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MacRumors
Dec 7, 2007, 10:26 AM
http://www.macrumors.com/images/macrumorsthreadlogo.gif (http://www.macrumors.com)

A Fortune blog (http://bigtech.blogs.fortune.cnn.com/2007/12/07/apples-15-billion-cash-hoard/) explores what Apple could be doing with their $15 billion cash reserve that they have accumulated in the past few years.

When asked about Apple's plans, chief financial officer Peter Oppenheimer simply stated that having a few billion on hand helps to fund big projects, though there reportedly had been discussion about buying back shares or issuing dividends to Apple stock holders.

Apple could use the money to make strategic acquisitions. In the recent past, Apple has acquired a number of companies, including PowerSchool, Emagic, Nothing Real, Zayante, and Fingerworks. Apple also has plans to expand into a new campus which could take up to $500 million to fund.

Article Link (http://www.macrumors.com/2007/12/07/apples-15-billion-cash-reserve/)



Grimace
Dec 7, 2007, 10:30 AM
"Apple could buy TiVo, NetFlix, and Circuit City and still have cash left over." Hopefully only buying CC to shut them down, I've had miserable experiences there.

Take the $15B and buy something a little more fun, like a new Mac Pro for me!

Spanky Deluxe
Dec 7, 2007, 10:34 AM
And in other news, Apple launches first manned mission to Mars, claiming the planet to be its own and renaming it Planet Apple.

MrCrowbar
Dec 7, 2007, 10:36 AM
And in other news, Apple launches first manned mission to Mars, claiming the planet to be its own and renaming it Planet Apple.

Also, put some majo explosives there to make it looks like the company logo. :apple: :p

ifjake
Dec 7, 2007, 10:36 AM
how much is NBC-Universal worth?

Jim Campbell
Dec 7, 2007, 10:38 AM
http://www.macrumors.com/images/macrumorsthreadlogo.gif (http://www.macrumors.com)

Apple could use the money to make strategic acquisitions.

By my reckoning, they could blow the lot on a controlling share of Adobe ...

Cheers

Jim

Squonk
Dec 7, 2007, 10:38 AM
Umm, buy a couple of really cool domain names?

No wait, I got it! Buy a black t-shirt and blue jean factory. Yeah, that's the ticket! And pay the workers a fair wage!

Grimace
Dec 7, 2007, 10:39 AM
I'd jump all over Adobe. That is actually the best thing Apple could do for the software world.

freeny
Dec 7, 2007, 10:51 AM
And in other news, Apple launches first manned mission to Mars, claiming the planet to be its own and renaming it Planet Apple.

iWorld™

Cloudsurfer
Dec 7, 2007, 10:51 AM
Can't they buy Microsoft? :rolleyes:

Grimace
Dec 7, 2007, 10:52 AM
Actually, I'd buy up Sirius/XM -- have tunes playing and then have a "buy now" option from iTunes!

dsswarehouse
Dec 7, 2007, 10:52 AM
They could buy Avid Technology, Inc. and completely control the professional audio and video market

celavato
Dec 7, 2007, 10:53 AM
"Apple could buy TiVo, NetFlix, and Circuit City and still have cash left over."

Exhibit A as to why journalists should not run companies.

olliebraves20
Dec 7, 2007, 10:53 AM
I'd jump all over Adobe. That is actually the best thing Apple could do for the software world.

I agree with you there....how nice would that be.....

mclihah2
Dec 7, 2007, 10:55 AM
Maybe they could stop being so greedy with the iPhone, and let people buy it without having to be tied into a contract that they don't want.

Hell, they'd probably make more money with it, due to volume sales!

lazyrighteye
Dec 7, 2007, 10:55 AM
That $100 store credit for early iPhone adopters now seems even more silly. :p

Jprice02
Dec 7, 2007, 10:56 AM
"700 mhz auction, expected to generate some $15 billion in FCC fun-money, draws near."

notjustjay
Dec 7, 2007, 10:56 AM
Umm, buy a couple of really cool domain names?

No wait, I got it! Buy a black t-shirt and blue jean factory. Yeah, that's the ticket! And pay the workers a fair wage!

Sweet! A Steve Jobs clothing label!

Cloudsurfer
Dec 7, 2007, 10:56 AM
Maybe they could stop being so greedy with the iPhone, and let people buy it without having to be tied into a contract that they don't want.

Hell, they'd probably make more money with it, due to volume sales!

That would totally eat iPod touch sales.

shov
Dec 7, 2007, 10:57 AM
or buy up the wireless spectrum so they don't have to deal with phone companies...

amac4me
Dec 7, 2007, 10:58 AM
Adobe has a market cap of $25 Billion, so Apple won't be buying them. Besides, Apple already has a number of competing software applications.

Apple should use the resources to expand their engineering and developer base as a means to push the innovation envelope. The Leopard delay earlier this year was a prime example of Apple having to shift developers away from Mac OS X (at least that the excuse they gave).

Apple is essentially printing cash these days so no need to make any major changes. If there is a strategic partnership or buyout option of a company that could help Apple down the road, I'm all for it. Right now, I don't think Apple needs to rush into anything.

bryanc
Dec 7, 2007, 11:01 AM
"700 mhz auction, expected to generate some $15 billion in FCC fun-money, draws near."

Beaten to it. This is what strikes me as their best investment. Even if it means having to partner with Google to build it out after they buy it.

Although I wouldn't mind seeing Apple making a major (i.e. controlling) investment in Adobe either.

Cheers

IJ Reilly
Dec 7, 2007, 11:01 AM
I'd jump all over Adobe. That is actually the best thing Apple could do for the software world.

Buying a large, existing company with a distinct corporate culture such as Adobe (even assuming a friendly buyout), is always a dicey proposition. I'm also not sure what Apple would gain by owning Adobe.

For sure I agree with the article. Apple needs to do something with this cash hoard other than continue to hoard it. A dividend would be an appropriate start.

Kaspers
Dec 7, 2007, 11:02 AM
buy those apple shares that microsoft has back.. thats 49% or so..

juanm
Dec 7, 2007, 11:02 AM
Improve their quality control system... And spend more in advertising in Europe. Ignorance about Macs is getting really annoying.

Edit: and by they way, Apple Photoshop sounds good...

DTphonehome
Dec 7, 2007, 11:02 AM
OK, as a long-time AAPL stockholder, which makes up the overwhelming majority of my holdings, here's what I think Apple should do with it:

1. Buy TiVo. It's super-cheap, and it can save the Apple TV. iTunes video store isn't working so well (see main page posting), with content providers like NBC balking, so integrating DVR functionality into the ATV will make it a must-have device. When the iTunes store first started offering video for sale, it was important for Apple to assuage the fears of the content providers by excluding DVR functionality. But in this new hostile environment, let people record their own content instead of buying it. They can of course keep the video store around for people who would like to buy content they don't have access to over the air/cable (or hate commercials), and perhaps keep the current TiVo/Amazon partnership for even more content (NBC). Think about how awesome it would be to have your Apple TiVo record shows for you and automatically transfer them into iTunes to put on your iPod. Apple and TiVo are a natural fit, with rabidly devoted fans, and they both have a commitment to gorgeous, intuitive interfaces. For a billion dollars, Apple could buy TiVo and retool the existing boxes and software. Instead of being a "hobby", the ATV could be Apple's iPod for the TV, as it was meant to be.

2. Pay a dividend. I know everyone (who isn't holding AAPL) thinks this is "greed" on the part of shareholders, but it's not. It will make Apple a genuine blue-chip, and attract many more investment dollars both from institutional investors who will have more incentive to hold Apple (as it is generating income even without selling the shares), as well as individual investors who will view the stock as less risky, as it will pay a guaranteed amount like a CD or other interest-bearing security. It will raise the share price dramatically, as well as the perceived value of the company and its stability.

I don't think the time is right for a buy-back. The shares are pretty highly-priced as it is, and are in no need of shoring up with a display of confidence like a buy back. If AAPL were to dip dramatically for some reason, a buy back would be appropriate.

DTphonehome
Dec 7, 2007, 11:05 AM
Beaten to it. This is what strikes me as their best investment. Even if it means having to partner with Google to build it out after they buy it.

Although I wouldn't mind seeing Apple making a major (i.e. controlling) investment in Adobe either.

Cheers

I disagree. It's a very large investment that would eat up all their cash reserves. They would still have to invest tens of billions to build the actual infrastructure. Google could help, but it's still too pricey. And the wireless-provider business is cut-throat and Apple is in no way guaranteed success. How long would it be before Apple would generate enough profit to cover the initial investment, and would that money have been better spent in other areas?

netdog
Dec 7, 2007, 11:07 AM
Maybe Jobs would sell them Pixar.

DTphonehome
Dec 7, 2007, 11:08 AM
Apple needs to do something with this cash hoard other than continue to hoard it. A dividend would be an appropriate start.

Agreed, and I'll provide an analogy: Imagine your local government begins to generate tremendous surpluses year after year. Voters will demand either major capital projects, or a significant tax decrease. It's important to have a cushion against hard times, but if it's too big you have to consider where the money is better spent.

lazyrighteye
Dec 7, 2007, 11:08 AM
No wait, I got it! Buy a black t-shirt and blue jean factory. Yeah, that's the ticket! And pay the workers a fair wage!

Sweet! A Steve Jobs clothing label!

It's called Gap (http://www.gap.com).

Squonk
Dec 7, 2007, 11:10 AM
It's called Gap (http://www.gap.com).

Right!

Buy Gap.
Rename iGap.
Sell iPod socks and such.

chameleon
Dec 7, 2007, 11:21 AM
How about buying Dell? Wouldn't that ruffle feathers?

Seriously though, I think Adobe or Tivo make the most sense.

Yes, Adobe is more than 15B, but they could cover the remainder with stock or loans. Having Photoshop under their control gives them enormous leverage in the computer business. Imagine if the PC version of Photoshop was always 1 year behind the Mac version? There's a pretty big incentive to leave windows for anyone in the creative industry.

Imagine if Acrobat was fast like Preview and not a dog like Reader?

Snapping up Tivo and turning :apple:TV into :apple:Tivo would be a huge coup too. Work out partnerships with Time Warner, Comcast, Verizon and DirecTV to include it as their default DVR. Give them a cut of iTunes Movie & TV sales and watch that market explode.

It's fun to daydream...

unity
Dec 7, 2007, 11:22 AM
iWorld™

Nah... .eWorld!

IJ Reilly
Dec 7, 2007, 11:27 AM
buy those apple shares that microsoft has back.. thats 49% or so..

Microsoft never owned more than low single digit percentage of AAPL. It is very unlikely that they own any today.

SthrnCmfrtr
Dec 7, 2007, 11:27 AM
Apple doesn't need to buy TiVO. They could just buy Elgato if they wanted to and have the exact same value, and that wouldn't make the front page of anything (except MacRumors).

DTphonehome
Dec 7, 2007, 11:30 AM
How about buying Dell? Wouldn't that ruffle feathers?


I know you aren't being serious, but Dell is still too expensive, and to what gain? Apple would be the proud owner of a horrible computer company which will likely lose vast sums of money. All just to stick it to Dell?

And while Adobe would be a nice theoretical acquisition, it's too expensive, and a partnership would accomplish very similar things.

Rocketman
Dec 7, 2007, 11:30 AM
For sure I agree with the article. Apple needs to do something with this cash hoard other than continue to hoard it. A dividend would be an appropriate start.

The article and you are both wrong.

Apple does "use" the $15B. It uses it to capitalize large projects WITHOUT THE ADDED EXPENSE OF OUTSIDE DEBT. That means every time they prepay a memory supplier $250m to get preferential deliveries, they do so without paying out 12% to some bank for the priveledge of the use of the money. That goes right to the bottom line on the other end of the transaction. They have done this repeatedly with several memory, display, chip, and storage manufacturers.

They invest in things that accelerate the velocity or turnover of high margin products thus increasing gross margins and company growth rate. Financing a growing company requires a lot of forward leaning capital expenses. They are recouped by sales, but avoiding paying 12% per annum to a bank is a direct profit margin add.

Then there are long term capital expenses like buying the former Worldcom telco facility so software update capacity is sufficient, and buying a large tract of land in their expensive home town so they can build a new campus, again with debt-free cash. The long term benefits of which will reverberate for decades. Further, should Apple change directions, they can resell those assets at a capital gain with NO DEBT HOLDING COSTS.

The savings from a debt-free strategy translate directly to the bottom line.

Rocketman

IJ Reilly
Dec 7, 2007, 11:32 AM
2. Pay a dividend. I know everyone (who isn't holding AAPL) thinks this is "greed" on the part of shareholders, but it's not. It will make Apple a genuine blue-chip, and attract many more investment dollars both from institutional investors who will have more incentive to hold Apple (as it is generating income even without selling the shares), as well as individual investors who will view the stock as less risky, as it will pay a guaranteed amount like a CD or other interest-bearing security. It will raise the share price dramatically, as well as the perceived value of the company and its stability.

Exactly. Dividends, even small ones, are considered a sign of maturity in a company, and confidence. They can also reduce the stock's volatility.

As the article correctly notes, though, companies with soaring stock prices rarely feel pressured to offer a dividend. Microsoft only did it because their stock price was virtually flat for five years.

DTphonehome
Dec 7, 2007, 11:32 AM
Apple doesn't need to buy TiVO. They could just buy Elgato if they wanted to and have the exact same value, and that wouldn't make the front page of anything (except MacRumors).

I could be wrong, but I don't think Elgato has any cablecard compatible products, which means you are really limited to over-the-air broadcasts. I don't know how their software compares to Tivo, but I'll wager Tivo wins. If Apple bought Tivo, they would have all the hardware and most of the software in place for an AppleTV relaunch in months.

lazyrighteye
Dec 7, 2007, 11:32 AM
or buy up the wireless spectrum so they don't have to deal with phone companies...

Actually, I still suspect Apple will go the service provider route at some point. Like Dot Mac on steroids or something. I suppose it would have to be after their contract with AT&T... unless, of course, there is a strategically placed loop hole.

Regardless, there has to be something to that data center acquisition last year. Right?

ross.32
Dec 7, 2007, 11:33 AM
Apple doesn't need to buy TiVO. They could just buy Elgato if they wanted to and have the exact same value, and that wouldn't make the front page of anything (except MacRumors).

They could just buy both?

DTphonehome
Dec 7, 2007, 11:33 AM
The article and you are both wrong.

Apple does "use" the $15B. It uses it to capitalize large projects WITHOUT THE ADDED EXPENSE OF OUTSIDE DEBT. That means every time they prepay a memory supplier $250m to get preferential deliveries, they do so without paying out 12% to some bank for the priveledge of the use of the money. That goes right to the bottom line on the other end of the transaction. They have done this repeatedly with several memory, display, chip, and storage manufacturers.

They invest in things that accelerate the velocity or turnover of high margin products thus increasing gross margins and company growth rate. Financing a growing company requires a lot of forward leaning capital expenses. They are recouped by sales, but avoiding paying 12% per annum to a bank is a direct profit margin add.

Then there are long term capital expenses like buying the former Worldcom telco facility so software update capacity is sufficient, and buying a large tract of land in their expensive home town so they can build a new campus, again with debt-free cash. The long term benefits of which will reverberate for decades. Further, should Apple change directions, they can resell those assets at a capital gain with NO DEBT HOLDING COSTS.

The savings from a debt-free strategy translate directly to the bottom line.

Rocketman


Who says they have to blow all $15B? They can easily afford a dividend AND a large capital project and still finance it out of pocket with plenty left over.

cameronjpu
Dec 7, 2007, 11:34 AM
buy those apple shares that microsoft has back.. thats 49% or so..

Shyeah, brilliant.

Lets see, what could possibly go wrong by pissing off Microsoft. Oh yeah! They make the only Office suite that most people think they need to have on a PC, and they do it for a tiny sliver of the market when it comes to MacOS. Yeah, lets poke them with a stick, very smart.

diamond.g
Dec 7, 2007, 11:37 AM
Apple could buy Nintendo. /Runs Away

cameronjpu
Dec 7, 2007, 11:37 AM
How about buying Dell? Wouldn't that ruffle feathers?

Seriously though, I think Adobe or Tivo make the most sense.

Yes, Adobe is more than 15B, but they could cover the remainder with stock or loans. Having Photoshop under their control gives them enormous leverage in the computer business. Imagine if the PC version of Photoshop was always 1 year behind the Mac version? There's a pretty big incentive to leave windows for anyone in the creative industry.

Smacks of AMD buying ATi and thus removing ATi from the Intel integrated market. You don't spend a lot of money on a company and immediately put in place policies that will cause that company to be worth LESS than when you bought it. Duh!

Do you not realize that Adobe makes more money selling a copy of Photoshop than Apple makes selling it's PCs?

Unspeaked
Dec 7, 2007, 11:38 AM
They could just buy both?

Yes, why not buy Tivo and Elgato and Dell and Adobe?

:rolleyes:

I really don't understand some of the suggestions being made here. Just because you have $15 billion in cash doesn't mean you have to start a hostile takeover a $25 billion company!

Clearly, some of you need to brush up on how the business world works...

Clive At Five
Dec 7, 2007, 11:39 AM
Apple doesn't need to buy TiVO. They could just buy Elgato if they wanted to and have the exact same value, and that wouldn't make the front page of anything (except MacRumors).

Eeeuuhhhwww.... I hope that doesn't happen. I don't think Apple likes DVR because it competes with iTunes. If Apple bought Elgato, they'd surely kill eyeTV. While I think adding DVR functionality to :apple:TV would give it an enormously higher value, Apple is way to stubborn to do it. Have you noticed how none of the product lines overlap at all? DVR would stomp all over iTunes.

It's also the reason we don't have mid-towers...

-Clive

DTphonehome
Dec 7, 2007, 11:39 AM
Apple could buy Nintendo. /Runs Away

I wish...Nintendo has a HUGE market cap these days...10 years ago was a different story, but Apple didn't have the money then, and was still stinging from the Pippin fiasco.

diamond.g
Dec 7, 2007, 11:39 AM
I could be wrong, but I don't think Elgato has any cablecard compatible products, which means you are really limited to over-the-air broadcasts. I don't know how their software compares to Tivo, but I'll wager Tivo wins. If Apple bought Tivo, they would have all the hardware and most of the software in place for an AppleTV relaunch in months.

If Apple brought Tivo would they have to change the existing UI?

notjustjay
Dec 7, 2007, 11:40 AM
I know you aren't being serious, but Dell is still too expensive, and to what gain?

Obviously to shut it down and give the money back to the shareholders :D

dopplerd
Dec 7, 2007, 11:40 AM
A netflix "watch instantly" function on Apple TV would make me $400 poorer. The issue with Tivo is it's basis on broadcast. In 5 -10 years EVERYTHING we watch will be IP on demand based. There will be no need for a HD based DVR because you will just stream your movies and tv shows. Comcast on-demand, netflix's Watch Instantly, and Joost are already there. Netflix would give Apple a good company with the ability to leverage its market position in the industry.

DTphonehome
Dec 7, 2007, 11:41 AM
Eeeuuhhhwww.... I hope that doesn't happen. I don't think Apple likes DVR because it competes with iTunes. If Apple bought Elgato, they'd surely kill eyeTV. While I think adding DVR functionality to :apple:TV would give it an enormously higher value, Apple is way to stubborn to do it. Have you noticed how none of the product lines overlap at all? DVR would stomp all over iTunes.

It's also the reason we don't have mid-towers...

-Clive

Like I said before, they had to woo the content providers (who HATE DVRs) in the beginning, but now that iTunes has not succeeded in video as it has in audio, it would be better for them to just let users generate their own content via DVR.

DTphonehome
Dec 7, 2007, 11:43 AM
If Apple brought Tivo would they have to change the existing UI?

Probably not too much. Make it more Apple-y, but otherwise leave it intact...it works incredibly well. Best consumer-electronics interface of any non-Apple device, in my opinion.

Obviously to shut it down and give the money back to the shareholders :D

Well played sir, well played :D

cameronjpu
Dec 7, 2007, 11:43 AM
The article and you are both wrong.

Apple does "use" the $15B. It uses it to capitalize large projects WITHOUT THE ADDED EXPENSE OF OUTSIDE DEBT. That means every time they prepay a memory supplier $250m to get preferential deliveries, they do so without paying out 12% to some bank for the priveledge of the use of the money. That goes right to the bottom line on the other end of the transaction. They have done this repeatedly with several memory, display, chip, and storage manufacturers.

Whoa there - not sure what country you're in, but here in the USA you can borrow money at around 5% if you a company like Apple.

The savings from a debt-free strategy translate directly to the bottom line.

Yikes.

Running a business debt free is not always wise. It's called leverage - use someone else's cheap money (again, I don't know where you are getting 12% from, but a large company with good credit can borrow at 5.5% right now) to earn more for yourself at higher rates of return.

If the best Apple can do with its cash is earn the 6% savings rate, it should be given back to me (an owner) so I can invest it in another company giving me higher returns.

IJ Reilly
Dec 7, 2007, 11:44 AM
The article and you are both wrong.

You misconstrue. I realize the Apple spends some of this money on capital projects, and I'm certainly aware that they are debt-free (actually, they've held no long-term debt for many years now). I am also aware that they derive some income from their cash reserves. But if this mountain of cash continues to grow as rapidly as it has, the clear implication is that Apple hasn't found as many opportunities to invest in their own future growth as they could. A company is supposed to leverage profits into more growth -- that's why the game is called capitalism. In business, holding oversized cash reserves is the equivalent of lost opportunities.

FoxyKaye
Dec 7, 2007, 11:44 AM
Apple could buy MacRumors! Oh wait, that wouldn't probably work out so well - though I bet Arn would make out OK.

It strikes me as a rare thing for a company to be that far in the black. I'd personally love some serious reinvestment in R&D, especially after the Leopard/iPhone debacle this year. It's a mixed blessing for a company to have that much cash on hand, although it does, as others have pointed out, mean that Apple can literally throw money at certain problems and make them go away or leverage its cash on hand to corner parts of the processor market.

Wow, we've come a long way from OS 7 and $2.95 share prices.

Edit:
...But if this mountain of cash continues to grow as rapidly as it has, the clear implication is that Apple hasn't found as many opportunities to invest in their own future growth as they could. A company is supposed to leverage profits into more growth -- that's why the game is called capitalism. In business, holding oversized cash reserves is the equivalent of lost opportunities.
Exactly. Which is why that much cash really is a mixed blessing.

edcrosay
Dec 7, 2007, 11:50 AM
I wish...Nintendo has a HUGE market cap these days...10 years ago was a different story, but Apple didn't have the money then, and was still stinging from the Pippin fiasco.

Nintendo is gigantic right now. They are the third most valuable company in Japan. In ALL of Japan. That is ginormous. They have a market cap of $78.8 Billion right now.
They are bigger than Sony. And Sony makes a hell of a lot more than just video games.

EDIT: The only japanese companies bigger right now are Toyota at $181.7 B and the Mitsubishi Financial Group at $112B

DTphonehome
Dec 7, 2007, 11:50 AM
Wow, we've come a long way from OS 7 and $2.95 share prices.




Ohhh to go back in time.... (not that I'm complaining too loudly...AAPL has done pretty well since 2003 when I got on board).

phgreer
Dec 7, 2007, 11:51 AM
Hmm... their was a rumor going around yesterday that CompUSA was going out of business. Apple could buy them out, convert them all to Apple Stores. Apple is about the only reason I go into my local CompUSA anyway unless it's an item like an external hard drive, blank CD/DVD's or networking gear. At least they could buy out the top performing CompUSA's with Apple Shops.

bankshot
Dec 7, 2007, 11:52 AM
I know this goes against the prime motivation of any company (make as much profit as possible) so it'll never happen. But how about selling an inexpensive minitower that's priced to compete with lower end PCs and destroy the myth that Macs are too expensive? One without the typical ridiculous 20% profit margin that Apple normally enjoys (which helped build that massive cash stockpile) but maybe only has 1 or 2% profit margin like the rest of the industry?

Steve Jobs has argued that Apple doesn't compete in this segment because it would be impossible to make a good computer at that price point:
There's some stuff in our industry that we wouldn't be proud to ship. And we just can't do it. We can't ship junk. There are thresholds we can't cross because of who we are.

I dunno. I think the real reason is the razor thin profit margins in that market segment - Apple wants more profit per machine. Too bad. I'll bet they could even take a slight loss and still come out ahead by dramatically increasing market share and enjoying the resulting "halo effect" as new Mac users get into other Apple products. But it seems like they're stuck in the mindset that they are a premium brand (true) that requires premium prices (doesn't have to be that way).

Besides, if the recent Mac Pro rumors (http://forums.macrumors.com/showthread.php?t=397124) are true, having all 8-core machines only widens the vast gap in headless machines between the Mac mini and the Pro. I know the iMac is supposed to fill that gap, but it's a slightly different market segment. Apple refuses to recognize this, but who can blame them with the money coming in faster than they can count it?

Oh well, one can dream... :rolleyes:

diamond.g
Dec 7, 2007, 11:52 AM
I wish...Nintendo has a HUGE market cap these days...10 years ago was a different story, but Apple didn't have the money then, and was still stinging from the Pippin fiasco.

I thought their market cap was only half that of Apples.

Pandaboots
Dec 7, 2007, 11:53 AM
OK, as a long-time AAPL stockholder, which makes up the overwhelming majority of my holdings, here's what I think Apple should do with it:

1. Buy TiVo. It's super-cheap, and it can save the Apple TV. iTunes video store isn't working so well (see main page posting), with content providers like NBC balking, so integrating DVR functionality into the ATV will make it a must-have device. When the iTunes store first started offering video for sale, it was important for Apple to assuage the fears of the content providers by excluding DVR functionality. But in this new hostile environment, let people record their own content instead of buying it. They can of course keep the video store around for people who would like to buy content they don't have access to over the air/cable (or hate commercials), and perhaps keep the current TiVo/Amazon partnership for even more content (NBC). Think about how awesome it would be to have your Apple TiVo record shows for you and automatically transfer them into iTunes to put on your iPod. Apple and TiVo are a natural fit, with rabidly devoted fans, and they both have a commitment to gorgeous, intuitive interfaces. For a billion dollars, Apple could buy TiVo and retool the existing boxes and software. Instead of being a "hobby", the ATV could be Apple's iPod for the TV, as it was meant to be.

2. Pay a dividend. I know everyone (who isn't holding AAPL) thinks this is "greed" on the part of shareholders, but it's not. It will make Apple a genuine blue-chip, and attract many more investment dollars both from institutional investors who will have more incentive to hold Apple (as it is generating income even without selling the shares), as well as individual investors who will view the stock as less risky, as it will pay a guaranteed amount like a CD or other interest-bearing security. It will raise the share price dramatically, as well as the perceived value of the company and its stability.

I don't think the time is right for a buy-back. The shares are pretty highly-priced as it is, and are in no need of shoring up with a display of confidence like a buy back. If AAPL were to dip dramatically for some reason, a buy back would be appropriate.

I agree totally with you.

now my $.02 - The movie and television industries are even more messed up that the music industry. Yet, somehow we have easy access to legally record any show for a minimal charge. Apple needs to just buy Tivo, get "hobby" out of their mind and make the :apple:TV the "must have" device like the iPhone or iPod. Selling a limited selection (and inferior quality) of television shows and movies at a premium price obviously isn't working. why? Because when Apple did it with music, we knew we were getting inferior product but at an attractive price and an almost unlimited selection, and also a cool gadget in which to play it on. I don't think people collect movies and TV like music. In other words, for every let's say 100 cd's owned, the average person might own maybe 10 dvd's. You get the idea, no one owns more dvd's than cd's. Therefore, a rental model makes the most sense, until everyone can agree on pricing and the quality gets better. For music, most people don't own an HD stereo that greatly benefits listening experience, so AAC or MP3's work for most people. However, with video, our eyes seem to decipher slight changes in quality more than our ears. Anyway, give us :apple:TiVo with Blu-Ray player and a rental model to iTunes. Eventually all the mess with the movie and TV industries, HD format wars, and bandwidth issue will get sorted out, Apple can then move full steam ahead with selling the content. However they will still need to give us the option to rent and keep the :apple:TiVo around for old school people that still like to buy dvds and record sports shows etc. Anyway you look at it, Apple and the industries will make $$ for every type of customer out there.

basesloaded190
Dec 7, 2007, 11:54 AM
Hmm... their was a rumor going around yesterday that CompUSA was going out of business. Apple could buy them out, convert them all to Apple Stores. Apple is about the only reason I go into my local CompUSA anyway unless it's an item like an external hard drive, blank CD/DVD's or networking gear. At least they could buy out the top performing CompUSA's with Apple Shops.

i would like to see more apple stores. correct me if im wrong but here in wisconsin the only apple store near us is either in chicago or the mall of america. i wish there were more all around! it would really make my family buy more apple stuff if they could go to the store and try the stuff out

crazytom
Dec 7, 2007, 11:57 AM
How about a nice iCar. A super-efficient, everyone-wants-one type vehicle that drives itself. They might be able to make some money with the Automotive X-prize while they're at it!

DTphonehome
Dec 7, 2007, 11:58 AM
I thought their market cap was only half that of Apples.

They're worth about $85B now, which is less than Apple, but still way too big to acquire.

DTphonehome
Dec 7, 2007, 11:59 AM
Hmm... their was a rumor going around yesterday that CompUSA was going out of business. Apple could buy them out, convert them all to Apple Stores. Apple is about the only reason I go into my local CompUSA anyway unless it's an item like an external hard drive, blank CD/DVD's or networking gear. At least they could buy out the top performing CompUSA's with Apple Shops.

Or just rent the space when CompUSA vacates? What is this obsession everyone has with Apple buying everything in sight? Acquisitions have to be logical ways to make money, people!

Lone Deranger
Dec 7, 2007, 12:06 PM
And have SoftImage XSI finally ported for OSX! I like it!! :D

While they're at it, I'd like Steve to buy Pixologic, makers of the wonderful zBrush. Then he could give preferential treatment to the OSX version over the windows version (rather than the other way around like it is now).


They could buy Avid Technology, Inc. and completely control the professional audio and video market

lazyrighteye
Dec 7, 2007, 12:07 PM
A netflix "watch instantly" function on Apple TV would make me $400 poorer. The issue with Tivo is it's basis on broadcast. In 5 -10 years EVERYTHING we watch will be IP on demand based. There will be no need for a HD based DVR because you will just stream your movies and tv shows. Comcast on-demand, netflix's Watch Instantly, and Joost are already there. Netflix would give Apple a good company with the ability to leverage its market position in the industry.

Best suggestion yet.
And not just because I'm pissed that Netflix doesn't offer 'watch instantly' to their Mac users. :rolleyes:

gkroeger
Dec 7, 2007, 12:11 PM
Apple should take a bit and pay Intuit to do a feature complete native version of QuickBooks Pro with full network support for the Mac. This is the one hitch that is preventing many small offices from switching from Windows, despite the fact that their lives would be infinitely better with Macs. (and yes, I know there are good, perhaps better alternatives on the Mac already... but most offices can't overcome the activation energy to change their entire accounting database... and they need better PC compatibility so that their accountants on PCs can still work with their company files).

lazyrighteye
Dec 7, 2007, 12:12 PM
Wow, we've come a long way from OS 7 and $2.95 share prices.

What I wouldn't do for those prices today.
Buy, buy buy! :p

DTphonehome
Dec 7, 2007, 12:13 PM
A netflix "watch instantly" function on Apple TV would make me $400 poorer. The issue with Tivo is it's basis on broadcast. In 5 -10 years EVERYTHING we watch will be IP on demand based. There will be no need for a HD based DVR because you will just stream your movies and tv shows. Comcast on-demand, netflix's Watch Instantly, and Joost are already there. Netflix would give Apple a good company with the ability to leverage its market position in the industry.

You make good points, but Tivo has been moving toward IP based on-demand as well, with Amazon Unbox and TivoCast. The hybrid model, with ability to record broadcast (which is very high bandwidth and already in virtually every US home) as well as get IP based content, is where I think the future is. ATV currently only does the IP thing, and not very well. Netflix could be a good acquisition, but I'd rather go with Tivo. While Netflix's brand would be nice to have, I would think that iTunes has about the same amount of brand recognition.

Popeye206
Dec 7, 2007, 12:13 PM
Apple should just sink some of that money in Tivo, buy them and merge Apple TV with Tivo and a movie subscription service.... life would be good!

szark
Dec 7, 2007, 12:13 PM
I think Apple is doing alright, and doesn't need to go spending their cash reserves on acquisitions that don't make much sense. Though, as a stockholder, I hope they are thinking about some possible acquisitions down the road that will benefit all of us (like the Fingerworks acquisition).

i would like to see more apple stores. correct me if im wrong but here in wisconsin the only apple store near us is either in chicago or the mall of america. i wish there were more all around! it would really make my family buy more apple stuff if they could go to the store and try the stuff out

Here's me correcting you: ;)

Bayshore -- Glendale, WI (http://www.apple.com/retail/bayshore/)
West Towne -- Madison, WI (http://www.apple.com/retail/westtowne/)
Mayfair -- Wauwatosa, WI (http://www.apple.com/retail/mayfair/)

lazyrighteye
Dec 7, 2007, 12:13 PM
Nintendo is gigantic right now. They are the third most valuable company in Japan. In ALL of Japan. That is ginormous. They have a market cap of $78.8 Billion right now.
They are bigger than Sony. And Sony makes a hell of a lot more than just video games.

EDIT: The only japanese companies bigger right now are Toyota at $181.7 B and the Mitsubishi Financial Group at $112B

WOW! I had no idea. :eek:

Rocketman
Dec 7, 2007, 12:15 PM
Who says they have to blow all $15B? They can easily afford a dividend AND a large capital project and still finance it out of pocket with plenty left over.

As IJ Reiley pointed out a stock dividend reduces stock volatility. AAPL volatility is a feature not a bug because the current strategy does several BETTER things:

1. Increases gross margins (very good for the stock price)
2. Increases growth rate (crack for stocks)
3. Lowers debt expense (very good for the stock price)

So given the choice between a 2% dividend or an add of 10% to the compound growth rate of the stock, I choose the latter, and choose not to whine about it.

Rocketman

God^Cent
Dec 7, 2007, 12:16 PM
And in other news, Apple launches first manned mission to Mars, claiming the planet to be its own and renaming it Planet Apple.

LoL the Red Planet is now the Red Apple! :apple:

MikeTheC
Dec 7, 2007, 12:18 PM
I could be wrong, but I don't think Elgato has any cablecard compatible products, which means you are really limited to over-the-air broadcasts. I don't know how their software compares to Tivo, but I'll wager Tivo wins. If Apple bought Tivo, they would have all the hardware and most of the software in place for an AppleTV relaunch in months.
More and more I'm so glad I don't watch TV, and don't have to put up with any of this nonsense.

Rocketman
Dec 7, 2007, 12:20 PM
You misconstrue. I realize the Apple spends some of this money on capital projects, and I'm certainly aware that they are debt-free (actually, they've held no long-term debt for many years now). I am also aware that they derive some income from their cash reserves. But if this mountain of cash continues to grow as rapidly as it has, the clear implication is that Apple hasn't found as many opportunities to invest in their own future growth as they could. A company is supposed to leverage profits into more growth -- that's why the game is called capitalism. In business, holding oversized cash reserves is the equivalent of lost opportunities.

I do believe the reserves are not in "cash" per-se, but in "short to medium term liquid investments". There is a guy and his staff that do nothing but manage that. I believe his line item is "proceeds from capital investments" and that well exceeds his not specifically deleniated "costs to maintain capital reserves".

Rocketman

dbwie
Dec 7, 2007, 12:21 PM
I would like to see Apple continue pumping their $ into R + D. This is what keeps them innovative and profitable, IMHO. If they start paying dividends, I would worry that they have run out of ideas.

cmcconkey
Dec 7, 2007, 12:22 PM
The best things that could come from this would be teaming with google to acquire some of the new spectrum. Get something real going with iTunes Video store with a Tivo/Netflix answer. If they would get either one of these going then there would be an insane amount of money coming in.


Christopher

lazyrighteye
Dec 7, 2007, 12:23 PM
I agree totally with you.

now my $.02 - The movie and television industries are even more messed up that the music industry. Yet, somehow we have easy access to legally record any show for a minimal charge. Apple needs to just buy Tivo, get "hobby" out of their mind and make the :apple:TV the "must have" device like the iPhone or iPod. Selling a limited selection (and inferior quality) of television shows and movies at a premium price obviously isn't working. why? Because when Apple did it with music, we knew we were getting inferior product but at an attractive price and an almost unlimited selection, and also a cool gadget in which to play it on. I don't think people collect movies and TV like music. In other words, for every let's say 100 cd's owned, the average person might own maybe 10 dvd's. You get the idea, no one owns more dvd's than cd's. Therefore, a rental model makes the most sense, until everyone can agree on pricing and the quality gets better. For music, most people don't own an HD stereo that greatly benefits listening experience, so AAC or MP3's work for most people. However, with video, our eyes seem to decipher slight changes in quality more than our ears. Anyway, give us :apple:TiVo with Blu-Ray player and a rental model to iTunes. Eventually all the mess with the movie and TV industries, HD format wars, and bandwidth issue will get sorted out, Apple can then move full steam ahead with selling the content. However they will still need to give us the option to rent and keep the :apple:TiVo around for old school people that still like to buy dvds and record sports shows etc. Anyway you look at it, Apple and the industries will make $$ for every type of customer out there.

And a main reason people don't own more movies is because who has the time to sit and watch a 2-hour movie very often?
With music, it can be playing in your car, at work, around the house, etc. Not as immersive and experience (tho it certainly can be as immersive as you like).

Apple just needs to take a different approach with movies. Period.
Let's hope they do in '08.

cmcconkey
Dec 7, 2007, 12:25 PM
And a main reason people don't own more movies is because who has the time to sit and watch a 2-hour movie very often?
With music, it can be playing in your car, at work, around the house, etc. Not as immersive and experience (tho it certainly can be as immersive as you like).

Apple just needs to take a different approach with movies. Period.
Let's hope they do in '08.

To me there are 2 mian problems. One being that there is no HD content, the second being a "rental" option. These 2 things would shoot the Video Store with some adrenaline.

Christopher

swingerofbirch
Dec 7, 2007, 12:35 PM
What is with the Adobe buyout suggestions? Is it because it took Adobe so long to put out a UB version of CS?

ilogic
Dec 7, 2007, 12:36 PM
Some of what you guys are saying is great, others are really un-amusing, buying Adobe (Yuck), Tivo UI talks? (cringe) turning CompUSA's into Apple stores??? thats where I draw the line! :mad:

First, Steve Jobs gets his own fragrance!
then, Apple builds the iStadium for all of our sports teams to play in the NY/NJ metro area!

no seriously, let Apple improve itself by tying up all the loose ends, tighter integration and more development on ingeniously designed hardware and software... and improve the "i-ecosystem" and keep it protected from greedy enemy competitors. my take. ;)

surferfromuk
Dec 7, 2007, 12:37 PM
Well this thread proves one thing - there is little out there too interest a company like Apple or at least if there is nobody here knows what it should be.

Myself, once again I'll say - EMI - the most perfect compliment to Apple and more specifically iTunes - guaranteeing the iTunes brand FOREVER!!

The exclusivity of having 'The Beatles' on iTunes alone is worth a quarter of the $7 billion it would cost.

Direct fiscal payback in 5 years - indirect ipod market gains would reduce that to more like 3 years, after that it's all gravy.

They'd be stupid to let another 'download Store' get it - plus they've got the bonus of not having to get 'too involved'

Steve could also probably do for EMI what he did for Pixar...

IJ Reilly
Dec 7, 2007, 12:37 PM
As IJ Reiley pointed out a stock dividend reduces stock volatility. AAPL volatility is a feature not a bug because the current strategy does several BETTER things:

1. Increases gross margins (very good for the stock price)
2. Increases growth rate (crack for stocks)
3. Lowers debt expense (very good for the stock price)

So given the choice between a 2% dividend or an add of 10% to the compound growth rate of the stock, I choose the latter, and choose not to whine about it.

Rocketman

You got some evidence that these are true numbers?

Apple doesn't need $15 billion in cash reserves to remain debt-free. They were debt-free when they had a billion in cash reserves.

I would also dispute the idea that cash reserves add to margins or growth rate. Dollars invested in a company's business does that -- not dollars sitting in the bank.

MikeTheC
Dec 7, 2007, 12:41 PM
LoL the Red Planet is now the Red Apple! :apple:

Here's the latest Hubble Space Telescope imagery of iMars™:

http://img205.imageshack.us/img205/5689/iworld01rz7.png

Clive At Five
Dec 7, 2007, 12:49 PM
I would also dispute the idea that cash reserves add to margins or growth rate. Dollars invested in a company's business does that -- not dollars sitting in the bank.

*claps*

Yes. More R&D gives Apple a stronger product / new products. New products = bigger & better Apple. And for shareholders, = hello AAPL.

-Clive

jellomizer
Dec 7, 2007, 12:52 PM
how much is NBC-Universal worth?

A Lot more then 15 Billion. NBC is owned by General Electric. Right now the Mkt Cap 375.24B and is the 5th largest company on the planet. So no chance. At best they can use the money to be an influential shareholder. But the money can be used better elsewhere.

twoodcc
Dec 7, 2007, 01:05 PM
i think it would be cool if they bought TiVo

IJ Reilly
Dec 7, 2007, 01:08 PM
Here's the latest Hubble Space Telescope imagery of iMars™:

:) What I want to know is, did the Martians agree to the merger, or was it a hostile takeover?

chameleon
Dec 7, 2007, 01:12 PM
New Idea: Apple Studios

After all the crap Apple has had to put up with from the Music, TV and Movie industries, why not start your own Studio?

Produce and distribute Music, TV and Movies. Bribe big names to jump ship and join Apple, and the rest will follow. When Beyonce, Sting, Justin Timberlake, JJ Abrams, Peter Jackson, Michael Bay and Kevin Smith are all making and distributing their goods through Apple Studios and iTunes, you can bet others will follow.

Cash will start flowing like water, and though you'll piss a few companies off initially, they won't have any choice but to stick with iTunes because that's where the stars are.

bketchum
Dec 7, 2007, 01:24 PM
Apple could buy MacRumors! Oh wait, that wouldn't probably work out so well - though I bet Arn would make out OK.
Ssshhh... Apple does own MacRumors.

diamond.g
Dec 7, 2007, 01:31 PM
Apple could buy 40k shares in Berkshire Hathaway...

Ted13
Dec 7, 2007, 01:35 PM
I wrote this for the comment for the Fortune blog:

Yes Steve Jobs probably has better ideas than any of us. That said: Al Feldzamen's iPhone voice recognition software idea is great. (Dictate emails, etc.) IMO Apple should have bought Dragon Naturally Speaking a long time ago -- maybe they were fooled at the time by the empty promises of an OS X version. I don't know what's involved in getting true voice recognition software working on the iPhone, but at least voice recording technology is simple, and hopefully will be out with the next firmware update.

Bidding for the 700 MHz spectrum does make sense, but wasn't this past Monday the deadline for officially entering the bidding?

Buying Adobe clearly would be one approach to start a central assault on Windows -- force over time Adobe users who still run on PCs to switch to Macs, thus dragging many a Windows only shop kicking and screaming into OS neutrality. The problem is, it is a risky proposition -- resentful users, new competition cropping up in the Windows space, Apple losing software development focus...

A strategic investment in gaming might make a little more sense -- letting MS buy Mac game developer Bunge was another big mistake. An AppleTV DVR would work, but I hardly think Apple needs to buy TiVO -- they could develop their own or buy Elgato for a lot less.

eastcoastsurfer
Dec 7, 2007, 01:40 PM
You got some evidence that these are true numbers?

Apple doesn't need $15 billion in cash reserves to remain debt-free. They were debt-free when they had a billion in cash reserves.

I would also dispute the idea that cash reserves add to margins or growth rate. Dollars invested in a company's business does that -- not dollars sitting in the bank.

I agree! A company sitting on lots of cash (and not investing in new products or whatever the company does) is a huge red flag.

As far as debt is concerned, some debt is good - especially with rates as low as they are at the moment. Why use you're own money on projects when you can leverage someone else's at a low cost.

JPark
Dec 7, 2007, 01:42 PM
Obviously to shut it down and give the money back to the shareholders :D
:eek:
Best response of the thread. Thanks for making my day.

bketchum
Dec 7, 2007, 01:48 PM
Bidding for the 700 MHz spectrum does make sense, but wasn't this past Monday the deadline for officially entering the bidding?
Indeed the deadline was on Monday. Doesn't mean that Apple isn't involved, though. Under the 700 MHz spectrum bidding system, all participants must be publicly stated. Apple likes to keep secret. It's a massive investment for Google. One could imagine a backroom deal between Apple and Google to share the spectrum after Google buys it. Google could sell half to Apple and they go into partnership. Wild idea, I know.

bketchum
Dec 7, 2007, 02:00 PM
I think we shouldn't forget that Apple's money isn't sitting in a bank account earning 0.5. That money is working very, very hard for them - invested in various ways. With that amount, Apple is getting premium rates, and has very smart people managing it. It's essentially an investment fund. Apple shouldn't spend its money simply because they have a lot of it. If there isn't anything strategically worthwhile to buy, keep that cash working hard. It's a massive revenue stream with massive margins. Further to that, the folks in Cupertino are very good at creating. Why buy something that would require a great deal of additional money to integrate when they can do it themselves for a lot less? I also wonder about the animosity created when a company starts buying up a lot of smaller companies. The monopolistic behavior of Microsoft comes to mind. When you have a company creating something from nothing - innovating - it makes them interesting and shiny. Apple does that very well.

headfuzz
Dec 7, 2007, 02:22 PM
Apple should buy Orange so that when a new rumour starts circulating nobody will be able to come out with silly comments comparing Apples to Oranges :D

Not to mention the fact it would stop all the silly business regarding having the iPhone locked to a different network in every country... Imagine:

iPhone 2.0. Available exclusively on

http://i27.photobucket.com/albums/c199/Headfuzz/apples_and_oranges.jpg

;)

MikeTheC
Dec 7, 2007, 02:34 PM
I think we shouldn't forget that Apple's money isn't sitting in a bank account earning 0.5. That money is working very, very hard for them - invested in various ways. With that amount, Apple is getting premium rates, and has very smart people managing it. It's essentially an investment fund. Apple shouldn't spend its money simply because they have a lot of it. If there isn't anything strategically worthwhile to buy, keep that cash working hard. It's a massive revenue stream with massive margins. Further to that, the folks in Cupertino are very good at creating. Why buy something that would require a great deal of additional money to integrate when they can do it themselves for a lot less? I also wonder about the animosity created when a company starts buying up a lot of smaller companies. The monopolistic behavior of Microsoft comes to mind. When you have a company creating something from nothing - innovating - it makes them interesting and shiny. Apple does that very well.
Bravo, sir. Well said. Not that Apple hasn't acquired companies, both lately and over the years, but Apple's always been more about blazing their own trail than following someone elses'.

It's nice to know Apple's in such a good financial position. It's a position most other companies would kill to be in, big, small, and everywhere in between. It's also another piece of ammo to use in talking to someone about Apple. The ignorance level out there is beginning to fall, but it's still pretty high and we need all the good, facts-backed sound bites we can get.

So long as there are a statistically significant number of people out there who are mis-informed (e.g.: Do Macs connect to the same Internet? They don't make software for Macs. But Macs are so much harder to use than Windows. There's just as many viruses for Macs as for Windows. Didn't Microsoft buy Apple up several years ago? Apple is only still around because of the iPod. Well, if Macs don't run Windows, then how could they function? And so forth, and so on...) we need every single good thing we can get to show them we're not nuts for backing Apple.

The first thing you have to have in order to argue a defensible argument is to have a defensible position. I could make every impassioned argument that Tuesday's Wednesday, that plastic bags come from plastic trees, or that cow farts cause global warming, but at the end of the day if what I'm arguing is not rational, not "defensible", then my arguments aren't, either. The second thing is to be in possession of facts, of correct information, and an actual "correct" technical understanding. As many times as I have heard moronic salesmen try to steer people away from Macs, I've also heard people trying to defend Apple or the Mac on the basis of things that are so untrue, naďve, simply incorrect or just out-and-out wrong. And more ignorance -- even if pro-Apple-biased -- we don't need.

Small White Car
Dec 7, 2007, 02:50 PM
Oohh! Buying Tivo to make a new AppleTV!

And then they can buy Dell to design their new laptops!

And buy Microsoft to design their new OS!

And buy Nokia to take over the iPhone!

And, uhm...wait. Why is ANY of this a good idea?

applehappy
Dec 7, 2007, 02:56 PM
I like the idea of Apple forcing its way into the video world via buying some entity that is already doing it. Lot's of talk out there about :apple:tv failing and in large part because iTunes hasn't made video content work as well as music. Seems to me that there will be at least one more big push to get :apple:tv working, but it seems contingent on video content and accesibility. Purchasing content directly via :apple:tv makes sense, but iTunes video content is too limited. It needs a Netflix-sized library!

I love my :apple:tv and use it to view family photos and videos as well as movies I burn from DVD and purchase on iTunes. I'd love to see it have a future.

MikeTheC
Dec 7, 2007, 03:10 PM
Forcing one's way is not a good thing, and if Apple did that, they'd be no better than Microsoft.

The best thing Apple could do is to do what they've been doing, and that is to provide an alternative product, pour their heart and soul into making it the best at what it does (either through standards, features, user interface, something else, or any combination of the above) and let the market decide for itself whether Apple's offering is more desirable than their competitors'. That's essentially what they did with the iPod and the iTMS. Look at where they are, despite the fact that there are many, many other choices out there (choices which some number of people do actually buy).

The XBox is what you get when you use the heavy-handed approach Microsoft's taken. Yes, it's a success and one could even argue that it's a self-sustaining success, but it didn't start out that way. Microsoft badly wanted entry into the gaming console market, and they used every trick they could, short of mafia assassinations to get there. I mean, what do you call it when a company goes out and buys up a ton of game software manufacturers? Does this not strike anyone the same way as when Wayne Huizenga essentially "bought" the 1997 World Series win for the Florida Marlins? There's an old saying in the fighter pilot business: The F4 Phantom is proof that, with enough thrust, you can fly a brick. And using your power or position to force your way into success is no different than that.

IJ Reilly
Dec 7, 2007, 03:14 PM
I think we shouldn't forget that Apple's money isn't sitting in a bank account earning 0.5. That money is working very, very hard for them - invested in various ways. With that amount, Apple is getting premium rates, and has very smart people managing it. It's essentially an investment fund. Apple shouldn't spend its money simply because they have a lot of it. If there isn't anything strategically worthwhile to buy, keep that cash working hard. It's a massive revenue stream with massive margins. Further to that, the folks in Cupertino are very good at creating. Why buy something that would require a great deal of additional money to integrate when they can do it themselves for a lot less? I also wonder about the animosity created when a company starts buying up a lot of smaller companies. The monopolistic behavior of Microsoft comes to mind. When you have a company creating something from nothing - innovating - it makes them interesting and shiny. Apple does that very well.

Apple isn't a financial investment company, they are a technology and consumer products company. Any money that isn't working towards growing their business is money that isn't working as hard as it should. I'm not arguing that Apple should be buying companies left and right, or at all -- only that cash flow investments are not doing much if anything to help them ship new products.

Here's an example. This year Apple was forced to announce the delay of Leopard for several months because the iPhone launch got in the way. A company with $15 billion in cash reserves can't finish a product on time? Need I remind you, this is the kind of excuse that Microsoft uses constantly.

No, sitting no huge piles of cash and still being unable to meet product deadlines is not a sign of good management practices. It's a sign that financial resources could probably be better allocated.

Ugg
Dec 7, 2007, 03:21 PM
The idea of Apple buying Netflix brings up a number of questions. Since Apple's relationship with Hollywood is somewhat strained, I can't imagine it would get any better by buying Netflix.

Netflix has lately been promoting a lot of Indie films but in a very poor way. There's also Jaman but they don't seem to be getting very far.

The idea of Apple becoming a major film/music promoter is appealing but filled with major pitfalls.

I'm sure Steve has some sort of plan lined up, sitting on that much money isn't healthy but I also don't see him paying out dividends anytime soon.

Whatever he does with his stash of moolah, it'll be interesting, that's for sure.

Small White Car
Dec 7, 2007, 03:27 PM
Here's an example. This year Apple was forced to announce the delay of Leopard for several months because the iPhone launch got in the way. A company with $15 billion in cash reserves can't finish a product on time?

Haven't you heard of the "Mythical Man Month?"
http://en.wikipedia.org/wiki/The_Mythical_Man-Month
Sounds like what you're suggesting.

What would you have them do, hire 1,000 programers and somehow train them all in 2 weeks? By the time they're all up to speed the work is already done.

Ok, let's say you pull it off. Now what? Fire them all? Pay them to do nothing? Or make up work for them to do?

Those are all bad, but it's that last one that's MOST dangerous. Throwing money at projects no one asked for is a horrible, stupid way to run a company.

cube
Dec 7, 2007, 03:29 PM
AMD is worth 5 billion.

ChrisK018
Dec 7, 2007, 03:45 PM
Anybody else envision Steve Jobs swimming through piles of gold coins like Scrooge McDuck?

TurboSC
Dec 7, 2007, 03:48 PM
Anybody else envision Steve Jobs swimming through piles of gold coins like Scrooge McDuck?

they would be golden iPods and iPhones.

Clive At Five
Dec 7, 2007, 03:49 PM
Haven't you heard of the "Mythical Man Month?"
http://en.wikipedia.org/wiki/The_Mythical_Man-Month
Sounds like what you're suggesting.

The Leopard/iPhone problem began before things started being late. They should've hired more programmers at the eve of the iPhone OS project. Having one team of people for continually more numerous product lines is just idiotic. :apple:TV, iPhone, iPod Touch, oh, and let's not forget OS X, the desktop client, probably the most important of all...

Fact is, now more than ever, Leopard needs a bigger team to implement it on other products. Period.

-Clive

noriyori
Dec 7, 2007, 03:50 PM
"700 mhz auction, expected to generate some $15 billion in FCC fun-money, draws near."

I'm with you on that one. Even as a joint venture with google.

FREE nation-wide wifi!!! ahhh, they'd probably require .mac or something, but still, I think jumping on the C-Block auction is the best idea.

areve
Dec 7, 2007, 04:05 PM
$15 billion. Isn't it Facebook's price? :D

cameronjpu
Dec 7, 2007, 04:27 PM
I think we shouldn't forget that Apple's money isn't sitting in a bank account earning 0.5. That money is working very, very hard for them - invested in various ways. With that amount, Apple is getting premium rates, and has very smart people managing it.

You're thinking about short term investments. If it says cash, it's cash. It is probably earning 5 or 6%.

IJ Reilly
Dec 7, 2007, 04:51 PM
The Leopard/iPhone problem began before things started being late. They should've hired more programmers at the eve of the iPhone OS project. Having one team of people for continually more numerous product lines is just idiotic. :apple:TV, iPhone, iPod Touch, oh, and let's not forget OS X, the desktop client, probably the most important of all...

Fact is, now more than ever, Leopard needs a bigger team to implement it on other products. Period.

-Clive

This is essentially my point. I'm not suggesting that Apple needs to go hog wild with hiring, but if they're unable to complete high-profile products by the announced shipping dates, then it seems to me that they are too light in this area. It may also be that Apple is now growing too quickly for their own good, but that's another story.

brewcitywi
Dec 7, 2007, 05:00 PM
Surplus cash can be as tricky as debt. It's an opportunity, and it's dynamic, working for you while time passes.

For some reason, I would bet that the solutions regarding what to do with $15 billion is much less exciting than the posts.

They'll probably create the campus facility, some form of dividend, and continue to leverage the fact they're a "no debt" company.

It obviously gives them the freedom to create new innovations with more financial leverage to get things done the way they want.

I wouldn't doubt that there may be more acquisitions along the way, too!

eastcoastsurfer
Dec 7, 2007, 05:19 PM
Apple isn't a financial investment company, they are a technology and consumer products company. Any money that isn't working towards growing their business is money that isn't working as hard as it should. I'm not arguing that Apple should be buying companies left and right, or at all -- only that cash flow investments are not doing much if anything to help them ship new products.


Well said! If I'm invested in Apple I want them doing Apple things like inventing and coming out with new products. If I want professional money management I'll go to someone like Goldman Sachs.


Here's an example. This year Apple was forced to announce the delay of Leopard for several months because the iPhone launch got in the way. A company with $15 billion in cash reserves can't finish a product on time? Need I remind you, this is the kind of excuse that Microsoft uses constantly.

No, sitting no huge piles of cash and still being unable to meet product deadlines is not a sign of good management practices. It's a sign that financial resources could probably be better allocated.

Excellent point. Someone mentioned the Mythical Man-Month above, and I agree that adding resources once you're already late is the wrong thing to do. Apple should have looked ahead and prepared for getting the iPhone done at the same times as Leopard. IMHO, the delays show a management error and it looks like Apple is being somewhat caught by surprise with their growth. What's even more interesting is that many companies don't make it over this growth period. Or they get so big so fast and quit doing the things that made them successful when they were small, a la Innovators Dilemma.

CrockettGTO
Dec 7, 2007, 05:25 PM
I would say with that kind of surplus, they should be able to price a laptop and desktop machine in the 500-800 price range so they can really reach a larger customer base. Driving more innovation and competition. I mean, their machines, displays, Products, OS, etc. are excellent quality, innovative and slick, however most of us simply just cannot afford the price tag. With as many problems as Windows and Micropoly products have you can always
1. Build your own machine as powerful as you want, for a fraction of the cost.
2. Maintenance is simple for almost any component, example your power supply breaks, you run down to the local Fry's or PC store, buy a new one for 60 bucks and replace it yourself in 10 minutes.

I bought a decent laptop and desktop PC this year with fairly robust specifications and performance and still had $200 left for what one MacBook Pro would have cost me. (I would have much rather had the MacBook though)

nimbuscloud
Dec 7, 2007, 05:41 PM
I know this has been said, but Apple need to go ahead and get Adobe.

I don't know if Apple would put some money in with Google to the 700 mhz. It seems more of "Google's destiny", but they might.

:apple:

jouster
Dec 7, 2007, 06:28 PM
A Lot more then 15 Billion. NBC is owned by General Electric. Right now the Mkt Cap 375.24B and is the 5th largest company on the planet. So no chance. At best they can use the money to be an influential shareholder. But the money can be used better elsewhere.

A company does not have to have a higher market cap than another company it intends to purchase. Nor does it have to (and almost certainly wouldn't) use only cash.

Any money that isn't working towards growing their business is money that isn't working as hard as it should.

And is money that makes Apple itself a juicy takeover target.

Glideslope
Dec 7, 2007, 06:29 PM
Nah... .eWorld!

eWorld was cool. Everyone was always nice.

Glideslope
Dec 7, 2007, 06:33 PM
Indeed the deadline was on Monday. Doesn't mean that Apple isn't involved, though. Under the 700 MHz spectrum bidding system, all participants must be publicly stated. Apple likes to keep secret. It's a massive investment for Google. One could imagine a backroom deal between Apple and Google to share the spectrum after Google buys it. Google could sell half to Apple and they go into partnership. Wild idea, I know.

Let's keep an eye on this "wild idea." ;)

agore
Dec 7, 2007, 06:46 PM
By my reckoning, they could blow the lot on a controlling share of Adobe ...

Cheers

Jim

...Or on three copies of Adobe Creative Suite.

ajhill
Dec 7, 2007, 06:53 PM
"Apple could buy TiVo, NetFlix, and Circuit City and still have cash left over." Hopefully only buying CC to shut them down, I've had miserable experiences there.

Take the $15B and buy something a little more fun, like a new Mac Pro for me!


Circuit City is going down in flames all by itself. They fired their employees and hired them back at half the salary. They won't last another Christmas season.

As to TiVo and NetFlix? Both would make amazing enhancements to AppleTV. Netflix could be had for a mere $3 Billion. In 5 years that will look like a bargain.

TiVo could be had for $1.5 Billion. A bargain as well in light of the fact that Apple has ten times that much cash.

ajhill
Dec 7, 2007, 06:59 PM
It's obvious. Apple Inc. is saving up billions of dollars to one day (in the not too distant future) purchase Microsoft and rid the world of a terrible disease that has plagued us for nearly 3 decades.

Another 5-6 years ought to just about do it...

aaarrrgggh
Dec 7, 2007, 07:10 PM
One word: m-o-n-o-r-a-i-l !

Maybe connect their two campuses...

;)

IJ Reilly
Dec 7, 2007, 07:20 PM
IMHO, the delays show a management error and it looks like Apple is being somewhat caught by surprise with their growth. What's even more interesting is that many companies don't make it over this growth period. Or they get so big so fast and quit doing the things that made them successful when they were small, a la Innovators Dilemma.

This is my main concern about Apple going forward. Rapid growth can be even more difficult to manage than contraction. They seem to be doing okay so far, but signs aren't 100% positive.

And is money that makes Apple itself a juicy takeover target.

Possibly, but usually only when the stock price is depressed. You really need to add the cash to the market cap and other assets to get a valuation in a takeover. I can't think of many companies who could afford Apple, with all of this summed. Cash can also be used defensively in a hostile takeover situation.

But this just got me thinking of ten years ago, when Apple was a takeover candidate. The top suitor was Sun. Yes, we can certainly laugh about that now!

aaarrrgggh
Dec 7, 2007, 07:21 PM
Steve Jobs doesn't want to pay taxes on all the dividends that disposing of the cash that route would generate. Same problem as Bill Gates with MSFT before investor revolt.

Likewise, Sticking it to the Man (NBC/Universal, et al) would similarly impact Jobs interests in Disney.

:apple: needs to develop a real vision for video, given the constraints they have thus far. Lobbying fair use on the video front might actually get them considerable good-will, while helping them to release products that consumers really want and that change the way people interact with their TVs. They need to balance this with other vested interests.

I just pray to Buddha that they don't try and get into advertising... we need someone to balance out the other forces in the market. Can you imagine what it would be like if you had to listen to a commercial after every five songs on your iPod?!!

ajhill
Dec 7, 2007, 07:21 PM
New Idea: Apple Studios

After all the crap Apple has had to put up with from the Music, TV and Movie industries, why not start your own Studio?

Produce and distribute Music, TV and Movies. Bribe big names to jump ship and join Apple, and the rest will follow. When Beyonce, Sting, Justin Timberlake, JJ Abrams, Peter Jackson, Michael Bay and Kevin Smith are all making and distributing their goods through Apple Studios and iTunes, you can bet others will follow.

Cash will start flowing like water, and though you'll piss a few companies off initially, they won't have any choice but to stick with iTunes because that's where the stars are.


Wow, this idea makes so much sense its scary. They could create a successful Studio by simply paying artists a bigger share of the profit. Apple is already use to just getting pennies on the dollar for selling content on iTunes. Think what they could do if they kept 50% and gave the artists the other 50% ???

You need only look at Madonna's recent deal with a Concert promotions company to know that the music industry is on the verge of a MAJOR change. TV and Movies too. The only way to combat piracy is to make legally purchasing the content too convenient and too cheap for people want to spend the time to pirate the content. In ten years the Madonna contract will be looked back on as the turning point.

Congrats, chameleon on a truely great idea in a thread with several good ideas.

Al

ajhill
Dec 7, 2007, 07:31 PM
The idea of Apple buying Netflix brings up a number of questions. Since Apple's relationship with Hollywood is somewhat strained, I can't imagine it would get any better by buying Netflix.

Netflix has lately been promoting a lot of Indie films but in a very poor way. There's also Jaman but they don't seem to be getting very far.

The idea of Apple becoming a major film/music promoter is appealing but filled with major pitfalls.

I'm sure Steve has some sort of plan lined up, sitting on that much money isn't healthy but I also don't see him paying out dividends anytime soon.

Whatever he does with his stash of moolah, it'll be interesting, that's for sure.


Steve Jobs has experience running a studio. Didn't he run Pixar for a few years before he sold it to Disney?

Clearly a studio that paid artists a bigger share of the money and relied exclusively on the digital world for distribution would be interesting. But why would Steve go out and start a studio from scratch? He's on the board of Disney already. Now, if he could only talk an old school studio like Disney into cutting a bigger check to the artist in exchange for exclusivity to top talent.

It's kinda like the system that Hollywood abandoned in the late 1950s. You remember it better as the "Studio System". It was a Monopolistic Giant until Congress broke it up and killed it. With the internet being so new, and poorly understood by you typical congressman, "The internet is just a series of tubes..." It would be decades before Congress discovered that Apple/Disney had brought back the Omni powerful Studio system. And by then I'd be retired on my AAPL shares...

Al

aLoC
Dec 7, 2007, 07:44 PM
They should use the money to buy Windows from Microsoft and discontinue it. ;)

jouster
Dec 7, 2007, 08:05 PM
Steve Jobs has experience running a studio. Didn't he run Pixar for a few years before he sold it to Disney?
Al
Yes, but he was pretty hands-off....or at least the Pixar guys managed to dodge him when they had to.

They should use the money to buy Windows from Microsoft and discontinue it. ;)

Yeah, someone already did that one.

yoyon8
Dec 7, 2007, 08:22 PM
Apple isn't a financial investment company, they are a technology and consumer products company. Any money that isn't working towards growing their business is money that isn't working as hard as it should. I'm not arguing that Apple should be buying companies left and right, or at all -- only that cash flow investments are not doing much if anything to help them ship new products.

Here's an example. This year Apple was forced to announce the delay of Leopard for several months because the iPhone launch got in the way. A company with $15 billion in cash reserves can't finish a product on time? Need I remind you, this is the kind of excuse that Microsoft uses constantly.

No, sitting no huge piles of cash and still being unable to meet product deadlines is not a sign of good management practices. It's a sign that financial resources could probably be better allocated.

Ahh accusing Apple of being a bad administrator in this tread? Go figure. ;)

Iroganai
Dec 7, 2007, 08:33 PM
Wow, this idea makes so much sense its scary. They could create a successful Studio by simply paying artists a bigger share of the profit. Apple is already use to just getting pennies on the dollar for selling content on iTunes. Think what they could do if they kept 50% and gave the artists the other 50% ???

I can't disagree more. Look at Sony, which was so cool years ago before they acquired some of the media companies.
After they got the music and movie companies in their group, the Walkman slowly died because of its excessive DRM, which they put on it because they wanted to protect their own music from piracy. In a sense the music business killed the Walkman business. I don't like to see it happen to Apple.

glowingstar
Dec 7, 2007, 08:34 PM
please! apple!! acquire MEEEEEE!!!! :D

yoyon8
Dec 7, 2007, 08:41 PM
Continue as you are doing, you are doing great. I love what you are doing to my stock, Love my iPhone, My MacBook Pro, my iMac and my Apple TV (even if it does not have much use yet). I love all your applications, they are so intuitive and so well designed. I love your style ad how you are so unique and successful.

Please do not distract yourself and just continue to create marvelous products that add meaning to my life. Continue to use the revenues as wise as you have so far.

All I can say is. Thank you apple. Love you since the first mac in 1984. (Still have it, and works).

:apple:

megfilmworks
Dec 7, 2007, 11:11 PM
I can't disagree more. Look at Sony, which was so cool years ago before they acquired some of the media companies.
After they got the music and movie companies in their group, the Walkman slowly died because of its excessive DRM, which they put on it because they wanted to protect their own music from piracy. In a sense the music business killed the Walkman business. I don't like to see it happen to Apple.

The Walkman was not killed by the music business. It just became obsolete.
Sony bought CBS Records in 1988.
The walkman had no DRM. It was a cassette player.
You could play your own mix tapes or cassettes from the labels.
And if you are talking about the mp3 Walkman, that's not a Walkman, it's a dead man rolling over in its grave.

CaptainHaddock
Dec 7, 2007, 11:22 PM
Am I the only one who thinks Apple should keep doing what they're doing, and start paying juicy dividends to their stockholders?

Sharing a company's profits is, after all, the main reason an investor wants to own a portion of a company in the first place.

rtdunham
Dec 8, 2007, 01:42 AM
[QUOTE]It strikes me as a rare thing for a company to be that far in the black. I'd personally love some serious reinvestment in R&D, especially after the Leopard/iPhone debacle this year. It's a mixed blessing for a company to have that much cash on hand, although it does, as others have pointed out, mean that Apple can literally throw money at certain problems and make them go away or leverage its cash on hand to corner parts of the processor market.[QUOTE/]

The surplus makes it harder to accept shortcomings in the company's products: Consider dot mac (outages, limited storage and features for the price, add your own complaints); a new iMovie that seems to some people to be a step backwards; problems with Leopard that have various parts of the Mac community waiting for an upgrade; an iMail app that could be significantly improved with just some small fixes, and an iCal app that needs major work to be be more than an embarrassment. And those are only some of the software problems: Other posters can itemize hardware products that could be made much better with focused efforts, which, yes, would require some investment. Knowing of the company's surplus of resources makes it even harder to tolerate those shortfalls. imho.

flir67
Dec 8, 2007, 02:10 AM
Sweet! A Steve Jobs clothing label!

good idea but it most likely be mixed up with SJ on the market. (sean john) which is already raking in billions.

queshy
Dec 8, 2007, 03:34 AM
They should spend $14 B improving their at times pathetic quality control.

The remaining $1 B should be donated to me for giving them this great idea :p

Jim Campbell
Dec 8, 2007, 05:07 AM
Yes, Adobe is more than 15B, but they could cover the remainder with stock or loans. Having Photoshop under their control gives them enormous leverage in the computer business. Imagine if the PC version of Photoshop was always 1 year behind the Mac version? There's a pretty big incentive to leave windows for anyone in the creative industry.

Two things ...

1) I said a controlling share in Adobe, which wouldn't require them to buy the company outright.

2) The reason I suggested it was because, back in the day, it always used to feel like Apple had a preferential relationship with Adobe - their software used to feel like it belonged on the Mac, and the Windows versions were slightly grudging ports after the fact.

These days, not so much.

So ... it would seem to me that a controlling interest in Adobe would shore up Apple's relationship with creative professionals to a point where it was rock solid. To me, that would be a fantastic foundation as a business for Apple to pursue its newly emerging markets and to consolidate the inroads it's made into the home market.

Obviously, if I knew what I was talking about, I'd be running a FTSE-100 tech company and not posting to a discussion forum ... but as a strategy, this makes sense to me.

Cheers!

Jim

JonasLondon
Dec 8, 2007, 07:24 AM
I would like to see Apple continue pumping their $ into R + D. This is what keeps them innovative and profitable, IMHO. If they start paying dividends, I would worry that they have run out of ideas.

Fully agree. Pump 250 million each into Aperture "3.0", Final Cut Studio (it's already awesome, keep it way ahead of competition!) and upgrade the specs on the Mac Pro's to make them the ultimate in desktop computers.

2008 is going to be very exciting, product wise methinks!

Padraig
Dec 8, 2007, 08:59 AM
I agree! A company sitting on lots of cash (and not investing in new products or whatever the company does) is a huge red flag.

As far as debt is concerned, some debt is good - especially with rates as low as they are at the moment. Why use you're own money on projects when you can leverage someone else's at a low cost.

Yes, this is true. Microsoft only started paying dividends to get money of the balance sheet for tax implications. There was nothing else they could really do, or purchase with it. Likewise, financing through debt can sometimes be argued to be more attractive than equity.

IJ Reilly
Dec 8, 2007, 10:39 AM
Yes, this is true. Microsoft only started paying dividends to get money of the balance sheet for tax implications. There was nothing else they could really do, or purchase with it. Likewise, financing through debt can sometimes be argued to be more attractive than equity.

Microsoft was under pressure from their stockholders to part with some of their cash hoard, since the stock price had gone nowhere for years. Many of these stockholders were also employees. Bill Gates alone netted nearly $100 million when the dividend was instated. The move was also abetted by Congress, which lowered the tax rate on dividends.

JobsRules
Dec 8, 2007, 12:27 PM
I think they should really go out there with a product that would not only land them billiosn but get the Apple brand as more than just cool tech stuff to lust over.

I say they make a mainstream 400mile range electric car and start buying Tesla Motors http://www.teslamotors.com/ who've already proved you can make a high-performance 245mile range car.

The Tesla is based on a Lotus Petrol car. If apple funded a ground-up electric car that re-wrote the rule book they could really define the next stage of their history.

SiliconAddict
Dec 8, 2007, 07:57 PM
And yet we are paying a premium on the iPod. And please guys don't suggest otherwise. :rolleyes: I understand that a company needs to make a profit but I would love for once to see Apple bring that profit down to a level that isn't insane. At 15 Billion the whole R&D crap goes right out the window.

Bolded for relevance and less rant...
PS- Apple should go after that 700Mhz spectrum chunk. Imagine if they owned that nation wide. Welcome to the .Mac wireless network. At $99 a year....heck jack that up to $200 and I'd pay for that if I could link my MBP back to my desktop from across the city. Yes you would need infrastructure, but I can bet you a years salary that there would be plenty of hardware vendors chomping at the bit to be the exclusive manufacturer for whoever wins that spectrum. Cisco and Apple anyone? Even 7 billion could win that chunk. Leaving them a sizable nest egg.

applejilted
Dec 8, 2007, 08:04 PM
One thing Apple should definitely do is stop emitting stock options to its executives .... these are truly obscene .... Apple execs are becoming extravagantly rich with these options,,,, pay them a fair wage and that's it ... that would also preclude the need to buy back shares and would hence enhance shareholder value ..... THE TRULY OBSCENE STOCK OPTIONS MUST END !!!! Apple execs are like pigs at the trough !!!!

roocka
Dec 9, 2007, 12:14 AM
So I have been thinking about this a lot. Would this sync to your iPod so that any shows that you have recorded on your new Apple-tv would be available on your i-Pod? This would make your i-Pod a mobile TIVO player and jukebox. I think that would be awesome. It would also ensure that people would always want to upgrade their i-Pod to the latest and greatest hard drive size available so as to fix more shows.

When you own a TIVO or DVR, you don't own the shows that are on the DVR. You just own the harddrive allocation. At some point you will want to delete the show in order to accommodate new shows. If you had a 500 GB DVR, you could have so many shows it literally wouldn't matter.. If you had a 300GB iPOD, it also wouldn't matter.

I think this would kick ass...

I want to know what you think..

the Rook.

SiliconAddict
Dec 9, 2007, 02:52 AM
It's obvious. Apple Inc. is saving up billions of dollars to one day (in the not too distant future) purchase Microsoft and rid the world of a terrible disease that has plagued us for nearly 3 decades.

Another 5-6 years ought to just about do it...

actually MS could buy Apple outright and still have enough to buy a major studio or 2. 40 billion in cash assets gets you a lot these days.

kuliand
Dec 9, 2007, 04:32 AM
well i would like to see them split the stock and then buy some shares back to protect them selfs from a hostile take over i think Nintendo owns more than 50% of it's own stock so i guess that means no one could take them over unless they sold the shares they hold.

6502usetabe
Dec 9, 2007, 09:18 AM
"Apple could buy TiVo, NetFlix, and Circuit City and still have cash left over." Hopefully only buying CC to shut them down, I've had miserable experiences there.

Take the $15B and buy something a little more fun, like a new Mac Pro for me!

I was gonna say why bother with Circuit City, until I read the rest of your post!

mm1250
Dec 9, 2007, 09:30 AM
I'm sure acquiring left and right isn't the best way for AAPL. Look at MS, all they do is aquire. They have over $40billion but alot of the acquisitions turn out bad or taking well over 5 years to beak profit.

Apple needs to stick with innovating on it's own, which it has done pretty well. I think the next big investment for Apple is to target the business segment of the market in which MS owns outright for software and HP/IBM/Dell own on the hardware side. Alot of people think buying your distributor or vendors seems like a great idea but it's usually not. Does Nokia, LG, Samsung, RIM own any wireless spectrum? NO

I'm sure Apple has something up there sleeves right now. I'm sure their biggest expense will be to continue to innovate so their products like the iPod doesn't become what the Walkman, and their iPhone doesn't become the Beeper (obsolete).

dopplerd
Dec 9, 2007, 11:21 AM
Uses of $15B I don't understand:
Buy Adobe: Why? It's a very different corporate culture. They make great software for the Mac already. This seems like it would be very expensive for little gain.

Buy Dell: I think this was suggested out of spite for Mr. Dell's comments about liquidating Apple. This is a very bad idea.

Restart Dividend: Dividends are so last century. Keep focus on increased share price and market cap.

Cash distribution: I owned Ford stock in 2001 when they were sitting on about $20B and gave a cash payout to stock holders (who voted on the plan) to get rid of the money. I was hugely opposed to this idea and thought Ford should keep the cash or at the very least have $10B in cash reserves. Turns out I was right, the SUV market crashed and and now Ford has had to bet the farm and take out a loan for $18B. If they had listened to me they would have been able to weather the market shift and still have $2B in the bank. So, why this long story about a car company on an Apple website? Cash is King. And Apple exists in a VERY volatile industry. What seems like a great future can quickly turn. A significant amount of cash on hand is good.

TIVO: TIVO is hardware, Apple doesn't need more hardware to deal with selling and supporting. The issue going forward is content. iPods and Apple TVs are expensive paperweights without content. Now I know that TIVO has gotten into the market for IP delivery of content, but it doesn't impress me as as well developed as the Netflix's Watch Instantly (I know I'm ignoring the fact that WI is not supported on a Mac, this is to not confuse the issue with things that are easily fixed). Netflix WI provides, or can easily provide, everything that Tivo's internet based content does without all of the hardware. Do you think Apple wants to make an investment where they have to support old hardware? NO, Apple would want to acquire a company that sells Apple hardware and increases the value of iPods and Apple TVs.

Here is my proposal:

Buy Netfix. Cost $1.55B, that's their current market cap at least. They are a studio for indies (All those people who got their start on YouTube need somewhere to take their fame). They have a lot of older titles and new TV shows (Heroes for one) already available for IP distribution. As the studios soften up to the idea of content over the internet Apple/Netflix would be there to capitalize.

Keep $5B in cash. This is the rainy day fund. Add to it with all the profit from Apple TV sales and new Netflix supscriptions. I just read an article about Apple's corporate succession plans, lets face it S Jobs is still human and will not be around forever. His death (Heaven forbid!) or retirement could be a huge hit to Apple's identity due to how much he is linked to Apple's identity.

Buy $8B in iMacs and give them to public schools. To keep the math simple let's say Apple's cost for an iMac is $1000. That makes for 8 million iMacs in our public school system. Not only does Apple get tons of publicity and good will it also gets to reassert itself into education (not to mention the tax write off!). Remember the '80s. Kids that grow up using Macs in school buy one when they go to college. This 8B in cost would pay returns for decades. There are about 100,000 schools in the US. So 8M iMacs means 80 computers for every school in the US!

Just my $0.02 on Apple's $15,000,000,000.00.

ammonite
Dec 9, 2007, 11:37 AM
Love all this vicarious spending.
Apple can self-fund whatever it wants to develop without any outside financial involvement. Or input on design or direction (it's a dirty old world out there...).
It's really terrible that Apple is in the black and insulated from market wobbles when the convention is to be in the red (yes I'm being sarcastic; companies, like individual people, love to kid themselves that debt is good).
If they MUST buy something to keep most of you lot happy they should buy Binuscan and put out a true photoshop killer.
Cheers!

IJ Reilly
Dec 9, 2007, 11:59 AM
Restart Dividend: Dividends are so last century. Keep focus on increased share price and market cap.

Not really. When Congress lowered the tax rates on dividends, they came very much back into vogue. I personally invest in several high-dividend stocks, one of them set to automatically reinvest dividends. These have been good investments. Dividends can dampen volatility by rewarding investor patience. They don't impede share price at all. In fact, AAPL would probably take a very nice bump up after a dividend was announced. Investors like dividends.

The Ford analogy is not a good one. Ford is not growing; in fact, they are shrinking. Increasing dividends when a company is in desperate need of capital reinvestment is not a good idea. The leaders at Ford may not have known how desperately they needed to reinvest in their own products, but then, Ford is a poorly-run company.

dopplerd
Dec 9, 2007, 12:42 PM
The Ford analogy is not a good one. Ford is not growing; in fact, they are shrinking. Increasing dividends when a company is in desperate need of capital reinvestment is not a good idea. The leaders at Ford may not have known how desperately they needed to reinvest in their own products, but then, Ford is a poorly-run company.

I respectfully disagree. Ford in 2001 was making a lot of money and growing. They had $20B in cash from all the profits they had made during the '90s. The market changed under Ford and they were unable to react because the cash distribution got rid of all their cash. This was not an increase in dividend and was a shareholder instituted one-time cash distribution. This all occurred at a time when Ford seemed to be in good condition (just as Apple is today). The fact that Ford is in such dire straits today compared to 2001 is my point as to why Apple should maintain significant cash reserves. Markets change and cash give companies a cushion to weather the changes. Ford didn't have the cash cushion and the negative effects of market change were compounded as a result.

IJ Reilly
Dec 9, 2007, 01:03 PM
I respectfully disagree. Ford in 2001 was making a lot of money and growing. They had $20B in cash from all the profits they had made during the '90s. The market changed under Ford and they were unable to react because the cash distribution got rid of all their cash. This was not an increase in dividend and was a shareholder instituted one-time cash distribution. This all occurred at a time when Ford seemed to be in good condition (just as Apple is today). The fact that Ford is in such dire straits today compared to 2001 is my point as to why Apple should maintain significant cash reserves. Markets change and cash give companies a cushion to weather the changes. Ford didn't have the cash cushion and the negative effects of market change were compounded as a result.

Ford was relying too heavily on one product line, which is a dangerous strategy to follow in a very capitally intense and very low-margin industry. All of the US auto makers were doing the same thing, though perhaps to a lesser degree, and got caught with their collective pants down. Ford got slammed hard because they had no Plan B -- which is a pure management issue. Perhaps you believe Apple is in the same precarious position. I happen not to think so, but that's just a matter of opinion.

Incidentally, I'm not arguing that Apple should give up their cash cushion entirely by any means. If the board declared even a relatively generous $2.00 per share dividend, this would amount to only about 10% of their current cash on hand, and it would make the stockholders very happy campers, without any measurable risk to the company. I have little doubt such a move would boost the share price even further.

Rocketman
Dec 9, 2007, 01:12 PM
Uses of $15B I don't understand:
Buy Adobe: Why? It's a very different corporate culture. They make great software for the Mac already. This seems like it would be very expensive for little gain.

Buy Dell: I think this was suggested out of spite for Mr. Dell's comments about liquidating Apple. This is a very bad idea.

Restart Dividend: Dividends are so last century. Keep focus on increased share price and market cap.

Cash distribution: I owned Ford stock in 2001 when they were sitting on about $20B and gave a cash payout to stock holders (who voted on the plan) to get rid of the money. I was hugely opposed to this idea and thought Ford should keep the cash or at the very least have $10B in cash reserves. Turns out I was right, the SUV market crashed and and now Ford has had to bet the farm and take out a loan for $18B. If they had listened to me they would have been able to weather the market shift and still have $2B in the bank. So, why this long story about a car company on an Apple website? Cash is King. And Apple exists in a VERY volatile industry. What seems like a great future can quickly turn. A significant amount of cash on hand is good.

TIVO: TIVO is hardware, Apple doesn't need more hardware to deal with selling and supporting. The issue going forward is content. iPods and Apple TVs are expensive paperweights without content. Now I know that TIVO has gotten into the market for IP delivery of content, but it doesn't impress me as as well developed as the Netflix's Watch Instantly (I know I'm ignoring the fact that WI is not supported on a Mac, this is to not confuse the issue with things that are easily fixed). Netflix WI provides, or can easily provide, everything that Tivo's internet based content does without all of the hardware. Do you think Apple wants to make an investment where they have to support old hardware? NO, Apple would want to acquire a company that sells Apple hardware and increases the value of iPods and Apple TVs.

Here is my proposal:

Buy Netfix. Cost $1.55B, that's their current market cap at least. They are a studio for indies (All those people who got their start on YouTube need somewhere to take their fame). They have a lot of older titles and new TV shows (Heroes for one) already available for IP distribution. As the studios soften up to the idea of content over the internet Apple/Netflix would be there to capitalize.

Keep $5B in cash. This is the rainy day fund. Add to it with all the profit from Apple TV sales and new Netflix supscriptions. I just read an article about Apple's corporate succession plans, lets face it S Jobs is still human and will not be around forever. His death (Heaven forbid!) or retirement could be a huge hit to Apple's identity due to how much he is linked to Apple's identity.

Buy $8B in iMacs and give them to public schools. To keep the math simple let's say Apple's cost for an iMac is $1000. That makes for 8 million iMacs in our public school system. Not only does Apple get tons of publicity and good will it also gets to reassert itself into education (not to mention the tax write off!). Remember the '80s. Kids that grow up using Macs in school buy one when they go to college. This 8B in cost would pay returns for decades. There are about 100,000 schools in the US. So 8M iMacs means 80 computers for every school in the US!

Just my $0.02 on Apple's $15,000,000,000.00.

Oversized quote seemed mostly on-topic and agreeable.

If Apple were to buy a company it could do so with mostly stock and need not use much cash.

Dividends are indeed so last century, but more to the point, not applicable in their industry where stock appreciation is valued more than dividends, unlike, say, a utility stock.

Apple could make deals with foundations and endowments to sell iMacs at half their cost, thus not eating into cash nearly as much as your proposal, but still getting very widespread adoption plus the added value of a tax deduction to offset their hard or cash costs. at the government's expense.

I for one would suggest they set a goal of ever increasing net cash (medium term investment) assets. Some day Microsoft will be so cheap in relative terms, Apple will HAVE to buy it if only for historical reasons.

Rocketman

IJ Reilly
Dec 9, 2007, 01:33 PM
Dividends are indeed so last century, but more to the point, not applicable in their industry where stock appreciation is valued more than dividends, unlike, say, a utility stock.

I'm sorry, but saying this over and over again does not make it true. Stock appreciation and dividends are both applauded by investors, and it makes no sense to say which one is "more" valued, especially given that declaring dividends tends to boost a company's stock price -- if only because it is seen as a sign of confidence in the company's future. Further, a modest dividend does not make a company's stock comparable to a utility by any means.

Steven Ballmer
Dec 9, 2007, 09:40 PM
No dividends, nothing!

Jobs is selfish, sell overpriced products running yesteryear's OS!
sheesh!

Rocketman
Dec 9, 2007, 10:02 PM
I'm sorry, but saying this over and over again does not make it true. Stock appreciation and dividends are both applauded by investors, and it makes no sense to say which one is "more" valued, especially given that declaring dividends tends to boost a company's stock price -- if only because it is seen as a sign of confidence in the company's future. Further, a modest dividend does not make a company's stock comparable to a utility by any means.

I hear you.

I understand you.

I simply disagree with you.

I even like you.

Rocketman

mozmac
Dec 10, 2007, 11:37 AM
Also, put some majo explosives there to make it looks like the company logo. :apple: :p

And it will pulse delightfully during the night.

MuzikListner
Dec 10, 2007, 11:42 AM
No dividends, nothing!

Jobs is selfish, sell overpriced products running yesteryear's OS!
sheesh!

What's the point of coming on these forums if you have nothing better to do than insult apple, OS X and Steve Jobs ?

Schtumple
Dec 10, 2007, 11:53 AM
(snipped)
Here is my proposal:

Buy Netfix. Cost $1.55B, that's their current market cap at least. They are a studio for indies (All those people who got their start on YouTube need somewhere to take their fame). They have a lot of older titles and new TV shows (Heroes for one) already available for IP distribution. As the studios soften up to the idea of content over the internet Apple/Netflix would be there to capitalize.

Keep $5B in cash. This is the rainy day fund. Add to it with all the profit from Apple TV sales and new Netflix supscriptions. I just read an article about Apple's corporate succession plans, lets face it S Jobs is still human and will not be around forever. His death (Heaven forbid!) or retirement could be a huge hit to Apple's identity due to how much he is linked to Apple's identity.

Buy $8B in iMacs and give them to public schools. To keep the math simple let's say Apple's cost for an iMac is $1000. That makes for 8 million iMacs in our public school system. Not only does Apple get tons of publicity and good will it also gets to reassert itself into education (not to mention the tax write off!). Remember the '80s. Kids that grow up using Macs in school buy one when they go to college. This 8B in cost would pay returns for decades. There are about 100,000 schools in the US. So 8M iMacs means 80 computers for every school in the US!

Just my $0.02 on Apple's $15,000,000,000.00.

I really agree with you on the Netflix idea, keep netflix for the postal rental service on netflix, but add in all the movies/tv shows that netflix holds for online downloading and merge it with iTunes and that seems like a pretty good move.

Could be a good way to save the iTunes movie and TV section as it seems to be going a bit belly up now...

GoodWatch
Dec 11, 2007, 01:27 PM
To put things into another perspective, Phillips Electronics has a market value of almost 44 billion and a cash reserve of 17.3 billion (holy moly!) Two large hedge funds are aiming their arrows right now. Although 44 billion (let alone the well over 100 billion that Apple is worth) is a too big of a chunk to buy outright, they have started to accumulate shares. If the number of shares is big enough they will attend an annual shareholders meeting to voice their discontent over that stockpile of cash. And demand a healthy dividend or revenue generating investments. The latter is my assumption. Could this happen to Apple? I don’t know their legal structure.

IJ Reilly
Dec 11, 2007, 01:50 PM
I hear you.

I understand you.

I simply disagree with you.

I even like you.

Rocketman

It's a dirty job, but somebody has to do it. ;)

To put things into another perspective, Phillips Electronics has a market value of almost 44 billion and a cash reserve of 17.3 billion (holy moly!) Two large hedge funds are aiming their arrows right now. Although 44 billion (let alone the well over 100 billion that Apple is worth) is a too big of a chunk to buy outright, they have started to accumulate shares. If the number of shares is big enough they will attend an annual shareholders meeting to voice their discontent over that stockpile of cash. And demand a healthy dividend or revenue generating investments. The latter is my assumption. Could this happen to Apple? I don’t know their legal structure.

I presume a certain percentage of the outstanding shares have to petition for a vote of the shareholders on any issue, but I don't think this is necessary, strictly speaking, for the board to consider them. I don't think it happened in the case of Microsoft. As much as anything, they were responding to employees who hadn't seem much benefit from their stock options for years. This obviously isn't an issue for Apple.

jasper fink
Dec 14, 2007, 09:47 PM
They could throw a couple bil my way.
I got some time off and maybe one or two ideas that I think could give them a fair return on their investment. To start with I would fire their entire marketing department and hire people who weren't lier's cheats and thieves.
These idiots are bringing the whole company down by projecting their whims and to hell with reality.
Vote for me!

Mike Teezie
Dec 15, 2007, 02:42 PM
I'm treading carefully into these waters, to minimize how foolish I make myself look.

With all the talk of acquiring Netflix to boost the iTunes Store's content woes - doesn't that still leave the studio executives having to bend to the will of Steve Jobs? As long as that man draws a breath, it seems things will be his way or the highway. And hey, in this case I totally applaud that. NBC was trying to force crappy extra content down our throats to jack up prices, and Steve simply said "No dice, suckers."

So how would snapping up Netflix help that? I understand the mail side of the biz, but not the IP side. Doesn't Netflix have to deal with the studios? If that was suddenly Apple's, how would it be any different than what it is now?

As to the $15B, the blatantly obvious choice is to first give me $50 million as a token of appreciation for all the people I've switched. Next, let's get some engineers in there! OS X late because there weren't enough engineers? Baloney.

But then I ask myself - is there just a finite amount of properly skilled workers out there to hire, at any price?

I guess, after the 50 million to me, throw a couple bil at some nice R&D. I'd love an iJetpack to get from place to place.

John Musbach
Dec 15, 2007, 03:32 PM
http://www.macrumors.com/images/macrumorsthreadlogo.gif (http://www.macrumors.com)

A Fortune blog (http://bigtech.blogs.fortune.cnn.com/2007/12/07/apples-15-billion-cash-hoard/) explores what Apple could be doing with their $15 billion cash reserve that they have accumulated in the past few years.

When asked about Apple's plans, chief financial officer Peter Oppenheimer simply stated that having a few billion on hand helps to fund big projects, though there reportedly had been discussion about buying back shares or issuing dividends to Apple stock holders.

Apple could use the money to make strategic acquisitions. In the recent past, Apple has acquired a number of companies, including PowerSchool, Emagic, Nothing Real, Zayante, and Fingerworks. Apple also has plans to expand into a new campus which could take up to $500 million to fund.

Article Link (http://www.macrumors.com/2007/12/07/apples-15-billion-cash-reserve/)

Hmm, I don't know... Maybe making the ultra slim macbook and Mac OS X 10.6? ;) Of course, the more money Apple has the more brilliance they can push out the door :D

yamabushi
Dec 18, 2007, 08:30 AM
Apple could use the cash to give away 25 million Mac minis. :D

They could be used for marketing as contest giveaways. Or given to schools in low income areas.

Or how about a PC exchange program? Send in your old but functional PC with a Pentium III or better and get a free Mac mini. Limit one per household. Then Apple could load Darwin, X11, and a few open source applications on them and give away the 25 million PCs to charity in areas of the world that have very few computers.

I believe that any one or combination of these efforts would just about double the OS X user base. The exchange program would also create a huge Darwin user base without cannibalizing any OS X sales.

Of course, once users get hooked on OS X they are highly likely to purchase a more powerful Mac in the future.

Basically this would likely be the largest and most expensive marketing effort in history.