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As an Apple investor I'm not sure what to think of this. On the one hand Apple has so much cash on hand that they can do just about anything that they want. O
by m_mueller 12y ago
As an Apple investor I'm not sure what to think of this.
On the one hand Apple has so much cash on hand that they can do just about anything that they want.
On the other hand I can see developing a phone being a huge time and money sink with very little payoff in the end. Apple has huge margins on their computers/idevices while the mobile phone manufacturers have razor thin margins on their products.
I think I would feel better about this if they spun off a separate company to do this.
- nl 12y agoDoing that kind of comment is kinda cute when it makes some sense. But no one thought that when Apple moved into phones. Phone manufactures had big margins[1], and the synergies between computing and phones were so obvious that it was assumed that Microsoft would take over the smartphone sector. [1] Nokia's margin for March quarter 2007: 22% http://ycharts.com/companies/NOK/profit_margin http://ycharts.com/companies/NOK/profit_margin
- adventured 12y agoAt the rate Apple is going, within another two years they're going to have a balance sheet with $100 billion in debt. They're already at $61 billion, stacked against $178b in cash. I'll play devil's advocate: they absolutely do not have so much cash that they can do whatever they want. Another scenario is: via shareholder pressure, they keep upping their commitments to investors. Meanwhile they boost debt to $100 billion, while cash rots to $150 billion. Then they start investing billions into a low margin car business that won't see large profits for two decades. It's actually the setup for a disaster if anything happens and the iPhone loses favor in the market.