“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.
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