Pretty interesting article over at Ars

[TIGERmac]

From Q2 2005: Q3 2005 results will be released in just two days, then you might be right...

What!? I was wrong? I can't say that's ever happened before.

I do remember Mac sales surging last quarter, now that you mention it. Still, the iPod remains a huge cash cow for Apple. SJ also seems very focused on maintaining the dominance and not repeating mistakes made in the past.

 

[sigamy]

In its 10-Q filing to the SEC, Apple reported cash (and cash equivalents) of $2.25 billion dollars. While this is certainly a respectable figure, it isn't extraordinary for a company this size.

Didn't Apple have $5 or $6 billion in cash a few years ago? They haven't done any major acquisitions, where has all the cash gone?

 

[dswoodley]

Didn't Apple have $5 or $6 billion in cash a few years ago? They haven't done any major acquisitions, where has all the cash gone?

According to their Q2 call they had over $7,000,000,000 in cash - seems to be a healthy chunk of dough to me.

 

[gwangung]

According to their Q2 call they had over $7,000,000,000 in cash - seems to be a healthy chunk of dough to me.

Exactly.

People are misreading the statements. They have $2.2 billion in cash/cash equivalents, and $4.8 billion in short term investments, i.e., short term bonds, which are pretty close to liquid.

 

[gwangung]

I do remember Mac sales surging last quarter, now that you mention it. Still, the iPod remains a huge cash cow for Apple. SJ also seems very focused on maintaining the dominance and not repeating mistakes made in the past.

I think that's something ANY businesman would want to do....

 

[TIGERmac]

Exactly.

People are misreading the statements. They have $2.2 billion in cash/cash equivalents, and $4.8 billion in short term investments, i.e., short term bonds, which are pretty close to liquid.

You are correct, the company does have a nice chunk of short-term investments. I did not intend to mislead anyone by excluding this information from my original post. Rather, my intention was to highlight that while the company presently holds a respectable sum of cash, it is not in the financial position of industry giants such as Microsoft or Intel. Apple simply doesn't have the financial clout to continue to dictate terms to its suppliers (which happen to be corporations with much more money).

Profit is the name of the game for corporations. What likely happened is that Apple's demands and timeline were too costly for IBM to meet. Thus, IBM went by their own time schedule and subsequently annoyed SJ to the point of switching providers. That's a condensed version, anyway.

 

[gwangung]

You are correct, the company does have a nice chunk of short-term investments. I did not intend to mislead anyone by excluding this information from my original post. Rather, my intention was to highlight that while the company presently holds a respectable sum of cash, it is not in the financial position of industry giants such as Microsoft or Intel. Apple simply doesn't have the financial clout to continue to dictate terms to its suppliers (which happen to be corporations with much more money).

This is quite true. Apple is in no position to dictate terms.

On the other hand, Apple, I think, becomes Intel's fourth or fifth largest customer, which has SOME influence (something people forget at times). If Intel has some nifty new tech (like, oh, say a USB-type thingie.....) that might replace some legacy hardware, there's no need to strongarm folks into accepting it; they can use Apple to deploy it (who'd be more than glad to adopt some new, unique tech (while obsoleting older tech) as a way to differentiate themselves from the pack.

 

[emotion]

The way I see this is that I think to understand this situation better it's best looked at from Intel's point of view.

Intel have a problem with the fact the IA64 family of processors are not doing as well as expected in the server market and Intel are up against the IBM's Power architecture . Now sometime over the next two years Intel can leverage the IA64 in big flash new Apple desktops (the laptops will go the way of Pentium M) this volume market (compared to what they have now) will help make the IA64 cheaper and ensure success for Intel.

The Xscale in ipod is also believable and further sweetens the whole deal for both parties.

I could be way off tho but it's nice idle speculation.

 

[TIGERmac]

This is quite true. Apple is in no position to dictate terms.

On the other hand, Apple, I think, becomes Intel's fourth or fifth largest customer, which has SOME influence (something people forget at times). If Intel has some nifty new tech (like, oh, say a USB-type thingie.....) that might replace some legacy hardware, there's no need to strongarm folks into accepting it; they can use Apple to deploy it (who'd be more than glad to adopt some new, unique tech (while obsoleting older tech) as a way to differentiate themselves from the pack.

I completely agree with you. When the announcement was made, I noted that landing the Apple contract was probably just as beneficial to Intel as it is to Apple.

Apple is widely regarded as the innovator in the PC market. It's no secret that Macs are generally first to adopt (and/or create) new standards (Airport, Firewire, etc.). So Intel now has Apple to showcase its latest technologies. Not to mention the fact that being linked to Apple, OS X, and iPod gives the company a huge image boost. The relationship between Intel and Microsoft isn't as tight as the "Wintel" name suggests. I'm sure Intel is more than a bit annoyed by Microsoft's increasingly comfortable relationship with AMD. Given the opportunity, Intel would probably like to really stick it to Microsoft.