Again, does anyone think Apple's 1984 Super Bowl ad was a waste of money?
No, because it was to launch something totally and completely different that would change the world and they knew it would. It was also a different world back then as well. Today, Apple has no reason to run an ad and waste money on it. It can run on their website for virtually free and have millions see it over and over again at little to no cost.
they are earning about 1% on the $160B cash/long term investments
How do you know they are earning 1%?
Quote:
Originally Posted by mvigod
Now I'm educating people who don't know how investments are noted. When people speak of cash it means cash and liquid investments and short term marketable securities. Here you go. read this
Oh I understand the reference to cash as meaning liquid investments but how do you know they are earning 2% on 160 billion as you claimed when a lot of it is in unspecified investments. The interest earned is only on the cash portion right?
No, because it was to launch something totally and completely different that would change the world and they knew it would. It was also a different world back then as well. Today, Apple has no reason to run an ad and waste money on it. It can run on their website for virtually free and have millions see it over and over again at little to no cost.
Well you think it is alot of money but you have to get perspective. It's not to apple. They have 160B in cash and marketable securities and are generating on average 3.3B per month in free cash flow on top of that.
So if the spot was 60 seconds it cost them $8 million for that. That would be .005% of the 160 billion. It is just .24% of a single month's cash flow.
How many incremental iphones and tablets would they have to sell as a result of the ad? Assume an average selling price of $500 blended for tablets/iphones. That is just 16,000 additional iphones to pay for the ad spot. Pretty sure out of 110M viewers and the extra views on the web they could justify the ROI here.
Well you think it is alot of money but you have to get perspective. It's not to apple. They have 160B in cash and marketable securities and are generating on average 3.3B per month in free cash flow on top of that.
So if the spot was 60 seconds it cost them $8 million for that. That would be .005% of the 160 billion. It is just .24% of a single month's cash flow.
How many incremental iphones and tablets would they have to sell as a result of the ad? Assume an average selling price of $500 blended for tablets/iphones. That is just 16,000 additional iphones to pay for the ad spot. Pretty sure out of 110M viewers and the extra views on the web they could justify the ROI here.
But what benefit would it be to run an ad? Its already been said there isn't any benefit to running a SuperBowl Ad.
Oh I understand the reference to cash as meaning liquid investments but how do you know they are earning 2% on 160 billion as you claimed when a lot of it is in unspecified investments. The interest earned is only on the cash portion right?
Thanks for the info. mvigod directed me to Apple's web site to read the 10k which is where I got the chart.
Here this should help you see what they are earning and how to understand this part of apple's balance sheet.
You will see that apple generally invests in short term low yield paper. some really sub low yield like money markets. 6 month to 2 year notes yielding very little. CD's which yield close to zip still. More recently they are trying to stretch for a little more yield by going out on the curve. This leaves them exposed to and has made returns lower due to interest rate and credit risk. They are, like everyone else, living in a low yield environment so unless they put the money in riskier assets and in harms way they must settle for very low returns. Also when I say 1% that is net. They can earn 2% but they lose 3% to inflation each year. That is a 1% net loss each year. You always must compare returns to inflation rate as buying power erodes over time.
Other income was about $200 million last quarter which is less than 1% annualized
I admit I'm not a finance guy but it was my understanding that many investments can increase in value but you don't earn any income from them unless you sell them. So you are saying that 100% of the cash and cash equivalent, long and short term investments are earning some stated income?
I didn't say you did. I said what benefit would there be for Apple to run an ad? There are studies out there that suggest that SuperBowl Ads have little to no benefit except for a few select companies.
I think Apple is saving the marketing blitz for new product lines this year. Everyone watching the Superbowl already knows what an iPad and an iPhone are.
My point exactly! There's no reason for Apple to run an ad, and every if there was, unless its a major product announcement it would have little to no benefit.
Generally speaking, I agree with the sentiments behind your question (please actually read the last sentence before you attack me!), but I can imagine some arguments:
Apple has by far the largest population of users using identical devices (remember all those arguments about Android fragmentation?).
Apple devices are not cheaper (though they may bring more power to users per dollar).
Apple users accept the "ideology" of the company more than users of other company's products ("hipster conformists").
Apple's "walled garden" aims to maintain extensive control over users' use of their devices.
Punchline: That said, Google's information-gathering, hoarding, and use make it a better candidate for today's Big Brother.
I didn't say you did. I said what benefit would there be for Apple to run an ad? There are studies out there that suggest that SuperBowl Ads have little to no benefit except for a few select companies.
I'm sure some co's see little benefit and others tremendous benefit. Apple I say would yield the most. Highest net margin products. A product most people viewing are capable of purchasing. Apple is no low margin player and their products are expensive. It would take just 16,000 units to at minimum break even. 16,000 units out of 110 million viewers? Seems like a pretty low hurdle to me. Also this doesn't count future purchases from customers. What about the Android guy who changes to iphone and his next 5 phones and tablets are all apple?
I'd argue advertising on the Super Bowl would work better than their other ads which run during sitcoms, crime shows and regular tv as those are mostly skipped by DVR. Bowl ads are not skipped and instead gain focus. A rarity on tv
They are, like everyone else, living in a low yield environment so unless they put the money in riskier assets and in harms way they must settle for very low returns.
Ok but it still has nothing to do with their decision to run an ad in the super bowl or not. Clearly they have plenty of money to do so if they wanted to. I am still arguing that they probably thought the event was beneath them regardless of how many viewers were there. If that was their reasoning, I fully agree. This year's super bowl ads were largely ineffective bordering on stupidity, at least in my opinion. I'm glad Apple was not compared in that mix. Some ads were worse than others but none of them were very classy.
I was surprised to see a Maserati ad. That was probably the biggest waste of money because the message was really unbelievable. They were trying to be dramatic when they probably should have focused more on the car since they are not really a household brand and the actual car was only on the screen for a second or two. I think a lot of the ads were a waste of money because they were just trying to be clever at the expense of actually promoting the product, a classic marketing mistake.
They seem to be the only ones who know wtf they're doing in this age of changing market dynamics. Apple has *the* best mix of market share + profit. Bar none. Under Tim, now, Apple enjoyed RECORD PROFITS and RECORD SALES of everything that matters in today's market.
If Apple believes they don't need to run a Super Bowl ad, you can bet your donuts to their DOLLARS that they probably have a good reason.
Besides, what ads? The Apple brand is iconic. This stuff sells itself. Drop a smidgen of a rumour and you've already got folks reaching for their wallets.
I am amused by calls of "DOOMED" because Apple didn't throw a bunch of money at FOX to run a Super Bowl ad, or that somehow, Steve would have done it.
Both I think are wildly inaccurate characterizations.
Apple doesn't need nor rely on "event advertising" to get its message across. The company also has an enviable position of being able to create its own events and devote 60 minutes instead of 60 seconds on demonstrating whatever it wants, and writers and bloggers faithfully report it to millions of people. It doesn't need a Supoer Bowl spot. And not having one this year does not tarnish the brand one damn bit.
Good thing you are not in marketing. Apple requires less advertising to support the brand? Sure they do. They are already doing a lot less to support their brand. Samsung outspent them what 5 to 1 in 2013?
Which therefore must have resulted in 5 times more profit than Apple for Samsung, surely. Or, at least 3 times then ... 8-)
This reminds me of a follow up to the Knowledge Navigator videos. Except in this case, it's the realization and not the promise. There is a lot of hinting in this video about where Apple is going next. Medical, robotics, 3D fabrication just to name a few. One could also say this the logical follow up to the 1984 commercial in that it shows an open non-comformed world free to explore and communicate with tools that are flexible and personal instead of mindless subjects chained to a desk staring at C:\ all day long. Basically the era of peace after the war.
I am still arguing that they probably thought the event was beneath them regardless of how many viewers were there. If that was their reasoning, I fully agree.
That doesn't make sense. Why would Apple think the event is beneath them. Apple didn't want to spend money on an ad. Period.
At time 01:07ish there's a beautiful app with lots of dots, lines, etc. What is it? I'd love to give this a try on my projector like it's been demonstrated here. Thank you!!
I am still arguing that they probably thought the event was beneath them regardless of how many viewers were there. If that was their reasoning, I fully agree.
That doesn't make sense. Why would Apple think the event is beneath them. Apple didn't want to spend money on an ad. Period.
From my perspective the super bowl represents everything that is anti-apple. Apple is about science, art, sophistication, style and beauty. The super bowl, not so much.
Comments
Again, does anyone think Apple's 1984 Super Bowl ad was a waste of money?
No, because it was to launch something totally and completely different that would change the world and they knew it would. It was also a different world back then as well. Today, Apple has no reason to run an ad and waste money on it. It can run on their website for virtually free and have millions see it over and over again at little to no cost.
they are earning about 1% on the $160B cash/long term investments
How do you know they are earning 1%?
Now I'm educating people who don't know how investments are noted. When people speak of cash it means cash and liquid investments and short term marketable securities. Here you go. read this
Oh I understand the reference to cash as meaning liquid investments but how do you know they are earning 2% on 160 billion as you claimed when a lot of it is in unspecified investments. The interest earned is only on the cash portion right?
Thats the old report for period ending 9/30/13
here is the 12/31/13
http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=9731522-13565-15993&type=sect&dcn=0001193125-14-024487
cash 14.1 billon
short term investments 26.6
long term 118.1
total = $159B
Thanks for the info. mvigod directed me to Apple's web site to read the 10k which is where I got the chart.
No, because it was to launch something totally and completely different that would change the world and they knew it would. It was also a different world back then as well. Today, Apple has no reason to run an ad and waste money on it. It can run on their website for virtually free and have millions see it over and over again at little to no cost.
Well you think it is alot of money but you have to get perspective. It's not to apple. They have 160B in cash and marketable securities and are generating on average 3.3B per month in free cash flow on top of that.
So if the spot was 60 seconds it cost them $8 million for that. That would be .005% of the 160 billion. It is just .24% of a single month's cash flow.
How many incremental iphones and tablets would they have to sell as a result of the ad? Assume an average selling price of $500 blended for tablets/iphones. That is just 16,000 additional iphones to pay for the ad spot. Pretty sure out of 110M viewers and the extra views on the web they could justify the ROI here.
Well you think it is alot of money but you have to get perspective. It's not to apple. They have 160B in cash and marketable securities and are generating on average 3.3B per month in free cash flow on top of that.
So if the spot was 60 seconds it cost them $8 million for that. That would be .005% of the 160 billion. It is just .24% of a single month's cash flow.
How many incremental iphones and tablets would they have to sell as a result of the ad? Assume an average selling price of $500 blended for tablets/iphones. That is just 16,000 additional iphones to pay for the ad spot. Pretty sure out of 110M viewers and the extra views on the web they could justify the ROI here.
But what benefit would it be to run an ad? Its already been said there isn't any benefit to running a SuperBowl Ad.
How do you know they are earning 1%?
Oh I understand the reference to cash as meaning liquid investments but how do you know they are earning 2% on 160 billion as you claimed when a lot of it is in unspecified investments. The interest earned is only on the cash portion right?
Thanks for the info. mvigod directed me to Apple's web site to read the 10k which is where I got the chart.
Here this should help you see what they are earning and how to understand this part of apple's balance sheet.
http://beta.fool.com/robertbaillieul/2013/05/04/what-is-apple-doing-with-its-cash/33361/
You will see that apple generally invests in short term low yield paper. some really sub low yield like money markets. 6 month to 2 year notes yielding very little. CD's which yield close to zip still. More recently they are trying to stretch for a little more yield by going out on the curve. This leaves them exposed to and has made returns lower due to interest rate and credit risk. They are, like everyone else, living in a low yield environment so unless they put the money in riskier assets and in harms way they must settle for very low returns. Also when I say 1% that is net. They can earn 2% but they lose 3% to inflation each year. That is a 1% net loss each year. You always must compare returns to inflation rate as buying power erodes over time.
It's a great article explaining it. Enjoy
Other income was about $200 million last quarter which is less than 1% annualized
I admit I'm not a finance guy but it was my understanding that many investments can increase in value but you don't earn any income from them unless you sell them. So you are saying that 100% of the cash and cash equivalent, long and short term investments are earning some stated income?
But what benefit would it be to run an ad? Its already been said there isn't any benefit to running a SuperBowl Ad.
Who said there would be no benefit? I didn't.
Who said there would be no benefit? I didn't.
I didn't say you did. I said what benefit would there be for Apple to run an ad? There are studies out there that suggest that SuperBowl Ads have little to no benefit except for a few select companies.
I think Apple is saving the marketing blitz for new product lines this year. Everyone watching the Superbowl already knows what an iPad and an iPhone are.
My point exactly! There's no reason for Apple to run an ad, and every if there was, unless its a major product announcement it would have little to no benefit.
No. Costs were cheaper back then and the 1984 ad introduced the Mac.
I'll attack anyway. J/k.
I didn't say you did. I said what benefit would there be for Apple to run an ad? There are studies out there that suggest that SuperBowl Ads have little to no benefit except for a few select companies.
I'm sure some co's see little benefit and others tremendous benefit. Apple I say would yield the most. Highest net margin products. A product most people viewing are capable of purchasing. Apple is no low margin player and their products are expensive. It would take just 16,000 units to at minimum break even. 16,000 units out of 110 million viewers? Seems like a pretty low hurdle to me. Also this doesn't count future purchases from customers. What about the Android guy who changes to iphone and his next 5 phones and tablets are all apple?
I'd argue advertising on the Super Bowl would work better than their other ads which run during sitcoms, crime shows and regular tv as those are mostly skipped by DVR. Bowl ads are not skipped and instead gain focus. A rarity on tv
Ok but it still has nothing to do with their decision to run an ad in the super bowl or not. Clearly they have plenty of money to do so if they wanted to. I am still arguing that they probably thought the event was beneath them regardless of how many viewers were there. If that was their reasoning, I fully agree. This year's super bowl ads were largely ineffective bordering on stupidity, at least in my opinion. I'm glad Apple was not compared in that mix. Some ads were worse than others but none of them were very classy.
I was surprised to see a Maserati ad. That was probably the biggest waste of money because the message was really unbelievable. They were trying to be dramatic when they probably should have focused more on the car since they are not really a household brand and the actual car was only on the screen for a second or two. I think a lot of the ads were a waste of money because they were just trying to be clever at the expense of actually promoting the product, a classic marketing mistake.
Just leave it to Tim and co.
They seem to be the only ones who know wtf they're doing in this age of changing market dynamics. Apple has *the* best mix of market share + profit. Bar none. Under Tim, now, Apple enjoyed RECORD PROFITS and RECORD SALES of everything that matters in today's market.
If Apple believes they don't need to run a Super Bowl ad, you can bet your donuts to their DOLLARS that they probably have a good reason.
Besides, what ads? The Apple brand is iconic. This stuff sells itself. Drop a smidgen of a rumour and you've already got folks reaching for their wallets.
Both I think are wildly inaccurate characterizations.
Apple doesn't need nor rely on "event advertising" to get its message across.
The company also has an enviable position of being able to create its own events and devote 60 minutes instead of 60 seconds on demonstrating whatever it wants, and writers and bloggers faithfully report it to millions of people. It doesn't need a Supoer Bowl spot. And not having one this year does not tarnish the brand one damn bit.
Which therefore must have resulted in 5 times more profit than Apple for Samsung, surely. Or, at least 3 times then ... 8-)
Nice comment.
I am still arguing that they probably thought the event was beneath them regardless of how many viewers were there. If that was their reasoning, I fully agree.
That doesn't make sense. Why would Apple think the event is beneath them. Apple didn't want to spend money on an ad. Period.
From my perspective the super bowl represents everything that is anti-apple. Apple is about science, art, sophistication, style and beauty. The super bowl, not so much.