“Before Steve came back, sales executives were gutting Apple worse than the Capital One plunderers and rewarding themselves handsomely. (While Michael Spindler was looking to sell out.) None of the sales executives survived when Steve returned, and sales executives were rendered much less powerful. As bizarre as it seems, the sales organization can no longer even do marketing,” John Martellaro writes for The Mac Observer.
“These days, Apple has about $10B in the bank. That’s the result of years and years of rolling the profits into paying off debt and saving for a rainy day. Excellent. That $10B earns a lot of interest. But one analyst asked a few years ago whether Apple was simply running a credit union. The implication is that that much money either needs to be paid in dividends, which Apple won’t do, or be put to good work,” Martellaro writes.
Martellaro writes, “No one knows what Apple has in mind for that kind of money. My theory has been that Apple’s board of directors has been accumulating cash for a seriously large merger at the appropriate time. For a while, some thought it was Disney. It’ll be something much bigger than a mere $500M for a new campus. Or $50M for a new data center. No, I mean something so big, it’ll change the face of computing in America.”
“Apple appears to be transitioning to a much more consumer electronics focus. Back in the days, pre-iPod, when Apple was in its $6B/year doldrums, it was possible to put up barriers, remain a little arrogant (in order to keep the religious fervor alive), create a fever of endless product surprises, and remain distant from its customers. But as the Cluetrain Manifesto points out, companies that put up barriers, lock themselves behind walls, and refuse to actually talk with their customers get into trouble very quickly,” Martellaro writes.
Martellaro writes, “Apple realized that if they were going to become a consumer electronics company, they needed to have a store front presence on Main Street, USA. They’ve solved a major part of this ‘Castle and Moat’ complex with the Genius Bar at more than 150 retail sites, well placed with respect to population centers in the U.S. Even so, it’s interesting that the people who work in the Apple stores are a different kind of Apple employee, badged differently, and do not have a whole lot of authority. In time, that will have to change.”
Martellaro writes, “Apple is a mature company now, both technically and financially. The key to understanding how Apple is going to make this transition — from a computer company that has a popular electronic gadget, the iPod — into a company that has a portfolio of popular and useful electronic devices for the 21st century will be to watch where the money goes, up and down the organization. And with that money, authority and responsibility.”
Full article with much more here.
MacDailyNews Take: Buy Adobe. Clean out the dreck. Discontinue Windows versions of Photoshop, Dreamweaver, Illustrator, InDesign, Premiere, etc.
Hey, it’s just an idea. 
Related articles:
How long must we wait for Adobe to produce Universal applications for Apple’s Intel-powered Macs? – August 21, 2006
Cost of Apple’s second 50-acre Cupertino campus could top $500 million – April 25, 2006
Video: Steve Jobs meets Cupertino City Council – April 22, 2006
Transcript: Apple CEO Steve Jobs addresses the Cupertino City Council – April 20, 2006
Apple CEO Steve Jobs plans new 50-acre campus in California – April 19, 2006
Should Apple buy Adobe as leverage against Microsoft? – December 16, 2005
Adobe prefers (and promotes) PCs over Macs – March 24, 2003
yeah, they wouldnt discontinue windows production if they bought adobe, just crank the price tag up like on shake, then discontinue lol
It’s a chess board. But that’s nothing new.
Were AAPL to buy anyone strategically, it would have to be…….VZ. Okay, they have a market cap of $100B, but what about Sprint – $50B?
Similarly, Cingular is up there. It’s no secret the future is about anything, anywhere, anytime. So maybe go satellite. Iridium. 66 planet girdling satellites that can be had cheap. Iridium Satellite paid just $25M for the $5B network from Motorola. They have lots of debt, and a growing base of customers.
Just a thought.
You do not make large acquisitions with cash. You use stock.
You make small acquisitions with cash.
“…put up barriers, remain a little arrogant (in order to keep the religious fervor alive), create a fever of endless product surprises, and remain distant from its customers.”
The Apple manifesto is alive, well, thriving… Genius Bars are not the answer. Depending on the mood of the ‘genius’ you get, it might be a little helpful, but it’s no substitute for really caring about your customers and Apple doesn’t care care about much of anything other than itself.
Although I like MDNs take on what to do with all the cash, it would be nice to see them use some of it to compensate those of you who couldn’t wait and now face serious remorse with your intro versions of MacBook and MacBook Pro.
Apple buys Intel?
By the way, Apple is a hardware company, more so then software.
Pete,
I have a 17-inch Apple MacBook Pro with a 2.16GHz Core Duo and 2GB of RAM.
Zero problems. It just works. And it turns heads everywhere I go.
I have no buyer’s remorse whatsoever.
Makes no sense to buy Adobe.
Independently is correct – so long as it’s a public company you want to buy, or a private one where the owners are prepared to take your stock.
Most likely use of cash is massive investment in infrastructure.
I would lean towards a paradigm shift – a visionary move. Such as a deploying a satellite network or building a telecom infrastructure. A takeover of a consumer company such as Sony (funded partly through stock). But I don’t really see the benefit for Apple of buying a consumer products company. I would think more of content – like buying movie libraries. Or a joint venture with Google. Knowing Apple and Steve Jobs (okay, I don’t, but you know what I mean) I would bet it will be spectacular.
SONY CORP current market cap is US$45.340BN — so, maybe a quarter of Sony? Maybe not!
ADOBE SYSTEMS INC current market cap is US$19.217BN — stock and cash would probably do it.
Or maybe Steve Jobs is planning a buyback like Microsoft (Market Cap US$266.455BN) are currently executing?
Stto, remember a takeover of a public company is usually stock, or stock and part cash.
But I don’t think Sony makes sense. Too much goodwill.
Apple Corp buying Dell makes a lot of sense.
Apple has $10 billion cash
Dell market capitalization is $48 billion makes LTV 80% well within capacity and would take Apple to number 1 or 2 in the world in one hit.
Cool
Matt – “Personally, I think the most obvious “Consumer Electronics” company for a meger would be Dell”
Apple wouldn’t need to buy Dell because Dell do most of their manufacturing elsewhere.
If Apple wanted to have computers built on the scale that Dell do, all they need to do is to commission larger quantities to be assembled in Chinese factories.
Dell don’t need to be bought out, they can be squeezed out and are already being squeezed out by others. When your unique advantage is selling at a lower price, there is usually somebody who can figure out a way to sell for less.
My guess is that if Apple have specific plans for that money, it will not be to buy something that already exists, but to invest in something completely new and to invent an entirely new type of product or service.
I think Apple ought to buy the tiny island of Bermuda, soak up all the tourists money with the flagship Micro$oft museum with life sized wax replicas of MonkeyBoy, Gates, Dell, and so forth with each of their voices recorded reciting Shelley’s famous sonnet, “Ozymandias”.
I agree with Autodesk… although buying a stake in Adobe isn’t a bad idea either.
Yeah I know it’s all stock or stock+partcash for large transactions.
” width=”19″ height=”19″ alt=”smile” style=”border:0;” /> Should’ve said I was highlighting how much cash Apple have in bank versus Market Caps of companies being discussed.
There’s also the downside with too much cash, makes for takeover target via leveraged debt. 😮
Elgato has got to be on the chopping block, Apple already have the CEO, and the products are perfect for Apple with little or no effort.
And then once Parralells is out of Beta buy that one as well.
if they buy anything it will be a gaming company. Apple has made multiple moves in the last few months toward gaming.
Have considered for a while that Apple could buy SUN MICROSYSTEMS INC (market cap US$16.344BN) as first move in a Unix provider consolidation move.
But when one looks at Apple’s M&A history, they haven’t done anything since 1992. Compare that to Microsoft who’ve have 11 acquisitions so far in 2006.
Not sure that aquisition is Apple’s path.
Beware of this tale: there was a great British company called GEC. It had billions in the bank and was regarded as safer than a bank. Under pressure to spend, the now post Arnold Weinstock managment did just that. A splurge into telcoms companies, a sale of its defence industry business to buy more, and wham, 2000 comes and it was busted. Its shares fell from £14 to £0.03.
So, if Apple wants to keep this cash hoard, fine. Just DON’T put pressure on them to spend it just for the sake of it!!!
I think Apple should concentrate on getting Voiceover to sound like Lurch.
Parallels would be a no brainer – Good technology and cheap.
Adobe – Definately. It focuses on the creative industries which is Apple’s sweet spot.
Autodesk – Not sure about these guys. They don’t have mac products and there is no guarantee that enough people would use mac versions of their products
Dell – No way. Cheapo mediocre technology. Why would Apple want them? Unless it wants the coporate customer base.
Two other potential candidates:
Avid Corporation – Huge creative arts company
Native Instruments – Probably the best music software company in the world.
Apple could also buy controlling interest on some of these. Companies like Oracle have done that succesfully in the past.
@The MacDaddy-Oh!
Self-abusive animatronic taxidermy?
“As bizarre as it seems, the sales organization can no longer even do marketing,””
And here we find the reason why Apple is better than MS.
Apple shoudl take that money and build a giant 50 mile high tower in the center of the US, offer WiMax high speed internet, cell phone service, and blow the phone and cable companies out of the water with one fell swoop. Then do it over in every continent.
a couple of years ago i would have said SONY. but considering how they have been faltering lately, it appears that they have a fundamental culture issues that would make the merger very unlikely.
DELL. be real people. do you think the Michael Dell people will get along with the Steve Jobs and free thinkers of Apple. Get real.
Elgato will be a nice little company to buy. but i am betting Apple is already working on their own DVR functionalities into Quicktime. So very soon Elgato will be irrelevant.
Adobe? why buy them out. Apple is doing well with its own iLife product for consumers. and even with its own professional products. Adobe is not needed anymore.
i am betting Apple will invest heavily into wireless iPhone and services. Look for them to double in sizes in the next few years. It will be a lot easier to do it that way, better integration plan, better control. Buying somebody out will mean lots of training, lots of churn getting them integrated into Apple culture.
Discontinuing Window’s version of Adobe products would render that investment a huge loser.