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MacBytes
Feb 19, 2009, 01:52 PM
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Category: Opinion/Interviews
Link: Tough economic times will ding Apple, but not as bad as some companies (http://www.macbytes.com/link.php?sid=20090219145238)
Description:: New research from the ChangeWave Research group shows that Apple won’t be immune from taking hits due to the tough economy. But our favorite tech company seems to be in as good of shape as any to make it through some tight months.

Posted on MacBytes.com (http://www.macbytes.com)
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alexbates
Feb 19, 2009, 05:13 PM
I think Apple has gotten over everything that the bad economy has caused. The stock price went down to almost $70 at one point but has been increasing since then. If the rumors of new Mac Mini's, Displays, and the Mac Pro are true, then Apple will probably start doing even better.

twoodcc
Feb 19, 2009, 05:35 PM
of course the tough economy will hurt apple, at least a little bit. but i think apple can still do well compared to pc manufacturers

Andreios
Feb 19, 2009, 08:02 PM
of course the tough economy will hurt apple, at least a little bit. but i think apple can still do well compared to pc manufacturers

I agree. I think that as long as Apple keeps releasing great hardware and software people will keep buying.

Shagrat
Feb 20, 2009, 03:22 AM
I agree. I think that as long as Apple keeps releasing great hardware and software people will keep buying.


As "someone" once said..." Aye, there's the rub..."

fewture
Feb 21, 2009, 07:55 AM
you guys don't realise how bad this economic situation could become.

Its only just began, and they desperately trying to prevent it from turning into something big (Like really big).

Good luck to Apple, when people are worrying about just paying for bills, rent and food, I don't know where Apple's expensive products are going to fit in. And I am not talking just about people with no money now. Its the middle class which will be hit hardest by this recession, when they start losing all their jobs. They will lose the most, because they have made the most in recent times to begin with.

And it doesn't matter if Apple has 25 billion of reserve cash, if that cash loses most of its value.

Going to be interesting. I love Apple, but I will enjoy watching Apple be forced to provide a lot more value than it does now. Since its tasted what its like to sell to mass consumers, I don't think it will go back to just being an elite only company again. I think it will head for the mass market, the only way to maintain some of the size of the company.

MisterMe
Feb 21, 2009, 11:43 AM
...

And it doesn't matter if Apple has 25 billion of reserve cash, if that cash loses most of its value.

...Wrong! In an economic collapse, stocks lose value; bonds lose value; inventory loses value; real estate loses value; cash gains value. To put it another way, the money stashed under my mattress (cash) is a better investment than the money in my retirement account (stocks and bonds).

hoppo99
Feb 21, 2009, 02:21 PM
Wrong! In an economic collapse, stocks lose value; bonds lose value; inventory loses value; real estate loses value; cash gains value. To put it another way, the money stashed under my mattress (cash) is a better investment than the money in my retirement account (stocks and bonds).

Yes, but the US government has borrowed billions which will have to repaid. What's the simplest way of reducing that debt? Printing money. More cash in circulation means its value goes down. So while Apple's sitting pretty with its $26 billion cash pile now, throw a bit of inflation at 10% into the mix and we'll see what happens then.

MisterMe
Feb 21, 2009, 02:48 PM
Yes, but the US government has borrowed billions which will have to repaid. What's the simplest way of reducing that debt? Printing money. More cash in circulation means its value goes down. So while Apple's sitting pretty with its $26 billion cash pile now, throw a bit of inflation at 10% into the mix and we'll see what happens then.Yes, that is not the issue. During the Great Depression, the World went into a deflationary spiral. Cash--U. S. paper money--was so rare that many businesses issued "script," a private currency to pay their workers and to conduct business. We are on the verge of that situation now. Right now, virtually everything that you can invest in is declining in value. The average citizen sees this drop in the value of his/her home. I see it in the quarterly statement of my retirement account. As I said in my last post, money under my mattress has a better return than the money in my retirement account.

Apple is headquartered in California, one of the states that has been particularly hard hit by the drop in real estate prices. With the cash it has on hand, think about how much more real estate in Silicon Valley it can buy today than it could have purchased a year ago. Under these conditions, cash is the company's safest holding.

rfruth
Feb 22, 2009, 03:23 PM
IMO a good portion of Apple's customers aren't real price sensitive so AAPL will be better off than most - as for cash is king let me get my crystal ball...

fewture
Feb 24, 2009, 10:53 PM
Yes, that is not the issue. During the Great Depression, the World went into a deflationary spiral. Cash--U. S. paper money--was so rare that many businesses issued "script," a private currency to pay their workers and to conduct business. We are on the verge of that situation now. Right now, virtually everything that you can invest in is declining in value. The average citizen sees this drop in the value of his/her home. I see it in the quarterly statement of my retirement account. As I said in my last post, money under my mattress has a better return than the money in my retirement account.

Apple is headquartered in California, one of the states that has been particularly hard hit by the drop in real estate prices. With the cash it has on hand, think about how much more real estate in Silicon Valley it can buy today than it could have purchased a year ago. Under these conditions, cash is the company's safest holding.

Purchasing more land in Silicon Valley doesnt mean making money worldwide! If American dollar loses a substantial amount of its value and that is indeed what Apple holds (although I am sure the portfolio is broad) then Apple can buy far less of what it needs to buy for researching, manfacturing and selling its product line. However, they will still be able to employ Americans which is a good thing (and probably on lower wages than now)
If Apple converted all its money into gold for example and gold became the next currency, then that would be the safest holding (as a hypothetical). If the US Dollar loses most of its value, there is nothing 'safe' about that for a global company like Apple. Those reserves become worthless or at least substantially lose their value. However, given that Apple has accumulated this vast amount of wealth I am sure it has multiple plans surrounding the 'cash' and the current economic situation.

Finally, no one really knows what Apple's 25 billion in 'cash' reserves actually means (where, how, who etc)

fewture
Feb 24, 2009, 11:02 PM
IMO a good portion of Apple's customers aren't real price sensitive so AAPL will be better off than most - as for cash is king let me get my crystal ball...

I think the people who will be most hard hit by whats coming, will be the middle and 'upper' classes. And they are Apple's main customers.

It is possible that Amercia will go through the toughest time it has in the last 100 years with what may be coming. Remember the 1930s depression 40% of people lost their jobs in the US. Those numbers could go higher this time if the entire 'lending' and 'credit' phenomena is frozen for a long period of time.

Apple will have to generate more on global sales if American middle classes get hit hard (but to who and with what?) and try to find a product line which can be bought by consumers who no longer have access to easy credit, and who are worried about paying basic bills and food, let alone buying latest or nicest designed tech stuff. That will be hard for Apple. But knowing their capabilities, I think if any tech company could do it, it would be them.

Maybe they will be forced to sell OSX like Windows (I don't know if that would work or not)

fewture
Feb 24, 2009, 11:12 PM
Yes, but the US government has borrowed billions which will have to repaid. What's the simplest way of reducing that debt? Printing money. More cash in circulation means its value goes down. So while Apple's sitting pretty with its $26 billion cash pile now, throw a bit of inflation at 10% into the mix and we'll see what happens then.

exactly

MisterMe
Feb 24, 2009, 11:15 PM
... no one really knows what Apple's 25 billion in 'cash' reserves actually means ...Speak for yourself.

fewture
Feb 25, 2009, 12:15 AM
Speak for yourself.

Is it 25 billion liquid cash or includes cash equivalents? Details or links would be good (I can't find Apple's quarterly filing).