I think the Goople line would be good, but I am looking entertainment. How much is Universal/NBC going for? Or a complete takeover of Disney? Or other recording indsustry?

fun to fantasize...more than likely it will be a smaller collection of MAC sofware companies like Rogue Amoeba, and the like.

...buymajor companies?

Un-true_

Nashoba Systems created FilMaker and after Apple Launched Claris Nashoba was purchased by Apple_

Apple bought EMagic - which originally developed Logic Pro_

Apple bought a company called Nothingg Real - who originally developed Shake Compositing Software_

Final Cut Pro was originally developed at Macromedia and the development group was eventually hired away by - guess who - Apple_

Shall I go on?

MacNN check your facts_

iTunes originally created by a third party software company before Apple bought it, redid interface, and rename iTunes. Underneath iTunes it's actually SoundJam MP.

I would love to see Apple buy Adobe. World domination would be completed.

for fifteen billion, I'm on the market. I'll even take it in Euros!





I know, euros are worth more. I was being funny.

$15 billion US? Isn't that only like $8 Canadian? What's the big deal?

Canadian dollar is worth less the USD

cia: that's funny. Sad, but also funny. :-)

uberfu: none of those companies qualify as "major".

15 BILLION dollars? And it could well be 17B by February. Look, a new campus is great. A venture capital fund is a great idea. Acquiring some well-chosen companies is fine. But how about taking a FIFTEENTH of that cash and buying blankets, clothing, housing, medicine, etc., for hundreds of thousands of people? How many small, well-equipped hospitals and schools could be built around the world with a billion dollars? How many computers could Apple give to kids around the world by spending just a FIFTEENTH of their cash on hand?

Those that you just listed aren't necessarily considered "BIG" companies.

Hiring away people does not equal buying that company.

Now if Apple were to say...Buy Disney, that would be news.

"A 30% margin literally screams overpriced products."

Margin doesn't take into account research and development costs, only the price of the physical product. Apple generally spends much more than other computer companies on R&D - that spending leads to products way ahead of everyone else.

When Apple wasn't selling so many computers and iPods, etc., it needed the high margin to fund R&D - now it's reaping the benefits with increased sales.

Maybe you should check your dictionary. Look up 'major'. Explain to us all how it applies.

Then explain to us how buying a product from another company, and also hiring the talent behind it, is the same as "buying a company".

As for elroth, Margin doesn't take into account research and development costs, only the price of the physical product.

Technically, I think that's Gross Margin that you're talking about. Net Margins would.

Where the c*** are you getting 30%?

It ceased being SoundJam MP when Podcasting and the iTunes music store were introduced, you won't find much Sound Jam code left in there.

Again...NOT a Major company

What declining economy? You mean the one with the stock market never being higher and where we've had over 4 years of monthly job growth? There is a 'nn forum for that stuff...

with Google and purchase that 700 MHz spectrum as a way to get some more bandwidth for handsets. Maybe they could cut out the telephone companies completely. Even at a starting bid of $4.6 billion, both companies could easily handle higher bids.

The content available in iTunes needs to expand. When does apple just buy the Sony catalog?

So apple, you now have $15billion in the bank,

Why the h*** are all the educational discounts being reduced?

And why are your computers significantly more expensive outside of the US? (especially in the developing world?)

Now that you're rich, do you despise all of those poor people using your products?

Testudo said: As for elroth, Margin doesn't take into account research and development costs, only the price of the physical product.

Technically, I think that's Gross Margin that you're talking about. Net Margins would.

Actually, that's not completely true, either. R&D costs on successful projects are capitalized, not expensed, so they aren't fully recognized on the P&L sheet until a ways into the future. This only changes if the project completely fails, can't be attributed to some other project, and needs to be written off (often this results in an "unusual loss" calculation which is kept separate from net margins as well).

Depending on how the company handles the amortization of the R&D, it might factor into Net Margin accurately, so long as they can separate long term and short term portions of the R&D costs. For example, the R&D for the "first" iPod should still be on the books today, as it provided the basis for the current models, whereas the "incremental" R&D leading iPod mini should probably be off the books by now.

Actually, the costs of R&D would show up in quarterly financial statements. It must be attributed to expenses plus it must specifically be seperated out within those expenses. Taken from the standards board website, "This Statement establishes standards of financial accounting and reporting for research and development (R&D) costs. This Statement requires that R&D costs be charged to expense when incurred. It also requires a company to disclose in its financial statements the amount of R&D that it charges to expense." Last I knew this still stood as the legal practice. As for what Apple should do with the $15 billion. Based on their return on equity for 07 of 28.52%, I would say that leaving it where it's at would be the best course of action. But then I'm just a stock holder so what would I know.

I stand corrected - not capitalizing R&D seems counterintuitive to the idea of matching expenses to revenues, but after reading FASB's take on it, I can see why that is the policy in the US.

As for what Apple should do with the $15 billion. Based on their return on equity for 07 of 28.52%, I would say that leaving it where it's at would be the best course of action. But then I'm just a stock holder so what would I know.

So you would rather Apple just let your money sit in a savings account and collect interest? Couldn't you just do that yourself?

It was, in part, due to the fact that Apple had such large reserves of cash in the late 90's and early 00's that Apple was able to keep it's head above water. Apple would be wise to continue to have a large reserve (albeit 15B might be a little on the high side) especially in light of a weakening economy....... for more reasons than the immediately obvious.

As an investor, I would rather a corporation stay afloat by making good business investments with my money, rather than just using my cash to pay bills.

Consider this - Apple is now a very low-risk borrower, meaning the cost to borrow money during hard times would be low. Apple makes a very high rate of return on their products, which makes the cost of hanging on to cash high. At a 10% cost of capital above interest (which I'm pretty sure Apple is actually much higher) the company is costing its investors $150 Million per year in lost investment opportunities.

On the other hand, if they issued investors a dividend, those investors can then throw the cash into a savings account and make exactly the same amount of money as what Apple is making for them by leaving it sit in the bank.

Let's see, I'm sure I'll have a hard time figuring out why I invested in Apple when I subtract my cost basis of around $17 a share from the current price. Like I pointed out previously, based on it's most recent fiscal year results, Apple had a return on equity of a little over 28%. Not exactly an insigificant return for equity as it would put it near the same ball park as many of the large oil companies who I would have to say nobody is going to say are in a disaterous position. So I'd say that they are employing the cash they have on hand in a beneficial manner. Also, last time I took math many years ago I believe a 28% ROE is more than the return one would get for a bank account these days. Also, I think it would be important to point out that Apple is able to carry no long term debt as a result of the cash coffers they maintain which drastically improves their fiscal footing compared to companies which do have to seek outside capital.

How does $15 Billion in the bank contribute to Apple's ROE (except pushing it down)?

To be sure, I'm not saying Apple's in a disastrous position - they are having a kick-a** couple of years, and it is ONLY because of this that those ratios look so rosy. Lots and lots of ratios will do nothing but prove the obvious - Apple has seen incredible growth these past years. That's a give-in.

Having said that, consider that Apple doesn't have multi-billion dollar upgraders, huge exploration costs, offshore rigs, or massive manufacturing plants of their own, and they are growing at a rate MUCH higher than what "Big Oil" companies are growing, I would expect their ROE and ROA to be quite a bit higher than the oil companies. You're saying that's not the case - Apple is merely on par. Their denominator in those equations is normally quite a bit smaller than that of Big Oil.

I would also spend more time looking at Apple's ROI over ROE, as an investor. This measures what happens to the money Apple spends rather than what it hangs on to. They didn't make any major earnings on the money that's sitting in the bank: that money is sitting stagnant and did not contribute at all to the development of the iPhone, iPod, iMac, or anything else iApple produces. That money won't do anything other than collect 2-or-so-percent interest per year.

As far as it being a "good thing" to not carry long-term debt: spoken like a typical debt-scared farmer. Of course, not taking on debt is "safe", but it also means that Apple needs to finance all large projects using their own money - their investors' money. A company like Apple that pays very little interest on loans but reaps very high returns on investment is well advised to take on some debt in order to finance the investment. It's called leverage. It means that you investors don't have to provide the up-front capital for these projects. The cool thing is, that means you can invest in more money-making projects with less money, and your ratios will look VERY rosy.

I'd meant to use ROA instead of ROE. Which they are getting a better rate of return on than the only 2 companies with more cash on hand, Microsoft and Cisco. Ironic that it's considered a big plus for them because of the development possibilites it opens up. Personally I'd rather have a company with sufficient cash on hand that they could dip in and fund development or acquisitions of anything without having to go to the credit markets. Especially these days where it is becoming more common to see funding issues pulled from the table than put through.

As for the debt scared farmer crack, I kind of take offense at that since I am a former one. Have at times carried so much debt that it would choke the proverbial mule. Would much rather of had Apple's ability to not blink twice when deciding to add to the business. Plus personally, I most likely would not have a 5 year annual return of around 31% if I'd done it using borrowed money. Leverage is ok for some thing but not always.

But all this is neither here nor there. If you(generic term not pointing anyone out) are a stockholder, then float a proposal at the next meeting. If there is a point that can be made valid to a majority, then practice will change.

I didn't mean to offend, however you've underscored my remark explained where it came from. Comes from living in Calgary, surrounded by debt-scared farmers and debt-happy oil executives.

It's funny that you would mention Microsoft. Didn't they just "invest" a quarter-billion dollars for a 1.6% stake in a social-networking site with no real revenue plan that they've valued at $15B? Are we going to see a write-off of that next year a-la Google/Skype? (another company with lots of cash). History tells us that companies that are loaded with cash tend to invest in less-than-optimum projects.

As for the debt/leverage idea. If you're properly leveraged, you get a HIGHER return on investment than if you use cash. Farmers are debt-scared because they can't use this leverage effectively at times because they don't make a return higher than the interest they borrow at.

For example, Apple invests $1B cash on a project that earns $300M per year, they have an ROI of 30%. If they borrowed half a billion of that at 10% and made the same return, their ROI after interest would be 50%.

I meant eBay/Skype. Not Google.