So what are they saving up 40B$ for?

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    Posted: 28 September 2010 03:12 PM #16

    I don’t see Apple buying RIM at all. Their cultures are too disparate. RIMs focus on corporate is not really in Apple’s DNA. As much as we’d like it otherwise, Apple is far more focused on consumer than corporate, and I don’t think they would give it due attention if they acquired RIM.

    As far as purchasing manufacturing capacity, the downside is what to do with it when things go south. Many a company has been burned with idle factories due to market (and I mean product, not trading) downturns.

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    Posted: 28 September 2010 03:26 PM #17

    Intruder - 28 September 2010 06:12 PM

    I don’t see Apple buying RIM at all. Their cultures are too disparate. RIMs focus on corporate is not really in Apple’s DNA. As much as we’d like it otherwise, Apple is far more focused on consumer than corporate, and I don’t think they would give it due attention if they acquired RIM.

    I’m not saying Apple will or even would buy RIM, but imagine if they just took the tech that RIM uses that corps rely on, and put it into iPhone 5.
    At $24B, Apple would have to sell 40M iPhones @ $600/each to break even.  Given that sales forecasts are for 18M in the Dec quarter, they would have a pretty quick return.

    And it would expand their market greatly.  Not that they’re doing a bad job of it now with most of the Fortune 500 at least trying the iPhone/iPad.

         
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    Posted: 28 September 2010 03:32 PM #18

    What is the total cost of the leasing contracts for retail stores?  A liability.

    How many more stores should Apple open?  Future expenditure and liability.

    What is the cost of building a fully automated manufacturing factory for building, say a Mac?  How many do Apple need?  A capital expenditure.

    What is the cost of building a data center?  How many do Apple need? A capital expenditure.

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    Posted: 28 September 2010 03:37 PM #19

    Mace - 28 September 2010 06:32 PM

    What is the total cost of the leasing contracts for retail stores?  A liability.

    How many more stores should Apple open?  Future expenditure and liability.

    What is the cost of building a fully automated manufacturing factory for building, say a Mac?  How many do Apple need?  A capital expenditure.

    What is the cost of building a data center?  How many do Apple need? A capital expenditure.

    Correct, of course.

    However, as others have pointed out, Apple’s free cash flow is something like $4B per quarter; which includes the leases, future stores, and data center that are already in process.  That alone could cover all the expenses you mention.

         
  • Posted: 28 September 2010 03:40 PM #20

    As I’ve said many times before, for me the importance of the cash is that it means every industry is open to Apple, and the incumbents can be forced to the negotiating table, even though they know Apple may disrupt their industry. Cellular carriers were the first big example where Apple forced an industry to change. So far, Apple hasn’t really used its financial muscle to force the content distribution business to its senses. But if anyone else looked like becoming their partner of choice, you can be sure that Apple’s cash pile would put a stop to it.

    As to buying the competition, be careful what you wish for. While Apple is a big fish, it can live an exciting and rewarding life. But if it becomes the pond, its days of changing the world are over. Mergers and acquisitions of large companies are the way that megacorps maintain the illusion of youth in their declining years. A bit like trophy wives.

         
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    Posted: 28 September 2010 03:47 PM #21

    sleepygeek - 28 September 2010 06:40 PM

    ... the importance of the cash is that it means every industry is open to Apple, and the incumbents can be forced to the negotiating table ...

    Excellent point.

    Buying competitors is out because anti-competitive behavior would attract regulatory investigations, and there are always Young Turks around.  I won’t mind a Trophy wife.

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    Posted: 28 September 2010 03:48 PM #22

    NatasRevol - 28 September 2010 06:26 PM
    Intruder - 28 September 2010 06:12 PM

    I don’t see Apple buying RIM at all. Their cultures are too disparate. RIMs focus on corporate is not really in Apple’s DNA. As much as we’d like it otherwise, Apple is far more focused on consumer than corporate, and I don’t think they would give it due attention if they acquired RIM.

    I’m not saying Apple will or even would buy RIM, but imagine if they just took the tech that RIM uses that corps rely on, and put it into iPhone 5.
    At $24B, Apple would have to sell 40M iPhones @ $600/each to break even.  Given that sales forecasts are for 18M in the Dec quarter, they would have a pretty quick return.

    And it would expand their market greatly.  Not that they’re doing a bad job of it now with most of the Fortune 500 at least trying the iPhone/iPad.

    It would be interesting to see how many IT shops would then dump the new “Apple Blackberry” just because it became Apple and not RIM. It is amazing how many refuse to even look at the tech just because of the name attached.

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    Posted: 28 September 2010 03:55 PM #23

    NatasRevol - 28 September 2010 06:37 PM
    Mace - 28 September 2010 06:32 PM

    What is the total cost of the leasing contracts for retail stores?  A liability.

    How many more stores should Apple open?  Future expenditure and liability.

    What is the cost of building a fully automated manufacturing factory for building, say a Mac?  How many do Apple need?  A capital expenditure.

    What is the cost of building a data center?  How many do Apple need? A capital expenditure.

    Correct, of course.

    However, as others have pointed out, Apple’s free cash flow is something like $4B per quarter; which includes the leases, future stores, and data center that are already in process.  That alone could cover all the expenses you mention.

    Show me the numbers.

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    Posted: 28 September 2010 04:02 PM #24

    Mace - 28 September 2010 06:55 PM
    NatasRevol - 28 September 2010 06:37 PM
    Mace - 28 September 2010 06:32 PM

    What is the total cost of the leasing contracts for retail stores?  A liability.

    How many more stores should Apple open?  Future expenditure and liability.

    What is the cost of building a fully automated manufacturing factory for building, say a Mac?  How many do Apple need?  A capital expenditure.

    What is the cost of building a data center?  How many do Apple need? A capital expenditure.

    Correct, of course.

    However, as others have pointed out, Apple’s free cash flow is something like $4B per quarter; which includes the leases, future stores, and data center that are already in process.  That alone could cover all the expenses you mention.

    Show me the numbers.

    Are you seriously saying that $16B/year and growing isn’t enough to cover a mfg facility (~$10B), another data center (~$1B), current leases, and all future store openings?  Especially when current leases & planned future store openings are already covered in OpEx and therefore have already impacted free cash flow?

         
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    Posted: 28 September 2010 04:07 PM #25

    NatasRevol - 28 September 2010 07:02 PM
    Mace - 28 September 2010 06:55 PM
    NatasRevol - 28 September 2010 06:37 PM
    Mace - 28 September 2010 06:32 PM

    What is the total cost of the leasing contracts for retail stores?  A liability.

    How many more stores should Apple open?  Future expenditure and liability.

    What is the cost of building a fully automated manufacturing factory for building, say a Mac?  How many do Apple need?  A capital expenditure.

    What is the cost of building a data center?  How many do Apple need? A capital expenditure.

    Correct, of course.

    However, as others have pointed out, Apple’s free cash flow is something like $4B per quarter; which includes the leases, future stores, and data center that are already in process.  That alone could cover all the expenses you mention.

    Show me the numbers.

    Are you seriously saying that $16B/year and growing isn’t enough to cover a mfg facility (~$10B), another data center (~$1B), current leases, and all future store openings?  Especially when current leases & planned future store openings are already covered in OpEx and therefore have already impacted free cash flow?

    I’ve no idea.  I just want to know the numbers.

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    Posted: 28 September 2010 04:18 PM #26

    Mace - 28 September 2010 07:07 PM
    NatasRevol - 28 September 2010 07:02 PM
    Mace - 28 September 2010 06:55 PM
    NatasRevol - 28 September 2010 06:37 PM
    Mace - 28 September 2010 06:32 PM

    What is the total cost of the leasing contracts for retail stores?  A liability.

    How many more stores should Apple open?  Future expenditure and liability.

    What is the cost of building a fully automated manufacturing factory for building, say a Mac?  How many do Apple need?  A capital expenditure.

    What is the cost of building a data center?  How many do Apple need? A capital expenditure.

    Correct, of course.

    However, as others have pointed out, Apple’s free cash flow is something like $4B per quarter; which includes the leases, future stores, and data center that are already in process.  That alone could cover all the expenses you mention.

    Show me the numbers.

    Are you seriously saying that $16B/year and growing isn’t enough to cover a mfg facility (~$10B), another data center (~$1B), current leases, and all future store openings?  Especially when current leases & planned future store openings are already covered in OpEx and therefore have already impacted free cash flow?

    I’ve no idea.  I just want to know the numbers.

    Since I’m not privy to Apple’s internal numbers, all I can do is point you to their last earnings statement.

    Current accounts payable (leases, and many other things): $8.4B
    Selling operating expenses: $1.4B
    Again, both are above free cash flow.

    http://www.apple.com/pr/library/2010/07/20results.html

    Interestingly, that also shows that if Apple would just put their cash in a money market fund, they’d do a lot better.  They lost $9B in ‘investing activities’ over the latest reported 9 months.

         
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    Posted: 28 September 2010 05:02 PM #27

    NatasRevol - 28 September 2010 06:26 PM
    Intruder - 28 September 2010 06:12 PM

    I don’t see Apple buying RIM at all. Their cultures are too disparate. RIMs focus on corporate is not really in Apple’s DNA. As much as we’d like it otherwise, Apple is far more focused on consumer than corporate, and I don’t think they would give it due attention if they acquired RIM.

    I’m not saying Apple will or even would buy RIM, but imagine if they just took the tech that RIM uses that corps rely on, and put it into iPhone 5.
    At $24B, Apple would have to sell 40M iPhones @ $600/each to break even.  Given that sales forecasts are for 18M in the Dec quarter, they would have a pretty quick return.

    And it would expand their market greatly.  Not that they’re doing a bad job of it now with most of the Fortune 500 at least trying the iPhone/iPad.

    Buying RIMM makes sense for MSFT - frankly, I’m surprised they haven’t made a bid already. MSFT has the cash, is already big in the enterprise space, and has all but lost the mobile battle.

    For AAPL, it makes no sense to buy RIMM - AAPL has a great product, it is making strides in the enterprise world, iPad is helping open doors for iPhones, it’s a premium product that consumers love, etc. So what do you get for $24B? Keep in mind that one of the reasons large corporations are looking at or switching to iPhones from BB is the cost and skills for buying/managing the BES Servers - what was the biggest asset for BB is starting to become a liability (very slowly though) because iOS (and Android) does not require enterprise servers. It’s just a completely different buisness model.

    I would think that they would look at acquisitions that expand/accelerate their Apple TV business model. NFLX maybe?

         
  • Posted: 28 September 2010 07:32 PM #28

    Guys, there is no way AAPL could buy RIMM (or any other smartphone manufacturer for that matter).  It would definitely not make it past the competition authorities both in the US, and more importantly, in Europe (who historically tend to be harsher).

    Think harder re potential acquisitions!  I simply can’t think of anything that would a) make sense and b) get passed the competition authorities.

         
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    Posted: 28 September 2010 07:44 PM #29

    NatasRevol - 28 September 2010 07:18 PM

    http://www.apple.com/pr/library/2010/07/20results.html

    Interestingly, that also shows that if Apple would just put their cash in a money market fund, they’d do a lot better.  They lost $9B in ‘investing activities’ over the latest reported 9 months.

    I think you’re misinterpreting the cash flow. They’ve definitely NOT lost $9B on anything. It says “cash used in investing activities” was $9.5b. Net Income over the same 9 months was $9.7b. They’re just putting the money in the bank.

         
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    Posted: 28 September 2010 07:48 PM #30

    deagol - 28 September 2010 10:44 PM
    NatasRevol - 28 September 2010 07:18 PM

    http://www.apple.com/pr/library/2010/07/20results.html

    Interestingly, that also shows that if Apple would just put their cash in a money market fund, they’d do a lot better.  They lost $9B in ‘investing activities’ over the latest reported 9 months.

    I think you’re misinterpreting the cash flow. They’ve definitely NOT lost $9B on anything. It says “cash used in investing activities” was $9.5b. Net Income over the same 9 months was $9.7b. They’re just putting the money in the bank.

    I did struggle with it, but I can only interpret it as the net cash position in investments went down $9.5B over the trailing 9 months.

    Perhaps it just means they’re buying more long term investments and so don’t have the cash.  But I guess that’s what you mean by putting it in the bank?