first stock when I was thirteen. Let's see now, that was in 1963! I've done real well at it because the only thing I invest in is the computer industry with a light dusting of related technologies.
But then how come net profit was reported as $320 million when their cash reserve went up by $450 million ?
I haven't looked at their financial statements, and I'm more of a finance guy than an accounting guy by far (I'm a university business undergrad). Here are some potential answers to your question:
- Biggest single answer is that accounting profit/loss does not necessarily always lead to increase/decrease in cash. For example, there is something called amortization (depreciation), whereby you regularly expense the decreases in value of capital assets. This type of expense is a cashless expense.
The simplest example I can give is that if you buy a brand new car, it goes down in value over time, accounting standards dictate that this decrease in value be recognized over time (on a personal basis we just know that the car isn't worth as much, but usually don't bother to formally track this).
- Inventory may have dropped during the quarter. If you have $x in inventory, then sell it, your inventory valuations go down, and your cash is likely to go up. Of course this assumes that you don't have accounts payable (people you owe money to) and accounts receivable (people that owe you money), which leads us to:
- If someone owes you money (accounts payable) and they pay off some of their debt to you, your cash goes up, and your accounts payable goes down.
- A company can sell stock (shares) in their company, which would increase their cash position.
I won't provide any further examples of this, but just think about it like this: in the business world, profit and loss generally are not directly related to cash, i.e. $30 million profit does not directly mean an increase in cash of $30 million.
I haven't looked at their financial statements, and I'm more of a finance guy than an accounting guy by far (I'm a university business undergrad). Here are some potential answers to your question:
- Biggest single answer is that accounting profit/loss does not necessarily always lead to increase/decrease in cash. For example, there is something called amortization (depreciation), whereby you regularly expense the decreases in value of capital assets. This type of expense is a cashless expense.
The simplest example I can give is that if you buy a brand new car, it goes down in value over time, accounting standards dictate that this decrease in value be recognized over time (on a personal basis we just know that the car isn't worth as much, but usually don't bother to formally track this).
- Inventory may have dropped during the quarter. If you have $x in inventory, then sell it, your inventory valuations go down, and your cash is likely to go up. Of course this assumes that you don't have accounts payable (people you owe money to) and accounts receivable (people that owe you money), which leads us to:
- If someone owes you money (accounts payable) and they pay off some of their debt to you, your cash goes up, and your accounts payable goes down.
- A company can sell stock (shares) in their company, which would increase their cash position.
I won't provide any further examples of this, but just think about it like this: in the business world, profit and loss generally are not directly related to cash, i.e. $30 million profit does not directly mean an increase in cash of $30 million.
Very good. I might add that is after re-investment (R&D, etc)
Very good. I might add that is after re-investment (R&D, etc)
Thanks, though I just read through it again and caught a boo-boo, it should have read as
- If someone owes you money (accounts receivable) and they pay off some of their debt to you, your cash goes up, and your accounts receivable goes down.
Thanks, though I just read through it again and caught a boo-boo, it should have read as
- If someone owes you money (accounts receivable) and they pay off some of their debt to you, your cash goes up, and your accounts receivable goes down.
I read by it too. I assumed that's what you meant.
Very nice quarterly report. I will tend to agree with the points brought up about Japan. I honestly think Apple won't be successful in Japan until they do a sub-notebook, or some other "super geeky high-end" product. Japan loves small things... wonder why?
If Japan wants to increase sales here, they need to make a special edition Powerbook (or iBook) with a brighter and glossy screen (The Japanese prefer glossy screens) [/B]
I don't like those glossy screens at all.
They feel cheap and candy coated. A cheesy attempt to add a cool feature.
Maybe its necessary when you have the dull graphics of Windows.
Hey there's plenty of Mac heads in Japan - as far as I remember.
But it's true there was sub-notebooks on the scene there almost four years ago now. I had an internet phone 6 years ago. And the photo phones was 5 years ago I guess. I read somewhere there's 20 odd millions with video phones these days
Wasn't it they made a Japan only slightly, sub-PB3400(c) that was big success over there....
Moreover, it's a good testing ground for new products. As millions will buy new non-standard experimental electronics..
Cummon Apple Sub ibooks plz!
yatte kure!
--- Whoever said Japanese are small these days - should simply go there --- There's an equal number of grotesquely obese kids walking/waddling about as there is in the Apple motherland...
The points brought up about Apple's decrease in Japan are extremely true. It seems that Apple's price drops in the region may not have sold any extra products for them at the same time. On the music front, Panasonic and various other Japanese companies have released mp3 players over the last year, and iRiver has been promoting their music players there too. Additionally, PSP sells on average of 20,000 units a week, which has to put a dent in the iPod's potential there. 20-some million GameBoy Advance and DS systems can also be made into mp3 players with an inexpensive Nintendo accessory (Nintendo sells on average 40,000 handhelds a week there), so I think Apple really has a hurdle to overcome if they're to make headway into the second largest market in terms of music and economy.
I also think the Apple cinema displays are a little too pricey for them for something without a TV Tuner. And I think the Mac mini would be a hit over there, if it were a little more powerful (if it's not already a hit).
Comments
$375 to $750 MILLION dollars each year as pure profit (before tax).
compare this to $320million in profits made Q3 '05
financial wizards please enlighten us.
WHERE would apple report its interest earnings?
because, let's say Q4 '05, the interest from their 7.5billion cash reserve
my questions is:
1. where are (before/after tax) interest from cash reserves reported? is this just reported as how much the cash reserve increases by, minus of course the profits that go into the cash reserve?
confused
.................
edit: i'll control-c out of this loop in a while, but a final guesstimate. macobserver reports: "The company is now sitting on $7.562 billion in cash, up $450 million from the previous quarter"
so, therefore if apple made $320 million in net profits, this would mean that they made an (before/after tax?) interest of 450-320 = $130 million dollars from their cash reserves alone.
..................
Originally posted by sunilraman
well, another great moment that will go down as a key part of the history of Steve Jobs. Make the 'riskiest' move around the highest point in Apple history. Few business leaders have that sort of balls, really, most would prefer to ride out the wave as much as possible and not take such risks...
That's actually the best time to do it.
If they did it when sales and reputation were at a nadir then it would have been said that this is the last thrash of a dying firm, and that Apple was desperate and had no answer for their problems.
But as Jobs said, going into this change when they are at the strongest that they have been for many years, with tremendous brand recognition,is the best time they could do it.
I mentioned on another thread here, that now I could see why they intro'ed 10.4 when they did, bugs and all. (as we see now, MANY bugs).
It was so that they could get it out of the way before and during the dev conf before they announced the changeover. Then after that was over they worked on getting the bugs out that they most likely would hsve fixed first if they weren't making this change. It all makes sense.
Originally posted by sunilraman
Okay. I worked out that if apple gets 5% to 10% interest on that 7.5 billion in cash, that means that they get
$375 to $750 MILLION dollars each year as pure profit (before tax).
compare this to $320million in profits made Q3 '05
financial wizards please enlighten us.
WHERE would apple report its interest earnings?
because, let's say Q4 '05, the interest from their 7.5billion cash reserve
my questions is:
1. where are (before/after tax) interest from cash reserves reported? is this just reported as how much the cash reserve increases by, minus of course the profits that go into the cash reserve?
confused
If a company could get 5-10% interest on their money today, there would be NO investment in capital improvements or risk taking (new plant and equipment, etc) at all. Apple might get 2-3% interest. Some of it is investments as well.
Originally posted by sunilraman
Okay. I worked out that if apple gets 5% to 10% interest on that 7.5 billion in cash, that means that they get
$375 to $750 MILLION dollars each year as pure profit (before tax).
compare this to $320million in profits made Q3 '05
financial wizards please enlighten us.
WHERE would apple report its interest earnings?
because, let's say Q4 '05, the interest from their 7.5billion cash reserve
my questions is:
1. where are (before/after tax) interest from cash reserves reported? is this just reported as how much the cash reserve increases by, minus of course the profits that go into the cash reserve?
confused
.................
edit: i'll control-c out of this loop in a while, but a final guesstimate. macobserver reports: "The company is now sitting on $7.562 billion in cash, up $450 million from the previous quarter"
so, therefore if apple made $320 million in net profits, this would mean that they made an (before/after tax?) interest of 450-320 = $130 million dollars from their cash reserves alone.
..................
Interest from investments falls under the head of revenue/income. Net profit includes this interest.
Apple has always made shitloads in interest. For several quarters in the 2002-2003 era, the only reason Apple reported a profit was because of interest.
edit:
Increases in cash other than from net profits could be accounted for by capital gains, which are not counted as revenue and are generally not taxable.
Originally posted by melgross
If a company could get 5-10% interest on their money today, there would be NO investment in capital improvements or risk taking (new plant and equipment, etc) at all. Apple might get 2-3% interest. Some of it is investments as well.
hi mel, good point re: buggy 10.4.0 and intel transition
re: interest:
see my edit above,
if my calculations are right, apple got an interest of 1.83% after tax on their cash reserves for Q3 '05. which means that they are getting 7%-8% after tax interest per year, which makes sense for a reasonably conservative investment portfolio.
hence,
i think your point about "if a company could get 5-10% interest there would be no investment in capital and risk-taking" may be off the mark.
there are companies that make 5-10% in after-tax profits each year purely through investments. those would be investment firms
apple however is a technology/digital lifestyle company, hence they make money through innovative computer-oriented hardware and software. they are making investments in capital (eg new retail stores) and research and development (eg. Tiger, Macintel). The bonus is that all these costs are offset by revenues and so the interest on the cash reserve is the icing on the cake, which is why their cash hoard continues to grow.
Originally posted by Sceptic
Interest from investments falls under the head of revenue/income. Net profit includes this interest.
But then how come net profit was reported as $320 million when their cash reserve went up by $450 million ?
Originally posted by sunilraman
But then how come net profit was reported as $320 million when their cash reserve went up by $450 million ?
I have edited my original post to include the following:
Capital gains account for this discrepancy. Cash from CGs are not counted as revenue, and are generally not taxable.
Originally posted by sunilraman
hi mel, good point re: buggy 10.4.0 and intel transition
re: interest:
see my edit above,
if my calculations are right, apple got an interest of 1.83% after tax on their cash reserves for Q3 '05. which means that they are getting 7%-8% after tax interest per year, which makes sense for a reasonably conservative investment portfolio.
hence,
i think your point about "if a company could get 5-10% interest there would be no investment in capital and risk-taking" may be off the mark.
there are companies that make 5-10% in after-tax profits each year purely through investments. those would be investment firms
apple however is a technology/digital lifestyle company, hence they make money through innovative computer-oriented hardware and software. they are making investments in capital (eg new retail stores) and research and development (eg. Tiger, Macintel). The bonus is that all these costs are offset by revenues and so the interest on the cash reserve is the icing on the cake, which is why their cash hoard continues to grow.
Nice talking to you again.
Remember that I said that they had investments as well. They stated that, and I read it in the quarterly reports they send me. Their interest income can't be much above prime, and no doubt is less. Prime is somewhwre around 3% right now, and that's only because Greenspan has been raising it as of late.
Investment income is something else, and without knowing what it is, I can't speak ro it. It could be money market, though with the market where it's been, that might not be good. It could be currency hedging. It could be Treasury notes, bonds, derivitives. In short, it could be almost anything.
i'll try and read up more when i have the time. overall, great news from apple, makes me happy, although personally, i've just given up on a new iBook released before paris expo 2005. maybe i'll get an imac g5, it costs the same as an iBook 14" COMBO drive !!
i'm 26 now but i expect to do some hard time ala bernie ebbers before i reach 50
having a geek/hacker mentality like a lot of us, when dealing with financial stuff, not always a good thing
Originally posted by sunilraman
heh cool. thanks skeptic and melgross for tha info... this financial interest (dodgy pun intended) thing is fairly new for me, following on from the geek/tech/science thing.
i'll try and read up more when i have the time. overall, great news from apple, makes me happy, although personally, i've just given up on a new iBook released before paris expo 2005. maybe i'll get an imac g5, it costs the same as an iBook 14" COMBO drive !!
i'm 26 now but i expect to do some hard time ala bernie ebbers before i reach 50
having a geek/hacker mentality like a lot of us, when dealing with financial stuff, not always a good thing
You can do both. I have. I bought my first stock when I was thirteen. Let's see now, that was in 1963! I've done real well at it because the only thing I invest in is the computer industry with a light dusting of related technologies.
Originally posted by sunilraman
But then how come net profit was reported as $320 million when their cash reserve went up by $450 million ?
I haven't looked at their financial statements, and I'm more of a finance guy than an accounting guy by far (I'm a university business undergrad). Here are some potential answers to your question:
- Biggest single answer is that accounting profit/loss does not necessarily always lead to increase/decrease in cash. For example, there is something called amortization (depreciation), whereby you regularly expense the decreases in value of capital assets. This type of expense is a cashless expense.
The simplest example I can give is that if you buy a brand new car, it goes down in value over time, accounting standards dictate that this decrease in value be recognized over time (on a personal basis we just know that the car isn't worth as much, but usually don't bother to formally track this).
- Inventory may have dropped during the quarter. If you have $x in inventory, then sell it, your inventory valuations go down, and your cash is likely to go up. Of course this assumes that you don't have accounts payable (people you owe money to) and accounts receivable (people that owe you money), which leads us to:
- If someone owes you money (accounts payable) and they pay off some of their debt to you, your cash goes up, and your accounts payable goes down.
- A company can sell stock (shares) in their company, which would increase their cash position.
I won't provide any further examples of this, but just think about it like this: in the business world, profit and loss generally are not directly related to cash, i.e. $30 million profit does not directly mean an increase in cash of $30 million.
Originally posted by Chagi
I haven't looked at their financial statements, and I'm more of a finance guy than an accounting guy by far (I'm a university business undergrad). Here are some potential answers to your question:
- Biggest single answer is that accounting profit/loss does not necessarily always lead to increase/decrease in cash. For example, there is something called amortization (depreciation), whereby you regularly expense the decreases in value of capital assets. This type of expense is a cashless expense.
The simplest example I can give is that if you buy a brand new car, it goes down in value over time, accounting standards dictate that this decrease in value be recognized over time (on a personal basis we just know that the car isn't worth as much, but usually don't bother to formally track this).
- Inventory may have dropped during the quarter. If you have $x in inventory, then sell it, your inventory valuations go down, and your cash is likely to go up. Of course this assumes that you don't have accounts payable (people you owe money to) and accounts receivable (people that owe you money), which leads us to:
- If someone owes you money (accounts payable) and they pay off some of their debt to you, your cash goes up, and your accounts payable goes down.
- A company can sell stock (shares) in their company, which would increase their cash position.
I won't provide any further examples of this, but just think about it like this: in the business world, profit and loss generally are not directly related to cash, i.e. $30 million profit does not directly mean an increase in cash of $30 million.
Very good. I might add that is after re-investment (R&D, etc)
Originally posted by melgross
Very good. I might add that is after re-investment (R&D, etc)
Thanks, though I just read through it again and caught a boo-boo, it should have read as
- If someone owes you money (accounts receivable) and they pay off some of their debt to you, your cash goes up, and your accounts receivable goes down.
Originally posted by Chagi
Thanks, though I just read through it again and caught a boo-boo, it should have read as
- If someone owes you money (accounts receivable) and they pay off some of their debt to you, your cash goes up, and your accounts receivable goes down.
I read by it too. I assumed that's what you meant.
Originally posted by BeigeUser
If Japan wants to increase sales here, they need to make a special edition Powerbook (or iBook) with a brighter and glossy screen (The Japanese prefer glossy screens) [/B]
I don't like those glossy screens at all.
They feel cheap and candy coated. A cheesy attempt to add a cool feature.
Maybe its necessary when you have the dull graphics of Windows.
Originally posted by scavanger
.... Japan loves small things... wonder why?
ouch...
But it's true there was sub-notebooks on the scene there almost four years ago now. I had an internet phone 6 years ago. And the photo phones was 5 years ago I guess. I read somewhere there's 20 odd millions with video phones these days
Wasn't it they made a Japan only slightly, sub-PB3400(c) that was big success over there....
Moreover, it's a good testing ground for new products. As millions will buy new non-standard experimental electronics..
Cummon Apple Sub ibooks plz!
yatte kure!
--- Whoever said Japanese are small these days - should simply go there --- There's an equal number of grotesquely obese kids walking/waddling about as there is in the Apple motherland...
I also think the Apple cinema displays are a little too pricey for them for something without a TV Tuner. And I think the Mac mini would be a hit over there, if it were a little more powerful (if it's not already a hit).