How Apple should spend its $90 billion in cash
by Jason Perlow | January 25, 2012 9:07am PST | Image 1 of 6
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No sharks with lasers
As I write this, AAPL is now trading at over $447.00 a share. For the company's 1st quarter, Apple posted $13 billion of profit on record revenue of over $47 billion from its sales of the iPhone, the iPad, and the Mac. Apple now has a market capitalization of over $416 billion and has amassed a huge cash war chest exceeding $90 billion.
Yes, say that again, but with a Doctor Evil voice. NINETY BILLION DOLLARS! Muhahahahahahahah!
Apple could just sit on all that cash, and CEO Tim Cook has said that the company is in no rush to spend it. But the logical thing to do with it would be to make some strategic purchases or expand its infrastructure in order to maintain that growth.
I’ve been thinking about this for a while and I’ve come up with a few suggestions. And no, “Sharks with frickin’ lasers” did not make the list. So without further ado…
Just In
Sorry, but buying a telecom is out. Apple cannot afford to alienate the other telcos - world wide - that it depends on for distribution & support of its products.
@z2217
Why not globally in partnership with Walmart, Tesco, Amazon and Google buyout the entire ready-made and operational T-Mobile setup and stop the robber baron's nefarious activities of the incumbent Cell Phone companies.
- Pay as you go or Unlimited Calls within Country
- 1Gb, 5Gb, 10Gb and Unlimited Data plans within your Country
- Data free to use as you choose (i.e. no Tethering ripoff surcharge)
- Unlimited Texts within Country
- International roaming at a fixed price per week/month/year on your above plan - no $1000 overage bills for using some data whilst on holiday
They would clean up and the likes of Vodafone/Verizon, AT&T, NTT, Telefonica etc would be p155ing in their pants and have to change their ways.
Much in the way over the last 10-15 years Amazon have revolutionised on-line retailing for stuff, and Apple for entertainment soft-media.
-Considering Apple used to own 40% of ARM, as they were a set-up partnership with Acorn Computer (BBC Micro and ARM creators) and VLSI, this is amusing - didn't John Scully have to hock a large chunk of this in the dark days ?
Increase iCloud Storage to at least the same as your Apple device, preferably double. or even 100Gb as standard.
http://www.cultofmac.com/97055/this-is-how-arm-saved-apple-from-going-bust-1990s/
Why not globally in partnership with Walmart, Tesco, Amazon and Google buyout the entire ready-made and operational T-Mobile setup and stop the robber baron's nefarious activities of the incumbent Cell Phone companies.
- Pay as you go or Unlimited Calls within Country
- 1Gb, 5Gb, 10Gb and Unlimited Data plans within your Country
- Data free to use as you choose (i.e. no Tethering ripoff surcharge)
- Unlimited Texts within Country
- International roaming at a fixed price per week/month/year on your above plan - no $1000 overage bills for using some data whilst on holiday
They would clean up and the likes of Vodafone/Verizon, AT&T, NTT, Telefonica etc would be p155ing in their pants and have to change their ways.
Much in the way over the last 10-15 years Amazon have revolutionised on-line retailing for stuff, and Apple for entertainment soft-media.
-Considering Apple used to own 40% of ARM, as they were a set-up partnership with Acorn Computer (BBC Micro and ARM creators) and VLSI, this is amusing - didn't John Scully have to hock a large chunk of this in the dark days ?
Increase iCloud Storage to at least the same as your Apple device, preferably double. or even 100Gb as standard.
http://www.cultofmac.com/97055/this-is-how-arm-saved-apple-from-going-bust-1990s/
@neil.postlethwaite@... You don't seem to understand the Apple Business Model.
It does not involve taking an established industry and offering similar services at vastly cheaper prices.
Just the opposite. Apple makes money taking various target markets, creating a superior product and charging lots MORE for it.
An "Apple Provider" would be seamlessly integrated for 3G, 4G, Wifi, satellite, bluetooth with iCloud backup across a variety of (Apple exclusive) devices, and it would cost $200 per month instead of your existing $80 cellphone+data plan.
It does not involve taking an established industry and offering similar services at vastly cheaper prices.
Just the opposite. Apple makes money taking various target markets, creating a superior product and charging lots MORE for it.
An "Apple Provider" would be seamlessly integrated for 3G, 4G, Wifi, satellite, bluetooth with iCloud backup across a variety of (Apple exclusive) devices, and it would cost $200 per month instead of your existing $80 cellphone+data plan.
I like the CDN idea best of all.
Makes a lot of sense from an eco system point of view, takes care of a major pain point for a lot of mobile users and creates more incentives for users to stick with Apple products.
Makes a lot of sense from an eco system point of view, takes care of a major pain point for a lot of mobile users and creates more incentives for users to stick with Apple products.
internet infrastructure make any sense based on Apple's business model. Instead, look for Apple to spend that money on startups with exciting hardware technologies, like anobit.
How about filing lawsuits against the world
Or Apple could pay its employees in other countries a fair wage. Or even bring some of those jobs to the United States...
@babymommy That will never happen because the CEO has already stated it is not his job to worry about american jobs.
I expect them to prop up their iCloud infrastructure. The initial sign in for iTunes Match and the whole comparing of the music libraries was painfully slow.
I would also expect them to bring in some of the old MobileMe iDisk functionality.
Buying a telco? Nah! They'd have to setup infrastructure in every single country they operate in. Best leave the dumb pipe role to others.
A sattelite? Nah to that also. Too expensive to maintain and operate and too risky. What I do expect them to do however is introduce a bran new 3D mapping service. Didn't they buy a Swedish company lately?
Buying ARM? No way. If they do and lock others out of thgat technology, watch out for the lawsuits. Too risky for them. Besides, with their cash reserves, all they have to do is lock up supplies from various manufacturers thus effectively locking out competitors from those same parts. They do that now anyways.
Buy FaceBook? Why? It is in Facebook's best interest to play nice with Apple. Any screw ups on privacy can always be pointed away from Apple. They don't need the hassle.
Search engine? Sure why not and make it spectacular. This goes hand in hand with the Swedish 3D mapping company. Develop your own. Let the others try pulling their engines away from iDevices. Will Google want to loose the clicks? OTOH Apple can offer their own, nicely integrated into iOS and OSX while still telling its customers, "Well if you prefer to have an inferior one , go ahead."
I would also expect them to bring in some of the old MobileMe iDisk functionality.
Buying a telco? Nah! They'd have to setup infrastructure in every single country they operate in. Best leave the dumb pipe role to others.
A sattelite? Nah to that also. Too expensive to maintain and operate and too risky. What I do expect them to do however is introduce a bran new 3D mapping service. Didn't they buy a Swedish company lately?
Buying ARM? No way. If they do and lock others out of thgat technology, watch out for the lawsuits. Too risky for them. Besides, with their cash reserves, all they have to do is lock up supplies from various manufacturers thus effectively locking out competitors from those same parts. They do that now anyways.
Buy FaceBook? Why? It is in Facebook's best interest to play nice with Apple. Any screw ups on privacy can always be pointed away from Apple. They don't need the hassle.
Search engine? Sure why not and make it spectacular. This goes hand in hand with the Swedish 3D mapping company. Develop your own. Let the others try pulling their engines away from iDevices. Will Google want to loose the clicks? OTOH Apple can offer their own, nicely integrated into iOS and OSX while still telling its customers, "Well if you prefer to have an inferior one , go ahead."
Well now we know why you are not a CEO or business sense, Most of these ideas not only indicate a failure to understand the Apple business model, but are dubious in their own right. Apple has tilt up this incredible pile of cash by running a business with a minimum of baggage. Suddenly spending it on baggage does nothing for them. They have no manufacturing and very few employees, They outsource everything except the critically service affecting data centers to house iCloud. Launching their own satellites does nothing when the data is readily available and noon controls it. Your suggestion re ARM would leave Apple in court forever and pair a regulatory target on their back. No, Apple's current drive into publishing content and education fit their content expansion business case better than on expensive physical assets, and has the additional advantage of most of apples plans, very little risk to apple and low overhead
How about paying some fat dividends? Return the money to shareholders for them to re-invest.
Before reading the second idea, form the picture I thought you might be suggesting they buy the moon or at least put their logo on the face (ala Chairface from "The Tick".)
One of the most outrageous areas of corruption is the endemic fraud done by firms supplying services to tech companies. For example, Apple willingly disclosed finding 62 % of the 229 facilities it inspected were not in compliance with the company's maximum 60-hour work policy; 13 % did not have adequate protections for juvenile workers; and 32 % had problems with the management of hazardous waste. These frauds take place abroad, but they harm employees at home. Wages and pensions are slashed to save competing firms located in the US. All this suffering in the name of squeezing out profits. The article by William K Black of the New Economic Perspective paints a picture of indifference and simple avarice. This behavior is now part of everyday and one I personally avoid like a disease. So if Apple is seriously wondering how to spend these profits here are some well documents areas.
Dividend: would add huge value to the stock price.
R&D: spend money on keeping ahead of the game (designing products people are willing to pay a premium for) and on developing really key technologies, particularly the SOC's needed for small, fast and efficient chips that do everything their devices need to do, and push the envelope of designing products as a single unit, minimizing the number of physical chips in devices. If that means buying another chip design company or talent, so be it.
The problem with any good suggestion is that if it is indeed a good business decision, they'll just keep growing the cash pile, which brings us back to my first suggestion: dividend.
R&D: spend money on keeping ahead of the game (designing products people are willing to pay a premium for) and on developing really key technologies, particularly the SOC's needed for small, fast and efficient chips that do everything their devices need to do, and push the envelope of designing products as a single unit, minimizing the number of physical chips in devices. If that means buying another chip design company or talent, so be it.
The problem with any good suggestion is that if it is indeed a good business decision, they'll just keep growing the cash pile, which brings us back to my first suggestion: dividend.
and a couple of other beleaguered corporation. Kill that Windows crap, it would be a giant step for humanity.
Make it cost $0.99 to send mail anywhere in the universe, but the person who gets the mail must also be a US Postal Service customer otherwise their mail is recycled into shipping boxes for more iPads.
If I was made CEO of Apple and found $90b in the bank?
Spend 0.1% of that and rewrite iTunes for Windows to be lean, fast and bug free. Seriously, iTunes on Windows is the one thing that makes Apple look bad.
And time to rationalize the fading iPod line; the classic and shuffle to go and for the Touch range to scale up to have a model between the current model and the iPad. iPods are still often the gateway to other Apple products, so cheap or underpowered/old fashioned models dont help the Apple image. Oh and bundle headphones that cost a few cents more but dont make your products look and feel like crap.
Please?
Spend 0.1% of that and rewrite iTunes for Windows to be lean, fast and bug free. Seriously, iTunes on Windows is the one thing that makes Apple look bad.
And time to rationalize the fading iPod line; the classic and shuffle to go and for the Touch range to scale up to have a model between the current model and the iPad. iPods are still often the gateway to other Apple products, so cheap or underpowered/old fashioned models dont help the Apple image. Oh and bundle headphones that cost a few cents more but dont make your products look and feel like crap.
Please?
What to do with $90 billion in cash in one article, and horrible working conditions in the next.... Hmmm, maybe spend a little more making sure their products are built ethically?
Gear up to sell education. Not devices and software...content.
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