“Without Steve Jobs, Apple Inc. (AAPL) may start to embrace dealmaking after spending less on acquisitions than any of its biggest competitors,” Danielle Kucera and Rita Nazareth report for Bloomberg.
“Jobs, who transformed the near-bankrupt personal-computer also-ran into the world’s largest technology company, used less than a billion dollars for takeovers in the past decade as he unveiled the iPod, iPhone and iPad,” Kucera and Nazareth report. “Apple’s largest U.S. rivals have shelled out more than $15 billion on average to buy companies over the same span, according to data compiled by Bloomberg. Microsoft Corp. has lost a fifth of its value even after spending 10 times as much as Apple on acquisitions.”
Kucera and Nazareth report, “Boosting acquisitions in entertainment, patents and security with its $28 billion cash hoard may help Apple fend off Google Inc. (GOOG) and Samsung Electronics Co. without Jobs, the University of North Carolina and Stewart Capital said. ‘Time will come for acquisitions for sure,’ Arvind Malhotra, an associate professor at the University of North Carolina at Chapel Hill’s Kenan-Flagler Business School, who has taught Apple’s business strategies for a decade, said in a telephone interview. Jobs ‘always grew from within. If lack of his vision and availability of his position causes the future pipeline not to be there, that’s when the acquisition model comes into play. They’re sitting on a cash pile,’ he said.”
Read more in the full article here.
So, what they are saying is, without any acquisitions at all they have completely destroyed their competition and that the competition that did acquisitions all got hammered, even after they made those acquisitions, so now it’s in Apples best interest to completely change the business model that has made them the 2nd largest company in the country and start buying other companies that don’t do as well as their core business? That makes sense how?
The billions of cash they use to lock every other competitor out of getting materials to compete. They can pre-pay cash for every part of a Macbook Air and not allow anyone else to use those parts. It’s brilliant. They can totally destroy the market of any technology they want just buy pre-paying for all of it. And by pre-paying for it, they get the lowest possible price for everything.
Economic professors are professors for a reason, “Those that can’t, teach…”
+1
Thanks. You beat me to it.
+10
Same here. Gotta love people that tell you how to spend your money.
Yep me too. It’s amazing what rubbish comes out of these guys. Apparently they don’t even read their own stuff.
+1
Beat me too.
I’ve know some associate/assistant professors. There are often reasons for that title other than tenure.
It seems completely crazy to me (and says a lot about business today) that any analyst would expect Cook to “put his stamp on it” and change direction due to some kind of personal preference. Yes, that’s how everyone else does it these days. Apple is different (and Apple is successful because of it).
+2
Agree; and let me add…
1) Did they give Tim a shopping list!!??
2) Deal making or spending just for the sake of it or because competitors wasted more money on acquisitions?? Not smart at all.
“dealmaking after spending less on acquisitions than any of its biggest competitors”
3) These people are so desperate to write something that they can’t get their act together. It is not 28 Danielle and Rita, read and listen before you write.
“Boosting acquisitions in entertainment, patents and security with its $28 billion cash hoard may help Apple fend off…”
Actually, it’s 1st biggest company (in the world), according to the article itself:
“Apple’s shares advanced 1.4 percent to $378.92 at 11:02 a.m. today in New York trading, increasing its market value to about $351 billion. That made Apple the world’s biggest company by market capitalization, exceeding Exxon Mobil Corp. (XOM)’s $349 billion, data compiled by Bloomberg show.”
Stay tuned.
Thanx… you made it all so simple and clear, I doubt you’re a teacher.
“Those that can’t, teach…”
“Or work at Home Depot!”
For those that don’t know the old adage. It is something like this:
“Those that can…..do!, Those that can’t…. Teach” (update adds) “Or work at Home Depot!”
TR
+20. New adage:
“Those that don’t know, spout idiocy. Those that do know, reach the same conclusions about the idiots.”
Those who can, do. Those who can’t, teach. Never forget the guy that founded FedEx got a “C” from his B-school prof on the paper describing his business concept.
Here we go with people who’ve never run a business, much less been associated with a success like Apple, recommending that Apple start doing things different from the things that made it make history. God save us. Glad Tim Cook said, “Nothing’s going to change.”
“Microsoft Corp. has lost a fifth of its value even after spending 10 times as much as Apple on acquisitions.”
Maybe that ought to tell you something.
WWTCB? (What will Tim Cook Buy?)
Apple is not going to start burning money just like that. Tim Cook as a CEO is the same Tim Cook as the COO. He knows what is good and what is not.
Since when did the Board of Directors and the COB, Steve Jobs, leave Apple and thus signal a vast change at Apple, Inc.?
I don’t see change @ Apple. I hear only a journalist needing to crank out another 1000 words to satisfy his boss.
Nothing’s gonna change. Apple is steady on it’s course
Why does MDN reprint these ‘ten-a-penny’ articles? Worthless opinions from so called analysts who in one sentence explain how big Apple got ‘without’ doing what MS, HP etc have done, then go on to say they could, might, may( pick any combination) do a one eighty and suddenly do the opposite!
And what’s with the $28B figure?
Time for MDN to use a credibility filter.
to generate ad revenue? running these articles is like dangling a ding dong in front of a morbidly obese person.
Why do you think MDN reprints these articles? They are counting on you to get annoyed about it to click on the headline. They are just as much of click whores as the ones they reprint for the same reason.
I know, I know….. just venting ;-/
Wow. Just wow. This is a ridiculous article.
Now it is about $80+ billion, no $28 billion.
large aquisitions and mergers rarely work out. i have been with 3 large companies that went through mergers and auisitions to “grow the business”. None of them are better off today than they were pre-merger. Hell one of them was damn near destroyed over a culture war when both companies joined.
It must pain wallstreet to watch apple do everything backwards from the rest of “the street” while making massive profit and changing industries.
Hopefully Cook will keep Jobs’ approach for purchases.
Now of Apple’s $350 billion worth more than $80 billion are available as net assets. This means for company’s evaluation more than gigantic but wasted purchases.
There is a very long list of why media reporters and academics are not business executives. These geniuses illustrate this perfectly.
I love how Apple, with a couple billion in the bank was “nearly bankrupt” when Steve came on board. No doubt he’s done very well by the company, but the reports of Apple’s death were greatly exaggerated.
No, they weren’t. They had barely $3 billion, but were actually hemorrhaging money. Without enough revenue to cover all the expenditures, as well as losses, they would have burned those $3B in about 90 days. Cutting products, refocusing on the Mac, getting Microsoft’s commitment to develop MS Office (as well as the symbolic 5% investment in AAPL stock, worth $150M at the time) gave Apple enough of a breathing room to stop bleeding money and eventually turn the ship around.
No, “90 days” is typical exaggeration; Apple had huge losses only in one last quarter of 1996, and by the time of MS $150 million injection, Apple was already profitable for two quarters.
Maybe you had a seat on the board, but I think you don’t know the facts. Rather, it’s simply your opinion that Steve Jobs was exaggerating when he said that Apple was 90 days from bankruptcy. Moreover, if I understand the basis of your argument, you’re saying that a quick return to a razor thin profits (after Amelio’s massive cost cutting) is proof that Jobs was exaggerating. Maybe you’re right, but your theory ignores both the revenue trajectory and the sale of ARM holdings as a means of propping up profits in the quarters following Jobs’ return.
There was no “trajectory” of revenue. Apple got the biggest revenue hit in Q4 of 1996 and that is it; neither before, not later there were drastic movements of revenue level.
Also, Apple sold off final ARM Holdings’ Akamai’s shares years after returning to profitability. While, of course, there was shares sale in the late 1996, it was only part of shares, and, simultaneously, Apple was able to pay $400 million in cash for Next Software.
with 222 million iOS devices activated vs 135 android and 66% of world cell phone profits, Apple making 50 times more money in mobile than Google with android…
the great need to “Fend off” google?
No wonder this guy is an economics professor. Apparently he teaches, “If you have money in the bank, you must spend it because it’s not doing anything by sitting in the bank.”
What an idiot. Apple doesn’t need to acquire just for the sake of acquiring. And Apple DOES acquire – small companies which make sense to buy and add their technology and engineers to Apple’s team and products.
What doesn’t make any sense is this continual call for Apple to acquire media companies. Apple is much, MUCH better off letting Warner Bros., Sony, etc. take the risks of making content and Apple simply retails it. Apple has such leverage that it can force good terms and smart distribution models, just like it did with iTunes and music.
That’s ridiculous. Apple will acquire other companies, when it makes sense.
Having said that, a lot of those “other companies” just lost a lot of market value in the recent general market decline. So it may start to “make sense” more often. That does not mean Tim Cook is changing Apple’s strategy. It just means there is more “smart value” out there to be acquired now. And Apple has the cash to do it in a big way, if doing so makes sense.
What was really stupid, is Google and HP OVER-paying to acquire Motorola Mobility and Autonomy, respectively. They should be bargain-hunting, not blowing their available cash in one very expensive purchase.
What a bunch of BS. If you have no vision and In a panic, buy some one elses ideas.