So what are they saving up 40B$ for?

  • Posted: 29 September 2010 10:39 AM #46

    I’d take $10B in 2012 and do a flash build out of an LTE Advanced network. 100Mbps to endpoints in motion, 1Gbos tp fixed endpoints. Offer service bundled with MobileMe at $99/yr. If half the iTunes customers enroll, revenue replaces capex in first year. Not sure what the opex would be, but I’m sure the subscriptions provide a full gravy train even after paying that.

         
  • Posted: 29 September 2010 07:21 PM #47

    Purchase Sprint for $30b and make every Apple product have built in 4G wimax. Can you imagine if every computer/ipod/iphone/appletv can just be turned on and automatically hooked up to the internet/cell network. Bypass the whole AT&T/Verizon problem. Sure you wont get a direct return on the investment, but when it is earning 0 anyways it doesn’t matter. How much more appealing would Apple products be? No one would be able to compete.

         
  • Posted: 29 September 2010 07:47 PM #48

    WillyPitt - 29 September 2010 10:21 PM

    Purchase Sprint for $30b and make every Apple product have built in 4G wimax. Can you imagine if every computer/ipod/iphone/appletv can just be turned on and automatically hooked up to the internet/cell network. Bypass the whole AT&T/Verizon problem. Sure you wont get a direct return on the investment, but when it is earning 0 anyways it doesn’t matter. How much more appealing would Apple products be? No one would be able to compete.

    Something like this is exactly what I’ve been expecting for some time now.  Buying Sprint would be perfect.  The one valuable thing Sprint has is a partnership with Clearwire and a boatload of WiMax frequency licenses.

         
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    Posted: 29 September 2010 08:18 PM #49

    Zeke - 29 September 2010 10:47 PM
    WillyPitt - 29 September 2010 10:21 PM

    Purchase Sprint for $30b and make every Apple product have built in 4G wimax. Can you imagine if every computer/ipod/iphone/appletv can just be turned on and automatically hooked up to the internet/cell network. Bypass the whole AT&T/Verizon problem. Sure you wont get a direct return on the investment, but when it is earning 0 anyways it doesn’t matter. How much more appealing would Apple products be? No one would be able to compete.

    Something like this is exactly what I’ve been expecting for some time now.  Buying Sprint would be perfect.  The one valuable thing Sprint has is a partnership with Clearwire and a boatload of WiMax frequency licenses.

    Any solution must be workable overseas.  GSM/Wi-fi works because most nations use these standards.  Spent so much $ just for a single market?  Don’t make sense.

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  • Posted: 29 September 2010 08:19 PM #50

    And where would the rest of the world enter into your dream scenario?
    Spending $30B for a US only connectivity solution doesn’t seem to me as a great investment.
    Can’t you think bigger and global?  :0)

         
  • Posted: 29 September 2010 08:50 PM #51

    I would sell off some of Sprint’s assets, Boost mobile/prepaid business/etc and let some one else run those and sell non-iphone users to other carriers, then use the proceeds to build out wimax in europe, or just buy a different carrier in Europe/ROW that already has a network. There is no one stop solution but you could make it work.

    Yes, 30 bills is a lot of money, but it wont exactly be missed since it is not doing anything now anyways (arguably) isn’t being valued in the stock. But it would cement Apple’s position as the ultimate consumer electronic company and give Steve the ultimate control that he desires. No more dealing with cell phone or internet providers.

         
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    Posted: 29 September 2010 09:13 PM #52

    daveynb - 29 September 2010 11:19 PM

    And where would the rest of the world enter into your dream scenario?
    Spending $30B for a US only connectivity solution doesn’t seem to me as a great investment.
    Can’t you think bigger and global?  :0)

    How about Sprint or verizon n the US and Vodafone for the rest of the world.

    Another use for the money would be a purchase of Google. I dont think antitrust issues would arise, seeing as the only market they compete in at present is in Mobile platfrom OS - and at present both companies only have small market shares - and only recently mobile ad competitors, where there are also other competitors.

    However Google is potentially apples most potent threat for future products, so if apple bought google they could cease develpoment on android, forcing carriers/phone manufactures to either develop a android OS themselves or switch to another supplier like Microsoft or symbian/meego - neither of which would likely pose any significant competition the way Googles Android development so far has.

    Not only is Google the dominant search and online ad provider of course - but it has massive data centres located around the world, which I imagine would come in handy for apple as it builds up its streaming itunes services. They also have a bunch of the worlds most talented tech minds.

    Are there any obvious downsides to apple buying google I have missed? (Apart from the huge inital purchase cost of course)

    Another option for some of that cash - Apple should buy some exclusive itunes video content to help push apple tv - something like the new George Lucas live action Star Wars TV series - make it exclusive to itunes for a month before it airs on TV/other downlaod platforms.

    [ Edited: 29 September 2010 09:15 PM by Burgess ]

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  • Posted: 29 September 2010 09:56 PM #53

    Mace - 29 September 2010 07:47 AM
    cranium - 29 September 2010 02:13 AM

    ... some upcoming anger that you can easily see coming from dissident investors who are about to get pissed for not seeing some of this cash not coming back to the shareholders. There, I said the “D” word….now come and get me!!

    Let’s pray that these dissident investors sell their shares so we can pick them up cheap.

    You want all these big holders selling? I’m not sure I’ll be able to tell that’s the reason my apple portfolio dropped, I may not be feeling happy about that. Usually i prefer when AAPL goes up, not sure why.

    Let me be clear, I’m not suggesting a dividend of the size that would start burning off the cash horde, merely enough to partially offset the soon to be increasing rate of growth.

         
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    Posted: 29 September 2010 10:04 PM #54

    iOSWeekly - 30 September 2010 12:13 AM

    Are there any obvious downsides to apple buying google I have missed? (Apart from the huge inital purchase cost of course)

    Interesting idea but… Are you serious?

    Google’s market cap is $170B (+cash) and trust me, they think they’re undervalued so they’d go at a premium… say, $250B. Apple has cash but not THAT much cash. Financing a purchase of a search giant with an unproven OS strategy by raising $200B+ of debt is the last thing Apple will do. (Not to mention, Google will never sell to Apple).

    Apple doesn’t buy competitors. Leave that to Google itself, and Microsoft.

         
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    Posted: 29 September 2010 10:13 PM #55

    cranium - 30 September 2010 12:56 AM

    You want all these big holders selling? I’m not sure I’ll be able to tell that’s the reason my apple portfolio dropped, I may not be feeling happy about that. Usually i prefer when AAPL goes up, not sure why.

    Let me be clear, I’m not suggesting a dividend of the size that would start burning off the cash horde, merely enough to partially offset the soon to be increasing rate of growth.

    I don’t buy the argument. People (and institutions) invest for profit. Profit comes in 2 flavors:
    1) Capital appreciation
    2) Dividends

    Dividend-paying companies are typically slow-growth, maturing, or mature companies, and investors do not foresee further growth.

    Growth companies do not typically pay out dividends. Apple is a growing company. Rational investors that are in AAPL right now should have invested for only one reason: capital appreciation.

    I don’t understand the type of investor who buys AAPL today in the hopes of maybe paying a one-time dividend tomorrow.

    Moreover, dividends are taxed twice. Capital appreciation is superior.

    Finally, to reverse your argument, paying a dividend would attract new investors (the dividend-loving folk) but those investors tend to be risk averse and very-very impatient. Any hiccups in growth will result in sell-offs and further price swings.

         
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    Posted: 29 September 2010 10:22 PM #56

    BillH - 29 September 2010 04:32 AM
    Mav - 29 September 2010 03:57 AM

    Apple is a “Real Artists Ship” company.  We’ll never see Apple Labs so long as SJ is CEO.

    Maybe, but I do recall reports of a mea culpa to one of the HP guys when he was kicked out of Apple that had to do with him dropping a mantle that was bestowed upon him or sum such.  That would leave me believing that there is a bit of pioneer and not just builder in him.  Besides…,he’s more than fulfilled his shipping ambitions and may be open to considering “what’s next”.

    Yes, I was just quoting this passage in another thread: ?I felt that I had let the previous generation of entrepreneurs down?that I had dropped the baton as it was being passed to me. I met with David Packard and Bob Noyce and tried to apologize for screwing up so badly. I was a very public failure, and I even thought about running away from the valley. But something slowly began to dawn on me: I still loved what I did. The turn of events at Apple had not changed that one bit. I had been rejected, but I was still in love. And so I decided to start over.?

    I agree with you, and would (eventually) welcome more R&D investment by Apple. To others: yes, real artists ship - but remember that Apple always borrowed technology from others (Xerox being the obvious example). As the other tech giants slowly but steadily close off their R&D labs and move to commoditized models, Apple might need to build its own playground.

    I also agree with incorrigible: Cash, in the eyes of SJ and Apple, is best protection against black swans.

    IMHO, we won’t see the cash pile decrease for some time, despite for cries on AFB (and in the blogosphere) to spend it or give it back. We can speculate what could become of it, but while SJ is at the helm, the cash is staying with the company.

         
  • Posted: 29 September 2010 11:01 PM #57

    I think the purchase of any wireless communication company - much less for billions of dollars is a no go.  Google would be dumb.

    If anything, funding some independent content production might make sense and would be a hell of a lot less expensive, but I am not sure I would be in favor of that - but I can see some Jobsian reasoning that might support it.

         
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    Posted: 30 September 2010 02:05 AM #58

    Roman - 30 September 2010 01:22 AM
    BillH - 29 September 2010 04:32 AM
    Mav - 29 September 2010 03:57 AM

    Apple is a “Real Artists Ship” company.  We’ll never see Apple Labs so long as SJ is CEO.

    Maybe, but I do recall reports of a mea culpa to one of the HP guys when he was kicked out of Apple that had to do with him dropping a mantle that was bestowed upon him or sum such.  That would leave me believing that there is a bit of pioneer and not just builder in him.  Besides…,he’s more than fulfilled his shipping ambitions and may be open to considering “what’s next”.

    Yes, I was just quoting this passage in another thread: ?I felt that I had let the previous generation of entrepreneurs down?that I had dropped the baton as it was being passed to me. I met with David Packard and Bob Noyce and tried to apologize for screwing up so badly. I was a very public failure, and I even thought about running away from the valley. But something slowly began to dawn on me: I still loved what I did. The turn of events at Apple had not changed that one bit. I had been rejected, but I was still in love. And so I decided to start over.?

    Yep, that’s from the Stanford commencement speech as I recall. 

    I would argue that SJ is fully living this dream from his perspective - who among us thought an iPhone or iPad would be a reality just 5 years ago?  It’s a crude analogy but SJ is creating “practical magic”, “functional magic”, something like that.  Transformative experiences that are easy to use, devices that are much more than the sum of their parts.  UIs that work as expected, but took incredible work to perfect that “expected” experience.  Products that change our workflow and the ways we can use technology.

    I do wonder why R&D doesn’t seem to go up much year after year, but that may just be a product of Apple’s incredible focus.  For now, with ARM’s incredible chip designs and plenty of creative component makers in the field, Apple doesn’t need to take a lot in-house to work its craft, though it certainly is with A4, battery tech, Retina Display, etc.

    [ Edited: 30 September 2010 03:34 AM by Mav ]

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    Posted: 30 September 2010 02:15 AM #59

    Mav - 30 September 2010 05:05 AM

    Yep, that’s from the Stanford commencement speech as I recall.

    It is! I’ve watched it at least a dozen times by now.

    I do wonder why R&D doesn’t seem to go up much year after year, but that may just be a product of Apple’s incredible focus.  For now, with ARM’s incredible chip designs and plenty of creative component makers in the field, Apple doesn’t need to take a lot in-house to work its craft, though it certainly is with A4, battery tech, Retina Display, etc.

    I wondered too. I agree that “focus” is the key word here. Most of the technology that Apple brings to market (such as touch) has been in the labs for a couple of decades, or at least a couple of years (not Apple’s labs, importantly). They’re the master integrators that pick the best technology and bring it to market at the right time. Still, I wouldn’t be surprised if R&D budget goes up as innovation and research start to dry out in the marketplace and others’ research labs. I’ll watch the next decade with great interest. It’s hard (though not impossible) to imagine what Apple will be doing 10 years from now.

         
  • Posted: 30 September 2010 06:38 AM #60

    I don’t really understand why there must be a dichotomy between growth stocks and dividend stocks?

    The only reason I can fathom for why a stock shouldn’t pay a dividend whilst it is a growth stock, is if the stock has the need to reinvest all the cash that it makes to finance future growth, both through intensive capex plans and through large increases in working capital.  This would naturally make sense.  A ‘growth’ stock is growing very quickly, and therefore can’t afford to spend any of the cash it generates on distributing it to shareholders through dividends. 

    However, now imagine a scenario where there’s a magical company that is both growing exceptionally quickly, but also has more than enough cash generation to pay a dividend, without causing it to slow its growth (due to cash constraints).  Would you still argue that this ‘growth’ stock not pay a dividend or finance a stock buyback?

    I personally think AAPL is exactly the sort of company that could finance a dividend (or preferably a stock buyback, given how dividends are double taxed) whilst continuing to grow at the exact same rate it would without.  Can anyone even argue that spending some of their cash hoard would stint AAPL’s growth in the future?  So far the arguments for what AAPL could do with the cash border on impossible (buying RIMM, GOOG etc.) or else don’t fully utilise the significant resources the company has (enhanced manufacturing capacity/vertical integration, enhanced store rollouts etc.).