AAPL: Let the Games Begin!
According to many reports (including the feedback received in TMO’s Mac Gaming Forum – Ricky and Justin are working hard to keep the forum fun and informative), Apple is making a concerted effort to win back share in the gaming market. Generally speaking, gamers spend more on their systems than the average computer buyer and the gaming market represents high margin sales for computer makers.
What impresses me the most is that Apple is working very hard to address the concerns of gamers. The gaming market was pretty much ignored by Apple during its difficult years and it has had to make up for this lost time and effort. During ’96 and ’97, the years Apple lost critical mass and virtually imploded, the company was forced to make several important decisions just to survive. Mac OS X is the result of many of those decisions as is the company’s practice of using mainstream PC parts rather than go-it-alone in the use of specialty components that did little to improve performance or product quality. This has helped Apple reduce costs, product prices and new product development time. The fact that Apple is now making great strides in gaming is evidence of how far the company has come in 6 years and how hard the company is striving to become competitive in an important PC market.
In another form of computer “gaming” (and in the aftermath of the Enron collapse), attention is turning to computer industry accounting practices. Apple was the archetype of the Silicon Valley IPO and has now been in existence as a going concern for more than 25 years. Apple has one of the cleanest balance sheets in the PC business and about $4.4 in cash. A careful review of the company’s financial statements clearly evidences the company’s financial strength. Conspicuously absent from the company’s assets are bloated inventory valuations, aggressive bookings of future sales or unrealistic claims concerning the value of more amorphous assets. What you see is what you get.
Apple’s financial reporting has stood in sharp contrast to other companies in the computer business who have been forced to take multi-billion dollar write-downs on assets and which may come under scrutiny for aggressive sales and profit reporting.
Apple’s healthy cash position allows the company to be in the market for new technologies offered by companies that may be locked out of securing funding due to a fall-off of activity in the IPO market. Apple has no reason to exaggerate or inflate its earnings. The company requires neither funding via of loans or stock offerings and every dollar of declared earnings has a corresponding tax expense attached.
Apple has earned the ire of some consumers for the sometimes-hyperbolic claims of its PR hype machine as it relates to new products and claims of future functionality with OS upgrades. But this is nothing compared to the financial scrutiny of computer industry accounting practices that may occur after the Congress, federal agencies and the accounting industry revise and improve the methods used by technology companies to report and record their financial activities.
While much of the world looks to the major shows and exhibitions to see and report on Apple and its products, the quiet work being done behind the scenes may have the most important impact on AAPL and its share price.
Renewed interest in Macs among gamers and the conspicuous quality of Apple’s financial standing are just two of the things that will continue to attract investors and earn the respect of analysts.
What’s your view?
Apple has chosen to adopt a policy that prohibits its financial auditors from doing non-financial consulting work. Hype aside, this announcement should be welcomed by shareholders, employees, customers and others who have a vested interest in Apple’s financial well-being. Apple execs have stated one of the reasons for the company’s large cash position is to squelch the concerns of education buyers about Apple’s continued viability as a going concern. Legacy financial and market share issues continue to plague Apple with more risk-averse customers.
Apple’s large cash position and its conservative approach to the work performed by its auditors should provide educational and large commercial customers with an added sense of security about Apple, its future and its operations.
A Macs in Schools thread is available for view and posts in the Apple Finance Board Forum. Educators interested in following Apple’s financial and school-related events should visit the Macs in Schools and PowerSchool threads from time to time.
edited to fix link - DT
Please visit the TMO Apple Finance Board Forum early and often!
<font size=-1>[ This Message was edited by: DawnTreader on 2002-02-17 15:29 ]</font>