Money

More on Apple gobbling up PA Semi

Posted on May. 8, ’08, 8:47 AM PT by Dan Moren

Category | Business

Steve Jobs does not mess around. When the man wants a bag of chips, he buys a chip company. Disappointed to find that PA Semi does not in fact make Fritos, Jobs and co. decided to make lemoade by asking them to design some microchips for an Apple-branded toaster or something.

But why buy the company in the first place? The EETimes sheds some light on what went into the decision. Apple, which was allegedly an investor (potentially anonymous) in PA Semi before the acquisition, wanted the company to design a chip for them, but PA Semi had already exhausted their venture capital funds. At which point, Steve Jobs apparently sighed, beckoned over his manservant, and had them pay off the rest of the investors in solid gold ingots he has trucked around with him (why do you think he needs a private jet?).

Of course, that still leaves the burning question of what precisely the requested chip is for. Given Apple’s close ties to Intel for the Mac and the fact that PA Semi previously worked on PowerPC chips, it seems unlikely that it will be for anything in that line; much more likely are products in the consumer electronics division. Or, just maybe, something that we haven’t seen yet.

Apple gaining on Microsoft in cash money

Posted on May. 5, ’08, 9:20 AM PT by Dan Moren

Category | Money

You know, I think I’m doing pretty well when it comes to saving: I don’t spend a lot of money, I’ve got some investments, and I’ve put some money away for retirement. But just when I’m feeling pleased with myself, I find out that Apple’s got almost $20 billion in the bank. Among big tech companies, that puts Apple in the number two three spot behind their favorite rival, Microsoft, whose own piggy bank is stuffed to the gills with over $26 billion, and networking giant Cisco, with $22.7 billion. In third and fourth fourth and fifth place are Google and IBM, both with about $12 billion.

That’s a whole lot of cash. But what exactly can Apple do with $20 billion? Well, aside from anything it wants. Over at the Seattle Post-Intelligencer, Todd Bishop discusses the differences between how Microsoft and Apple treat their cash reserves.

Apple has historically built its business from the ground up, preferring smaller strategic acquisitions of technology and talent. If the company continues to follow that pattern, that means it’s not likely to reduce its cash pile through a blockbuster deal.

Meanwhile, Microsoft has engaged in stock buybacks and dividends. Not to mention, their cash is a little safer now that the proposed Yahoo merger is out of the question. Apple has not traditionally gone down these roads, partially, as Bishop points out, because of Steve Jobs’s penchant for financial stability given Apple’s ups and downs in the past.

For all the talk of Apple buying huge companies like Adobe or Yahoo, I think they’re on the right track with their smaller, targeted purchases (i.e. PA Semi) and pumping money into their own R&D budget, while keeping the vast majority of their cash on hand just in case. Think different? Sound off below.

Update: Seattle P-I later updated their story to add Cisco, who has almost $23 billion in cash reserves, so we’ve updated as well. Because all the cool kids are doing it.

Microsoft may go hostile on Yahoo…right after lunch

Posted on May. 2, ’08, 9:03 AM PT by Dan Moren

Category | Business

As a special treat, we now bring you an excerpt from MacUser’s upcoming first published collection, The Zen of Steve Ballmer. The Wall Street Journal talked with the Microsoft CEO, including asking him about a potential hostile takeover of Yahoo.

“With the right circumstances it’ll happen. Without the right circumstances it won’t happen,” said [Ballmer].

After that profound observation, a loud gong was sounded, but Ballmer quickly explained that merely meant that his lunch was ready. His lunch of pure, unsullied souls. Topped with a chipotle spread and a little lemon. Mmm.

Word on the street says that were Microsoft to launch a hostile bid on Yahoo, it could happen as soon as today. In fact, it may be happening as you read this. If you listen very quietly, perhaps you will be able to make out the distant ringing of the gong that indicates Ballmer is once again on the warpath.

[via Macworld]

Yahoo thumbs nose at Microsoft acquisition deadline

Posted on Apr. 28, ’08, 12:39 PM PT by Dan Pourhadi

Category | Money

Microsoft wants Yahoo. Yahoo thinks Microsoft is nerdy and smells funny and would much rather be purchased by a cuter company who uses deodorant and plays football.

Why else do you think the search giant ignored Microsoft’s Saturday deadline for wrapping up an acquisition agreement the Redmond company really, really, wants?

You know the story: Microsoft wanted to purchase Yahoo for a price well-above its current market value. Yahoo said “No, not enough money.” Microsoft said “Yes, or else.” Yahoo said “La la la can’t hear you.” Microsoft said “Agree to it by Saturday or we’ll go hostile on your ass.” Yahoo said “Did you hear something? Must be the wind.” Microsoft said “You suck!” then ran to its room crying. Sorta.

Microsoft’s execs have been threatening to purchase Yahoo in a hostile takeover via proxies if the web company didn’t agree to the deal by Saturday. But as the deadline approached and Yahoo seemed unflinching, they toned down their rhetoric, going from “Big Tough Guy With Lots of Money” to “Defeated Child on the Playground.”

“Unless we make progress with Yahoo towards an agreement by this weekend, we will reconsider our alternatives. We will provide updates as appropriate next week, these alternatives clearly including taking an offer to the Yahoo shareholders, or to withdraw our proposal and focus on other opportunities, both organic and inorganic,” [Microsoft CFO Chris] Liddell said then.

Seems like the hoopla is finally coming to a head — either Microsoft will take the next steps in executing a hostile takeover, or they’ll give up altogether and pretend like it never happened.

There’s a great piece at the Mothership about the whole acquisition business that’s definitely worth a read — it reveals a lot about Microsoft’s intentions with the bid, and their surprise and frustration at Yahoo’s reluctance to accept. But once again it seems like Big Red is all talk and no walk — which, in this case, may actually be a good thing for users who don’t want to see the tech industry’s garbage disposal obliterate Yahoo’s great array of online services.

Break out your subpoenas: backdating suits are back in fashion

Posted on Apr. 24, ’08, 9:18 AM PT by Dan Moren

Category | Legal

I was realllllly hoping I would never have to utter—or, more to the point, type—the word “backdating” ever again. Then again, I was also hoping that I might be able to some day afford an island shaped like Djibouti. Neither of these things was apparently destined to be.

The Boston Retirement Board, who last September requested access to minutes from Apple board meeting, has now announced that they’re pursuing a suit against Apple for wasting $105 million by granting backdated options for Steve Jobs. While other, similar suits have been dismissed, the BRB claims to have new information gleaned from the above-mentioned documents—that information, however, is not being listed in the complaint, as it is technically confidential, and the court has yet to determine how it should be treated.

To these ends, the court is summoning a number of Apple’s executives and board, both current and former, to testify, including William Campbell, Millard Drexler, Arthur Levinson, Jerome York, Gareth Chang, Edgar Wollard, Fred Anderson (pictured), Nancy Heinen, and Steve Jobs himself. I hope they scheduled Anderson and Jobs on different days, because otherwise sparks are going to fly! Catfight!

[via The Mac Observer]

While you were sleeping…(tidbits from Apple Q2 results)

Posted on Apr. 24, ’08, 8:29 AM PT by Dan Moren

Category | Money

If you didn’t listen to yesterday’s financial results conference call (or read our lovingly handcrafted liveblog over at the Mothership), I suppose I can’t blame you. It takes a true masochistic personality to follow along with the numbers and figures, listening to Peter Oppenheimer and Tim Cook’s awkward pauses as they remind themselves that they’re only doing this because it’s required by law.

But as always, there are a couple of bits and bobs nestled in the data that might be of interest to even your casual Apple-watcher.

• 1.43 million Mac laptops were sold in the quarter, the most ever.
• Apple had a blockbuster quarter in education, growing 35% over the year ago quarter, the highest increase in any quarter in 8 years.
• Apple acknowledged their recent move into selling videos in Germany and said they would continue to expand that internationally.
• Interest in the iPhone’s forthcoming enterprise features is big: over 400 higher education institutions and 1/3 of Fortune 500 companies have registered interest.
• Around 45 more Apple Stores will open in 2008, including the first stores in Australia, Switzerland, and China.
• The 51% increase in Mac sales year over year is strongest in almost two decades and about 2.5x the market growth rate.
• Best Buy rollout is going extremely well. Apple’s in about 400 stores at present, and plans to have 600 by the summer.
• Apple’s corporate treasurer, Gary Wipfler, who sits in on all the calls, but pretty much never says anything actually answered a question! Unfortunately, I didn’t really understand a word out of the guy’s mouth. The short answer to the question asked, however, was “No.”
• Sharon Cross of Cross Research tried to trick COO Tim Cook into revealing Apple’s plans to release a 3G iPhone, but Cook is far too wily for that—he dodged the question like one of he was in The Matrix, causing Cross to cry plaintively “I had to try!” That got a laugh from Tim, even as I imagined his finger hovered over the trap door button.
• iPhone unlocking is a “significant” number, but Apple doesn’t want to give a figure because they aren’t confident they can back it up.

Now that your eyes are fully glazed over, we’ll return you to our regularly scheduled Mac tomfoolery. No more numbers. Well, for about three months anyway.

The numbers game: liveblogging Q2 2008 earnings

Posted on Apr. 23, ’08, 1:44 PM PT by Dan Moren

Category | Money

Doctor, Doctor, Mister MD, will you tell me please what’s ailin’ me? Looks like I’ve got a bad case of Apple financial fever, baby! It comes just four times a year, so get ready for the fun and excitement of finding out just how Apple’s results stack up (hopefully without all the delirium and chills that actual fever brings with it). As promised, we’ll be liveblogging all the fun over at Macworld, just as soon as it kicks off at 5PM Eastern (2PM Pacific).

But Apple’s not about to keep us in suspense. It’s already put out a press release of the quarterly highlights which we, in all due diligence, shall break down for you here. As expected, Apple had another bang-up quarter, reporting revenue of $7.51 billion and profits of $1.05 billion, which translates to earnings of $1.16 per diluted share (that’s considerably higher than the guidance CFO Peter Oppenheimer offered in January). Compare that to the year ago quarter, where revenue was $5.26 billion and profit was $770 million, and it all looks pretty tasty.

Mac sales continued very strong: 2,289,000 units sold, with 51% unit growth and 54% revenue growth year over year; iPods sold 10,644,000, which was about flat with 1% unit growth since last year and 8% revenue growth; and the iPhone sold 1,703,000 units. As should surprise nobody by now, this was a record March quarter for Apple, bringing them to over $17 billion in revenue for the first half of FY 2008. In looking forward to Q3, Oppenheimer offered a forecast of $7.2 billion in revenue, and $1.00 even in earnings per diluted share.

Okay, it’s all well and good, but come on: that’s drier than a bowl of Cheerios in the Sahara. For the real meat-and-potatoes, you want the full liveblog. So hit the link below to read our up-to-the-minute commentary, underway shortly.

Reminder: Apple talks money tomorrow

Posted on Apr. 22, ’08, 2:07 PM PT by Dan Moren

Category | Money

Not that you probably need—or even particularly want—a reminder, but twenty-four hours from now we’ll be tuning in to hear the dulcet tones of Apple CFO Peter Oppenheimer and COO Tim Cook as they discuss all things financial and Apple-related. It’ll be like Christmas in April, only with way more numbers.

So what, then, can we say about it a full day in advance? Both Reuters and Forbes have posted pieces anticipating tomorrow’s financial results, both agreeing that the news will probably be on the good side, despite what many analysts are seeing as conservative guidance from Apple for the quarter (if you want a reminder, back in January Oppenheimer forecasted revenue of $6.8 billion with earnings per diluted share of around $0.94).

As always, you can tune in to the audio webcast of the report or, if you’d prefer a little company, you can follow along over at Macworld where I will be liveblogging the call, along with color commentary from our Grand Poobah, Jason Snell. We’ll post a link to that tomorrow shortly before the webcast, so keep it locked.

Motley Fool: What airlines can learn from Apple

Posted on Apr. 22, ’08, 11:29 AM PT by Cyrus Farivar

Category | Business

For those of you who follow this whole stock market madness, you might know that the market as a whole is tanking [If you didn’t notice, pardon us for interrupting the ride on your gold-plated zeppelin -DM].

In particular, the airline industry is taking a bit of a—pardon the expression—nosedive. With oil reaching record highs and mergers on the horizon, the airline industry is struggling to stay, erm, aloft.

So, The Fool suggests that the airlines emulate Apple. Huh? Check it:

No one in the retail world benefits from this formula more than the Mac’s daddy. Here’s why:

1. Embrace the simple. Apple Store employees carry wireless checkout devices and can email your receipt. The result? More revenue and more time for customer service.

2. Experience is everything. Glass cases? That’s soooo Best Buy (NYSE: BBY). Apple encourages customers to try its on-display products. Play with them, even. Artificial barriers to buying—e.g., how do I know if I’ll really like this?—are thereby removed and more buying occurs.

That’s what carriers need: more buying. One way to get it is by offering in-flight upgrades. United Airlines could offer this on long-distance flights when its Economy Plus cabin has available seats.

Gartner and IDC reports indicate a continued upward trend in Mac sales

Posted on Apr. 17, ’08, 10:56 AM PT by Aayush Arya

Category | Business

According to a preliminary report published by Gartner, Apple moved somewhere around 1.01 million Macs in the USA in the first quarter of 2008, a 32.5% year-over-year growth for the company—far higher than the rest of the industry, which experienced an average growth of 3% in the same quarter.

Dell came in a distant second with 15% year-over-year growth, a distinct surge in sales after their lackluster performance in 2007. When it comes to market share, Apple’s 6.6% of the US market is currently at the fourth position, trailing after Dell, HP and Acer.

In a similar report published by IDC, Apple’s current market share in the USA is estimated at 6%. Apple, according to IDC, sold 950,000 Macs in the first quarter of 2008, a 25.2% growth in year-over-year sales.

Both reports indicate that Apple’s steady sales increase has carried forward into 2008 and the company is way ahead of the competition in terms of year-over-year growth.

In other words, they’re raking in the moolah hand over fist, and now is as good a time as any to lay a class-action lawsuit for some trivial issue onto them, if you feel like it (MacUser doesn’t endorse it, however).

Apple’s own earnings call is scheduled to be webcast live at 2:00 p.m. Pacific on April 23 and Macworld will dutifully be live-blogging the event for your convenience, as always.

[Update: In the interests of full disclosure, it’s worth noting that IDC is owned by IDG, which also owns MacPublishing, which owns us. Also, we all reside on the planet Earth, breathe air, and enjoy a frosty mug of beer on occasion. -DM]