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Apple's $15 Billion Cash Reserve

DTphonehome said:
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.
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More and more I'm so glad I don't watch TV, and don't have to put up with any of this nonsense.
 
IJ Reilly said:
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.
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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
 
more R + D

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.
 
New Spectrum or Tivo-ish/Netflix setup

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
 
Pandaboots said:
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.
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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.
 
lazyrighteye said:
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.
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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
 
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. ;)
 
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...
 
Rocketman said:
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
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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.
 
God^Cent said:
LoL the Red Planet is now the Red Apple! :apple:
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Here's the latest Hubble Space Telescope imagery of iMars™:

iworld01rz7.png
 
IJ Reilly said:
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.
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*claps*

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

-Clive
 
ifjake said:
how much is NBC-Universal worth?
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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.
 
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.
 
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.
 
IJ Reilly said:
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.
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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.
 
Ted13 said:
Bidding for the 700 MHz spectrum does make sense, but wasn't this past Monday the deadline for officially entering the bidding?
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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.
 
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 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

apples_and_oranges.jpg


;)
 
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