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It seems C-level execs across industries believe buying back stock with profit/debt to unlock performance bonuses is a win-win. This kind of stupidity is why I

It seems C-level execs across industries believe buying back stock with profit/debt to unlock performance bonuses is a win-win. This kind of stupidity is why I'm bearish on Apple. Companies should never prioritize financial engineering over R&D imo. The company & shareholders will eat the disastrous consequences of this asinine thinking when the market next adjusts 30-60% and everyone realizes they were wasting money buying back stock at all time highs.

coralreef 7y ago
- Apple is spending more than ever on research and development. - R&D account for 7.9% for its revenue this part quarter. - Apple is now on pace to spend $16 billion in R&D in 2019 as it preps for life after iPhone dominance. https://www.imore.com/apple-spending-record-amount-research-and-development-it-searches-next-thing https://www.imore.com/apple-spending-record-amount-research-...
- jquery 7y ago
  Apple may be spending a lot on research but they've recently become too obsessed with mobile profits over holistic prosumer experience. I don't think I'm the only heavy Apple user considering leaving the reservation if they choose to focus on mobile consumption above everything else. If they don't fix the MPro[1], I've lost one of the major reasons I use Apple products at all, I thought the agreement was I pay Apple a nice fat 30% profit margin and in return they ensure I'm using the hands-down best computing devices on the market. The Airport Extreme disappearing is another disappointment. https://blog.pinboard.in/2016/10/benjamin_button_reviews_the_new_macbook_pro/ https://blog.pinboard.in/2016/10/benjamin_button_reviews_the... (not replacing my 2013 MPro until they fix all the issues with the current generation that I'm forced to use at work)
  - kmlx 7y ago
    “they've recently become too obsessed with mobile profits over holistic prosumer experience” “For the first time since 2013, iPhone sales did not account for at least half of Apple’s revenue” i’d say that AAPL has been focusing on services more than anything else lately.
    - mieseratte 7y ago
      How much comes from iPhone sales and how much from iPhone app sales?
  - eecc 7y ago
    Just bought an Airport Express second hand to extend a Time Capsule network around a big concrete wall. Impressed by the design and functionality of the thing, really just plug and move on. Whoever decided to discontinue Apple WiFi should be kicked
    - jquery 7y ago
      Yes, I got a Time Capsule with a nice fat spinning disc, and used its USB port to chain a 4TB HD to it, and have a 6TB networked Plex setup, which was relatively easy to set up and gets me strong dual signal everywhere in my 3 story house. Really impressive tech. The capsule has taken some abuse too and still works. Before that I had an Extreme with basically the same results minus Plex.
    - jbverschoor 7y ago
      It’s not a closed system. So you end up with servicing a not so big product
      - jquery 7y ago
        That's where you want to consider second order effects. The type of person who's buying an Apple Wifi router is probably spending a lot of money on Apple products, it's part of the "long tail". They might be the people most likely to evangelize their products. It keeps expertise about wifi inside of Apple. Getting rid of it seems like a move made by an executive who had to "do something" to look impressive. Apple isn't a cash-poor company that needs to ditch every product that's not part of their core offering. And the Airport wasn't a failed product line, it was a beloved one. I have a feeling it's more to do with not wanting to help technologically illiterate individuals set up their own wifi, who blame "Apple" when their wifi doesn't work. But of course that's just speculation. The Airport lineup was bar-none the best easy-setup home router on the market when it was pulled.
- Aeolun 7y ago
  It’s actually pretty impressive that they’re spending that much on R&D and still manage to make the next product worse than the previous one.
  - cuban-frisbee 7y ago
    Most of it is likely going to unannounced products like the rumored Apple car and and the rumored AR product.
    - secfirstmd 7y ago
      I really don't understand how Apple hasn't used it's cash pile to buy Tesla. It seems like a pretty dam good fit.
      - nojvek 7y ago
        I wonder about this too. Although Apple rarely makes big acquisitions. Elon’s not the kind of guy who will cede away control and Apple loves control. Plus Apple’s chief “Taste person” and chief designer have left so it’s no longer a product company. It’s a squeeze the Juice kind of company. I’m bearish on Apple too.
      - steelframe 7y ago
        > I really don't understand how Apple hasn't used it's cash pile to buy Tesla. All you need to understand is that they haven't. Assuming Apple is still a sound and rational company pursuing a similar line of business, that should speak volumes to you.
        NotSammyHagar 7y ago
        Apple raising prices on their phones so 1k was probably an irrational choice. It's amazing how they are repeating history of the first time jobs was ejected from apple and they reduced innovation and were on the way to death until he came back and saved them with nextstep.
      - 7y ago
cobookman 7y ago
Say you can get debt at 3% interest. The same money could get 4-7% yearly average return in safe investments over a 7-15 year time frame. Why wouldn't you aquire debt? This is the same reason rich people get a mortgage even if you could afford to buy the house outright. Best part is that debt is defaultable.
- User23 7y ago
  Anyone with collateral can go into debt at 3%(ish) interest. I've never heard of anyone getting a sizable loan for longer than overnight at that rate without collateral. If there is a counterexample please share it. And if a person defaults on a collateralized debt, well, they lose, and usually badly. Margin calls are one of the nastier examples, but foreclosures also come to mind. Even a safe investment like US Treasury bonds can trigger a margin call if, for example, interest rates rise and reduce the market value of the bond enough to fall below margin requirements.
  - tomatocracy 7y ago
    Most vanilla corporate bonds are unsecured and offer nothing more than a promise not to give anyone else security over the corporate assets and an unsecured debt claim.
jbverschoor 7y ago
Then you must have been bearish for 6 years. Which simply means you’re wrong. Apple does buybacks for “compensation”. In reality I think they have these motivations: 1) they think their yield is higher than the market. 2) their company is not an investment fund, but you still want your cash deployed. 3) Steve wanted to have nothing to do with investors anymore
diedyesterday 7y ago
Apple is not overvalued. It's P/E is actually very low considering the amount of cash for R&D and the potential for growth they have at hand. Currently it's bound by a lack on entrepreneurial imagination on part of its execs but has a sure future nonetheless.

coralreef 7y ago

- Apple is spending more than ever on research and development. - R&D account for 7.9% for its revenue this part quarter. - Apple is now on pace to spend $16 billion in R&D in 2019 as it preps for life after iPhone dominance. https://www.imore.com/apple-spending-record-amount-research-and-development-it-searches-next-thing https://www.imore.com/apple-spending-record-amount-research-...

jquery 7y ago
Apple may be spending a lot on research but they've recently become too obsessed with mobile profits over holistic prosumer experience. I don't think I'm the only heavy Apple user considering leaving the reservation if they choose to focus on mobile consumption above everything else. If they don't fix the MPro[1], I've lost one of the major reasons I use Apple products at all, I thought the agreement was I pay Apple a nice fat 30% profit margin and in return they ensure I'm using the hands-down best computing devices on the market. The Airport Extreme disappearing is another disappointment. https://blog.pinboard.in/2016/10/benjamin_button_reviews_the_new_macbook_pro/ https://blog.pinboard.in/2016/10/benjamin_button_reviews_the... (not replacing my 2013 MPro until they fix all the issues with the current generation that I'm forced to use at work)
- kmlx 7y ago
  “they've recently become too obsessed with mobile profits over holistic prosumer experience” “For the first time since 2013, iPhone sales did not account for at least half of Apple’s revenue” i’d say that AAPL has been focusing on services more than anything else lately.
  - mieseratte 7y ago
    How much comes from iPhone sales and how much from iPhone app sales?
- eecc 7y ago
  Just bought an Airport Express second hand to extend a Time Capsule network around a big concrete wall. Impressed by the design and functionality of the thing, really just plug and move on. Whoever decided to discontinue Apple WiFi should be kicked
  - jquery 7y ago
    Yes, I got a Time Capsule with a nice fat spinning disc, and used its USB port to chain a 4TB HD to it, and have a 6TB networked Plex setup, which was relatively easy to set up and gets me strong dual signal everywhere in my 3 story house. Really impressive tech. The capsule has taken some abuse too and still works. Before that I had an Extreme with basically the same results minus Plex.
  - jbverschoor 7y ago
    It’s not a closed system. So you end up with servicing a not so big product
    - jquery 7y ago
      That's where you want to consider second order effects. The type of person who's buying an Apple Wifi router is probably spending a lot of money on Apple products, it's part of the "long tail". They might be the people most likely to evangelize their products. It keeps expertise about wifi inside of Apple. Getting rid of it seems like a move made by an executive who had to "do something" to look impressive. Apple isn't a cash-poor company that needs to ditch every product that's not part of their core offering. And the Airport wasn't a failed product line, it was a beloved one. I have a feeling it's more to do with not wanting to help technologically illiterate individuals set up their own wifi, who blame "Apple" when their wifi doesn't work. But of course that's just speculation. The Airport lineup was bar-none the best easy-setup home router on the market when it was pulled.
Aeolun 7y ago
It’s actually pretty impressive that they’re spending that much on R&D and still manage to make the next product worse than the previous one.
- cuban-frisbee 7y ago
  Most of it is likely going to unannounced products like the rumored Apple car and and the rumored AR product.
  - secfirstmd 7y ago
    I really don't understand how Apple hasn't used it's cash pile to buy Tesla. It seems like a pretty dam good fit.
    - nojvek 7y ago
      I wonder about this too. Although Apple rarely makes big acquisitions. Elon’s not the kind of guy who will cede away control and Apple loves control. Plus Apple’s chief “Taste person” and chief designer have left so it’s no longer a product company. It’s a squeeze the Juice kind of company. I’m bearish on Apple too.
    - steelframe 7y ago
      > I really don't understand how Apple hasn't used it's cash pile to buy Tesla. All you need to understand is that they haven't. Assuming Apple is still a sound and rational company pursuing a similar line of business, that should speak volumes to you.
      - NotSammyHagar 7y ago
        Apple raising prices on their phones so 1k was probably an irrational choice. It's amazing how they are repeating history of the first time jobs was ejected from apple and they reduced innovation and were on the way to death until he came back and saved them with nextstep.
    - 7y ago

cobookman 7y ago

Say you can get debt at 3% interest. The same money could get 4-7% yearly average return in safe investments over a 7-15 year time frame. Why wouldn't you aquire debt? This is the same reason rich people get a mortgage even if you could afford to buy the house outright. Best part is that debt is defaultable.

User23 7y ago
Anyone with collateral can go into debt at 3%(ish) interest. I've never heard of anyone getting a sizable loan for longer than overnight at that rate without collateral. If there is a counterexample please share it. And if a person defaults on a collateralized debt, well, they lose, and usually badly. Margin calls are one of the nastier examples, but foreclosures also come to mind. Even a safe investment like US Treasury bonds can trigger a margin call if, for example, interest rates rise and reduce the market value of the bond enough to fall below margin requirements.
- tomatocracy 7y ago
  Most vanilla corporate bonds are unsecured and offer nothing more than a promise not to give anyone else security over the corporate assets and an unsecured debt claim.

jbverschoor 7y ago

Then you must have been bearish for 6 years. Which simply means you’re wrong. Apple does buybacks for “compensation”. In reality I think they have these motivations: 1) they think their yield is higher than the market. 2) their company is not an investment fund, but you still want your cash deployed. 3) Steve wanted to have nothing to do with investors anymore

diedyesterday 7y ago

Apple is not overvalued. It's P/E is actually very low considering the amount of cash for R&D and the potential for growth they have at hand. Currently it's bound by a lack on entrepreneurial imagination on part of its execs but has a sure future nonetheless.