“If Apple wants to shift its focus to high-margin enterprise with IBM, it should spin off its retail operations into a new company for investors who like retail,” Intrepid Investor writes for Seeking Alpha. “I see retail investors as accountants and tech investors as geeks. Retail and technology require different employee skill sets. Retail margins tend to be lower, and they don’t garner market caps approaching a trillion dollars like AAPL’s in early 2015. They are different investments.”
“Apple seeks new avenues of growth and one of those is through its partnership with IBM, but it needs to shed excess baggage to grow in that direction,” I.I. writes. “As of September 26, 2015, Apple had a total of 463 retail stores. Those figures are not available in form 10-Ks for 2014 or 2013 and were determined from the numbers of new stores, data which was provided. Apple reported 110K full-time equivalent employees in its 10-K for 2015. This was up from 92.6K in 2014; half of them were in retail operations. Transferring 55,000 employees to “Apple Store Company” (new ticker) would substantially reduce SG&A, which was over $22 billion in 2015.”
“As an investor who has come to appreciate transition periods that bring temporary declines in revenues and stock price, I have recently purchased IBM’s shares,” I.I. writes. “Since I have a strong preference for tech over retail investments, I will wait for Apple to get further along in what I believe will be a transition away from retail. When Apple spins off the retail business, revenue will abruptly decline – that will be time to buy Apple, the leaner device and software company. Right now Apple is still too large for me – ‘consider the scale of the investment.'”
Read more in the full article here.
MacDailyNews Take: IBM MobileFirst for iOS is working so well that iPad until sales only declined 25% YOY last quarter. Granted, it make take more time, but “Intrepid Investor” puts too much stock in IBM and not nearly enough in Apple.
MacDailyNews Note: Today is Washington’s Birthday in the U.S.A., a federal holiday and, as such, the U.S. markets are closed for the day. We will resume our normal posting schedule tomorrow.
Apple will never spin off the retail business, this guy is on pcp…
When Apple went into retail everyone and their mother sited Gateway as an example of how Apple will fold – HA!
taking retail into its own hands, Apple made probanly the best move ever to control its retail business and there has never been a better example of “best” in the retail model of rtail inthis world.
Exactly. Retail is one huge way that Apple markets itself and controls its own image. It would be a big mistake to spin it off.
And it’s not likely: Apple is opening new stores. We see Jony Ive taking a lead in new store design.
This is another dumb suggestion by another dumb analyst. It’s amazing how these investing analysts are so smart yet never built a company even approaching Apple’s level of success. They are simply armchair CEO’s.
Oh and BTW, I’d like to see the actual portfolio results of this analyst and see how stellar they are. It’s amazing to me how so many investing guru’s get away with broadcasting their opinions with no accountability or regard to their own track record.
I agree. This guy is high.
While up there, he should try his hand at writing music.
Well, go ahead and name your horse, make sure that you compare apples to apples now (history, track record, consecutive years etc)…
Agreed. Apple’s retail business is a huge success. This is not something you want to spin off. Furthermore, the IBM model is not a model you want to emulate.
Well now that settles it, doesn’t it?
You’re so lame, you probabky think this about you…don’t you dumby????
Annuity, annuity, annuity.
Out of every crack and crevice comes someone who knows better than Apple, the underdog company that made more money in a year than any other in history because it puts quality and customer satisfaction before anything else, including the rants of professional and arm chair analysts.
Apple is never perfect. It’s just the better than the alternatives. Mellow out analysts all before you destroy your golden goose. Get it? Heard that fable? No? Here you go:
https://en.wikipedia.org/wiki/The_Goose_That_Laid_the_Golden_Eggs
If you can read, you can learn. <- My great quote of the week, apparently.
No question its better than the alternative, but no where near like it used to be in terms of everything except the quality of the hardware.
I often say: Mac user since 1988, but in reality its: Apple user IIe, since 1984.
Yes, things are more complicated than they were back then, but often people and companies bring on their own “complications” willingly. They need to deal with it.
I agree kentkd34 in that poking Apple over its actual blunders (versus myth mongering and doom spinning) is part of the process. In the last two years, Apple has clearly closed its proverbial ears to criticism in a variety of aspects. I’ve focused on Apple security and OS X betas. Friends have focused on their audio and video software. Letting Apple get away with laziness and crap is a great way to let them rot into just another mediocre business. I hope that never happens.
[BTW: I was first exposed to Macs in 1984, having never used an Apple ][ or III. I started working on Macs professionally in 1991. Before that I was VAX terminals, punch cards and main frames, and gawd-help-me MS-DOS.]
Bullshit
“Since I have a strong preference for tech over retail investments, I will wait for Apple to get further along in what I believe will be a transition away from retail. When Apple spins off the retail business, revenue will abruptly decline…”
Well, that’s utter bollocks – all that will happen is that the entire Apple retail experience will again become one of variable quality and in which Apple is effectively competing against an entity which used to be part of the company for sales to consumers and businesses.
The stores themselves will be trading on razor-thin margins and won’t be able to invest in services, because Apple won’t be standing behind them with its 35% profit margins on hardware.
So much dumb in one article…
Agreed.
Apple became the most valuable company ever by “NOT THINKING LIKE EVERY OTHER COMPANY”. The person who wrote the article unfortunately thinks like everyone else.
A whole bunch of Dumb is right. haha
NO
We all have theories on what Apple needs to do to become valuable. Everything Apple has tried so far has gone for naught and the overall value continues to slide. There are going to be plenty of more ideas about what Apple needs to do to become a more attractive investment like the F.A.N.G. darlings.
Although I hate to see Apple keep losing value I hope that what the company is doing are the right things for the long-term strength of the company. It’s easy to be fooled by the greedy Wall Street investors. I don’t understand very much about finances but I’d prefer Apple stays around a long time more than trying to keep up with the F.A.N.G. stocks exploding value. I’ll admit I’m really puzzled as to why Apple’s value keeps falling, but I suppose there are things I’ll never completely understand. It’s fun to play armchair CEO but I know it can’t be easy trying to satisfy all conditions and fix things properly overnight. It’s just frustrating to be an Apple shareholder and not seeing things go well for a company that seems to doing quite well fundamentally.
Clearly the most profitable company in the history of the world must take immediate and drastic action to prevent itself from going out of business.
It never ceases to impress me that people who have never run a global corporation always have all the best answers for those who have. Tim Cook seems to me to have things going pretty well. Damned foolishness.
Apple is still growing. Maybe the writer should write articles when he is not under the influence. Just dumb.
I have recently purchased IBM’s shares
…and that’s all you need to know about this assclown.
-jcr
Absolutely NOT!!!!
These wannabe Tim Cooks has to stop advising him. He is the best CEO in the human history. We get back to this issue only when the space ship is ready and we make the first contact with the aliens.
This idea for Apple to dump its retail stores to increase value is brain dead because it ignores what makes the Apple experience so valuable to consumers in the first place. One company to deal with that manufactures both hardware and the OS, sells its products at retail and provides its own, best-in-class warranty and technical support. Apple protects its customer data too. From the consumer’s perspective, Apple is great just the way it is.