Apple Is Not As Big As Israel, Greece, Denmark Or Hong Kong, Please, Get A Grip - Forbes

Apple's results were certainly impressive: the largest quarterly results for any company ever and obviously therefore the best Apple has ever achieved. But along with that we’ve had an outbreak of one of my pet peeves, the comparison of corporate turnover to the GDP of a country. Therefore we’ve variously had people insisting that Apple’s now the size of, or comparable to, Israel, Greece, Denmark and Hong Kong. Please people, please my fellow journalists, try to understand this. The GDP of a country and the turnover of a company are two conceptually very different things. We really shouldn’t be trying to compare one with the other.

As examples, here’s the Mail:

Apple today announced a record quarterly profit of $18billion (£11.8bn) – the biggest ever made by a public company.

The U.S. tech giant also posted record revenue of $74.6 billion (£49.2bn) for the three months to December 31, outstripping the quarterly GDP of Israel, Greece or Denmark.

And the Independent:

Apple’s total revenue for the first quarter was $74.6bn. If this trend continues for the next three quarters, that would bring total revenue to at least $298.4bn, which is a larger figure than the GDP of Hong Kong.

Telegraph:

$18bn

Apple’s record-breaking profit, bigger than the quarterly GDP of Greece, equal to Yemen, and almost as big as Denmark

That last is particularly good as the $18 billion profit number is a better one to use than turnover, but slightly marred by the fact that the quarterly GDP of Greece is more like $60 billion and that of Denmark rather higher. And that of Yemen is about half that Apple number. So quite what brain spasm went on there I’m not sure.

The bit that I do know about is that we shouldn’t be trying to compare the turnover of a company with the GDP of a country. They are conceptually two entirely different things. And they cannot be compared against each other as a useful measure of the size of an economic organisation. GDP is the value added in an economy and turnover is just that, the turnover, not that value added. As an example one of the world’s largest markets is partially based in London. The global foreign exchange market, or that part of it that happens in London, turns over perhaps $2 trillion a day. And there’s 260 0r so trading days in a year (ignoring that Sunday part that happens in the Middle East). So we’ve $520 trillion of turnover happening in a country where the entire GDP in a year is around $2.5 trillion (rough numbers, £1.5 trillion). Obviously we’re measuring very different things here then. And turnover isn’t going to be a good guide if the other thing we’re measuring is that value added.

The easiest way to get to the right answer is to look at the way we calculate GDP from the income side. All of the value produced is obviously equal to all of the value consumed and both must be equal to everybody’s incomes. So, we can just add up the incomes of everyone in a country and we have our GDP number (technically more difficult than this but conceptually that’s it). And profits plus wages will get us pretty close to the right number, adding interest and rent gets us closer. So, by the same concept, the economic size of a company, something we can indeed compare to GDP, is the wages, profits, interest and rent paid by that company. That is the measure of economic size that at least conceptually equals the way we calculate GDP.

I’m not going to start trying to estimate Apple’s wage bill but say it’s $30 billion. Add that $18 billion profit at an annual rate and call it $100 billion. Somewhere around Slovakia or Morocco then. Yes, that’s incredibly impressive for a company, that’s a truly hefty economic organisation. But it’s just not the size of Hong Kong, Denmark or any of the others that are being used as comparisons.

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Amid blow-out quarter, Apple barely mentions Mac sales - Computerworld

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Apple takes high road in China smartphone standoff with Xiaomi - Reuters

Lei Jun, founder and Chief Executive Officer of China's mobile company Xiaomi, shows Mi Notes at its launch in Beijing January 15, 2015. China's Xiaomi Inc staked its claim to Apple Inc's crown on Thursday as the world's third-biggest smartphone maker and most valuable tech start-up unveiled the flagship Mi Note, its challenger to Apple's iPhone 6 Plus.

Credit: Reuters/Jason Lee (CHINA - Tags: SCIENCE TECHNOLOGY BUSINESS TELECOMS) - RTR4LHWQ

(Reuters) - Apple Inc (AAPL.O) is steering clear of Chinese rival Xiaomi Inc's [XTC.UL] low-price online strategy, ramping up store openings in China to harness its premium edge and fend off the fast-growing No.3 global smartphone maker.

The U.S. firm's quarterly results smashed Wall Street expectations with record iPhone sales in the holiday season and a 70 percent rise in China, powering the company to the largest profit in corporate history.

Its result in China, as well as other emerging markets such as Brazil, marks a riposte to critics who questioned the firm's strategy a year ago not to launch a cheaper phone to lure cost-conscious buyers from Xiaomi and Samsung Electronics Co Ltd (005930.KS).

"In the long run Xiaomi is more of a threat to Apple than say Samsung," said Ben Thompson, analyst at Stratechery.com. "But the way Apple fights that is to further differentiate, not by trying to compete on Xiaomi's turf, which is low cost."

Instead, Apple plans to roll out around 20 new China stores by 2016, likely located in glitzy locations and rubbing shoulders with outlets for luxury brands such as Chanel and Hermes International SCA (HRMS.PA).

For Apple, brick-and-mortar stores help it maintain a premium image, from the product to in-store service and even packaging, allowing the firm to charge far higher prices than rivals - vital to its enviable profit margins.

"If you could only get an Apple product online, then there wouldn't be the same user experience and so people might not be so willing to buy. After all, it's an expensive product," said Shi Xinchao, 24, a civil servant in Jiangsu province.

WHAT'S NEXT?

Apple's quarterly leap may be hard to replicate, with the launch of large-screen iPhones and a tie-up with telecoms operator China Mobile Ltd (0941.HK) in late 2013 lifting last year's numbers.

"People had been waiting for large-screen iPhones for a long time. The demand had piled up and Apple hadn't been able to meet it," said Nicole Peng, research director for Canalys in China.

Canalys data showed Apple outsold all other smartphone makers in China by units shipped in October-December 2014, making it the country's top seller for the first time.

However, some were already asking what Apple's next driver of growth in China would be and how the firm would fend off Xiaomi's longer-term challenge.

Xiaomi unveiled the Mi Note earlier this month, its challenger to Apple's iPhone 6 Plus. At 2299 yuan ($371) for a model with 16 gigabytes of memory, the Mi Note costs almost two-thirds less than its Apple rival.

The Chinese firm, which sold its first phone just over three years ago, has also been moving into other personal and home devices that would be compatible with Xiaomi phones, helping it retain users.

"This could lock in Xiaomi's younger generation, low-income users from migrating to other brands like Apple," said Gartner analyst C.K. Lu.

"The large screen has given Apple a big core, but what's after the large screen? That's what we need to address."

(Additional reporting by SHANGHAI newsroom; Editing by Christopher Cushing)

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Apple iPhone sales trample expectations as profit sets global record - Reuters

An iPhone 6 phone is seen on display at the Fifth Avenue Apple store on the first day of sales in Manhattan, New York September 19, 2014.

Credit: Reuters/Adrees Latif

(Reuters) - Apple Inc (AAPL.O) quarterly results smashed Wall Street expectations with record sales of big-screen iPhones in the holiday shopping season and a 70 percent rise in China sales, powering the company to the largest profit in corporate history.

The company sold 74.5 million iPhones in its fiscal first quarter ended Dec. 27, while many analysts had expected fewer than 70 million. Revenue rose to $74.6 billion from $57.6 billion a year earlier.

Profit of $18 billion was the biggest ever reported by a public company, worldwide, according to S&P analyst Howard Silverblatt. Apple's cash pile is now $178 billion, enough to buy IBM (IBM.N) or the equivalent to $556 for every American.

Apple Chief Executive Officer Tim Cook said the Cupertino, California-based company would release its next product, the Apple Watch, in April.

Shares rose about 5 percent to $114.90 in after-hours trade.

Daniel Morgan, senior portfolio manager at Apple-shareholder Synovus Trust Company in Atlanta, Georgia, said that the report was a good sign in a quarter where big tech companies such as IBM and Microsoft Corp (MSFT.O) have disappointed.

Apple Chief Financial Officer Luca Maestri told Reuters in an interview that the company did not sell more iPhones in China than the United States, despite some earlier predictions by research analysts.

But the big-screen iPhone 6 and 6 plus drove revenues in China were up 70 percent in the quarter from a year earlier. The company's success in the competitive Chinese market can be attributed to its partnership with China Mobile Ltd (0941.HK), the largest global mobile carrier, and the appeal of the larger screen size of the iPhone 6 and 6 Plus.

Maestri said he does not expect Apple to struggle because of China's slipping economic growth. "We haven't seen a slowdown," he added.

Maestri also said the company doubled iPhone sales in Singapore and Brazil.

Apple will reach 40 company stores in greater China by mid-2016, Maestri told analysts on a conference call.

Carolina Milanesi, an analyst with Kantar Worldpanel ComTech, also lauded a 14 percent rise in unit sales of Apple Macintosh computers and sales of older iPhone models.

Apple was well positioned for the current quarter in China, she added, which will include the Chinese New Year holiday and reflect Apple's attempts to sell through new channels.

Apple reported net profit of $18.02 billion, or $3.06 per diluted share, compared with $13.07 billion, or $2.07 per share, a year earlier. That topped expectations of $2.60 per share, according to Thomson Reuters I/B/E/S. Analysts had expected revenue of $67.69 billion.

Maestri said that Apple faced "a clear headwind" from the strong dollar but that it had included the challenge in its forecasts. Apple predicted revenue of $52 billion to $55 billion in its fiscal second quarter, compared with Wall Street's average target of $53.79 billion.

Cook said that the company's new mobile payment service, Apple Pay, which lets customer buy products from select merchants with their phones, was in its "first inning" and the company would consider adding new features as it looked at expanding outside the United States.

(Reporting by Christina Farr in San Francisco; Additional reporting by Supantha Mukherjee in Bengaluru and Caroline Valetkevitch in New York; Editing by Peter Henderson, Ted Kerr and Lisa Shumaker)

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Apple stock pushes toward record after massive holiday sales - San Jose Mercury News

FILE - In this Aug. 25, 2011 file photo, an Apple employee walks between Apple buildings at Apple headquarters in Cupertino, Calif. (Paul Sakuma/AP photo)

CUPERTINO -- Apple stock hopped Wednesday after the tech giant announced record profit and revenue in the holiday-shopping quarter, nearing the company's all-time high as analysts predicted more growth to come.

Apple shares gained 5.7 percent to $115.31 and moved as high as $118.12 Wednesday, shy of the $119.75 record price set in November, when excitement about initial sales of the iPhone 6 and iPhone 6 Plus spurred investors. Those initial sales of Apple's newest smartphones led to a blockbuster quarter, with Apple announcing Tuesday that it sold a record 74.5 million iPhones in three months, leading to profit of $18 billion -- $3.06 a share -- and total sales of $74.6 billion.

While growth in iPhone sales was massive, with Apple's holiday-quarter sales increasing more than 46 percent from the same quarter a year ago, analysts wonder if the company will be able to repeat the performance this year after setting such a high bar.

"Now that consumers have these 'apparently amazing' iPhone 6/6+s, with better batteries and larger screens, this propensity to upgrade will probably be lower than it was in this past cycle," Berenberg analyst Adnaan Ahmad wrote in a note. "In our opinion, this is not good news for Apple's iPhone business."

Ahmad is the most bearish analyst on Wall Street in regard to Apple, however, with a "sell" rating and $60 price target that puts him far out of the mainstream, but colleagues from Pacific Crest Research and Nomura Equity Research expressed similar views.

Those views appeared to be in the minority, however, as most analysts praised Apple and predicted more huge quarters to come.

BTIG analyst Walter Piecyk emphatically stated in a blog post Wednesday that Apple will be able to sell more iPhones in 2015, which means the stock is not accounting for any earnings growth from new products such as the Apple Watch, which CEO Tim Cook said will debut in April.

"Apple can deliver on strong revenue and EPS growth in 2015 and the stock valuation does not adequately reflect that," Piecyk wrote, later adding, "Apple's current stock price (even after rising more than 5 percent after the close) is substantiated by the growth potential of its existing products with a free look on the growth potential of new product categories."

Citigroup analyst Jim Suva pointed out that changes in wireless plans are allowing consumers to upgrade their smartphones without waiting two years to avoid penalties, which he called a big factor in Apple's sales total and a continuing plus for the stock.

"We believe investors do not fully grasp this change in behavior by the wireless carriers and the positive impact to Apple," Suva wrote.

Another factor cited as a positive for Apple is the large pile of cash the company is pushing back to shareholders. Apple said in its report that it spent $5 billion on its own stock in the fourth quarter and paid $2.8 billion in dividends, part of a plan to return $130 billion to shareholders that is nearing completion.

"We spent over $8 billion on our capital return program, bringing total returns to investors to almost $103 billion, over $57 billion of which occurred in just the last 12 months," Chief Financial Officer Luca Maestri said in a prepared statement Tuesday.

Analysts believe Apple will increase the total it plans to return to shareholders because of the massive amounts of cash it continues to collect, however.

Apple "will announce an update to the program in April and we think that it will raise its capital return program further still," FBN Securities analyst Shebly Seyrafi wrote, while RBC Capital Markets analysts predicted Apple would increase the program to $200 billion.

Apple's massive repurchase plan is decreasing the number of shares on the open market, which is likely to keep its world's-best market capitalization -- the total value of all its shares -- from setting records even if its stock price reaches a new mark. Apple reported a share count slightly lower than 5.9 million Tuesday, after having 6.3 million shares available at the same time last year, giving it a market cap of $678.2 billion at the close of trading.

Contact Jeremy C. Owens at 408-920-5876; follow him at http://ift.tt/1drGiGq.

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Why is Apple sitting on $142bn? - BBC News

28 January 2015
Last updated at 08:11 ET By Jamie Robertson Presenter, BBC World News

King Midas, you may remember, had a problem with gold. Everything he touched turned to the yellow stuff.

Fine for a while, but not when he realised "everything" meant just that - everything.

He might have had some sympathy with Apple's problem of simply having too much money.

And the biggest quarterly profit in history, $18bn, is actually adding to Apple's biggest headache - an excess of cash.

In short the company is making money far faster than it can spend it.

Its cash pile now stands at close to $142bn (£93.5bn).

The problem is how to generate a return with that money for shareholders.

It has enough, in theory, to buy 480 or so of the companies in the S&P 500.

Or Lithuania, three times over.

But simply buying up companies is a complex and intricate business and suitable take-over targets are few and far between.

Its latest, the subscription music service Beats, cost just $3bn - and that was its largest purchase ever.

Apple Campus

It can invest in its own development, and it is spending an estimated $5bn on the 176-acre Apple Campus headquarters site.

But still the money keeps rolling in.

Most of it gets parked in what the accounts call "cash and cash equivalents" and short and long term marketable securities: government and corporate bonds.

Apple manages the cash through a subsidiary, Braeburn Capital, based in Reno, Nevada which has no state corporate income tax, or taxes on corporate shares.

It is in effect one of the largest hedge funds in the world.

But shareholders like shareholder activist, Carl Icahn, have been demanding the company simply must hand some of that cash back to shareholders by buying back shares.

Share buybacks

Hedge fund manager David Einhorn of Greenlight Capital went so far as to sue the company two years ago to try to get a payout.

They argue that cash, invested largely in government securities gives a paltry rate of return.

Einhorn argued that getting the excess cash off Apple's balance sheet and back to shareholders would increase the value of the company by $50 per share or more.

So the company obliged and in 2012 started buying back its own stock . Last year it spent some $45bn buying back Apple shares.

The problem is it has not made much difference. The latest set of results show it has as much cash as it has ever had.

In total, the amount of cash in the group is around $178bn. Some $35bn in debt reduces that figure to the $142bn mentioned above.

Debt? Why on earth, when you have more wealth in your piggy bank than the average developing nation generates in a year, would you want to borrow more?

The answer is that little of that cash is easily accessible to pay shareholders. Some 89% of it lies offshore out of the hands of the Internal Revenue Service.

Tax reform

Bringing it back would subject it to a top corporate tax rate of 35%.

Far easier to borrow the money instead. And since it has a such a cash pile behind it, banks are happy to lend to Apple at rock bottom rates - even by today's standards.

Last year Apple funded its share buy-back with a $17bn bond issue.

So, in effect, Apple did what Icahn and Einhorn wanted.

The share price has recovered from around $60 in mid 2013 to around $110 this week.

But the cash mountain remains.

Chief Executive Tim Cook told Congress two years ago that much of it could eventually come back to the US.

He even admitted Apple would be happy to pay more tax, but only if there was a "dramatic simplification of the corporate tax code" including a "reasonable tax on foreign earnings that allows the free flow of capital back to the United States".

But of course if the money did flow freely back to the US, no one is guaranteeing it would be invested any more wisely than it is at the moment.

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Apple iPhone sales trample expectations as profit sets global record - Reuters

An iPhone 6 phone is seen on display at the Fifth Avenue Apple store on the first day of sales in Manhattan, New York September 19, 2014.

Credit: Reuters/Adrees Latif

(Reuters) - Apple Inc (AAPL.O) quarterly results smashed Wall Street expectations with record sales of big-screen iPhones in the holiday shopping season and a 70 percent rise in China sales, powering the company to the largest profit in corporate history.

The company sold 74.5 million iPhones in its fiscal first quarter ended Dec. 27, while many analysts had expected fewer than 70 million. Revenue rose to $74.6 billion from $57.6 billion a year earlier.

Profit of $18 billion was the biggest ever reported by a public company, worldwide, according to S&P analyst Howard Silverblatt. Apple's cash pile is now $178 billion, enough to buy IBM (IBM.N) or the equivalent to $556 for every American.

Apple Chief Executive Officer Tim Cook said the Cupertino, California-based company would release its next product, the Apple Watch, in April.

Shares rose about 5 percent to $114.90 in after-hours trade.

Daniel Morgan, senior portfolio manager at Apple-shareholder Synovus Trust Company in Atlanta, Georgia, said that the report was a good sign in a quarter where big tech companies such as IBM and Microsoft Corp (MSFT.O) have disappointed.

Apple Chief Financial Officer Luca Maestri told Reuters in an interview that the company did not sell more iPhones in China than the United States, despite some earlier predictions by research analysts.

But the big-screen iPhone 6 and 6 plus drove revenues in China were up 70 percent in the quarter from a year earlier. The company's success in the competitive Chinese market can be attributed to its partnership with China Mobile Ltd (0941.HK), the largest global mobile carrier, and the appeal of the larger screen size of the iPhone 6 and 6 Plus.

Maestri said he does not expect Apple to struggle because of China's slipping economic growth. "We haven't seen a slowdown," he added.

Maestri also said the company doubled iPhone sales in Singapore and Brazil.

Apple will reach 40 company stores in greater China by mid-2016, Maestri told analysts on a conference call.

Carolina Milanesi, an analyst with Kantar Worldpanel ComTech, also lauded a 14 percent rise in unit sales of Apple Macintosh computers and sales of older iPhone models.

Apple was well positioned for the current quarter in China, she added, which will include the Chinese New Year holiday and reflect Apple's attempts to sell through new channels.

Apple reported net profit of $18.02 billion, or $3.06 per diluted share, compared with $13.07 billion, or $2.07 per share, a year earlier. That topped expectations of $2.60 per share, according to Thomson Reuters I/B/E/S. Analysts had expected revenue of $67.69 billion.

Maestri said that Apple faced "a clear headwind" from the strong dollar but that it had included the challenge in its forecasts. Apple predicted revenue of $52 billion to $55 billion in its fiscal second quarter, compared with Wall Street's average target of $53.79 billion.

Cook said that the company's new mobile payment service, Apple Pay, which lets customer buy products from select merchants with their phones, was in its "first inning" and the company would consider adding new features as it looked at expanding outside the United States.

(Reporting by Christina Farr in San Francisco; Additional reporting by Supantha Mukherjee in Bengaluru and Caroline Valetkevitch in New York; Editing by Peter Henderson, Ted Kerr and Lisa Shumaker)

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Apple Is Not As Big As Israel, Greece, Denmark Or Hong Kong, Please, Get A Grip - Forbes

Apple's results were certainly impressive: the largest quarterly results for any company ever and obviously therefore the best Apple has ever achieved. But along with that we’ve had an outbreak of one of my pet peeves, the comparison of corporate turnover to the GDP of a country. Therefore we’ve variously had people insisting that Apple’s now the size of, or comparable to, Israel, Greece, Denmark and Hong Kong. Please people, please my fellow journalists, try to understand this. The GDP of a country and the turnover of a company are two conceptually very different things. We really shouldn’t be trying to compare one with the other.

As examples, here’s the Mail:

Apple today announced a record quarterly profit of $18billion (£11.8bn) – the biggest ever made by a public company.

The U.S. tech giant also posted record revenue of $74.6 billion (£49.2bn) for the three months to December 31, outstripping the quarterly GDP of Israel, Greece or Denmark.

And the Independent:

Apple’s total revenue for the first quarter was $74.6bn. If this trend continues for the next three quarters, that would bring total revenue to at least $298.4bn, which is a larger figure than the GDP of Hong Kong.

Telegraph:

$18bn

Apple’s record-breaking profit, bigger than the quarterly GDP of Greece, equal to Yemen, and almost as big as Denmark

That last is particularly good as the $18 billion profit number is a better one to use than turnover, but slightly marred by the fact that the quarterly GDP of Greece is more like $60 billion and that of Denmark rather higher. And that of Yemen is about half that Apple number. So quite what brain spasm went on there I’m not sure.

The bit that I do know about is that we shouldn’t be trying to compare the turnover of a company with the GDP of a country. They are conceptually two entirely different things. And they cannot be compared against each other as a useful measure of the size of an economic organisation. GDP is the value added in an economy and turnover is just that, the turnover, not that value added. As an example one of the world’s largest markets is partially based in London. The global foreign exchange market, or that part of it that happens in London, turns over perhaps $2 trillion a day. And there’s 260 0r so trading days in a year (ignoring that Sunday part that happens in the Middle East). So we’ve $520 trillion of turnover happening in a country where the entire GDP in a year is around $2.5 trillion (rough numbers, £1.5 trillion). Obviously we’re measuring very different things here then. And turnover isn’t going to be a good guide if the other thing we’re measuring is that value added.

The easiest way to get to the right answer is to look at the way we calculate GDP from the income side. All of the value produced is obviously equal to all of the value consumed and both must be equal to everybody’s incomes. So, we can just add up the incomes of everyone in a country and we have our GDP number (technically more difficult than this but conceptually that’s it). And profits plus wages will get us pretty close to the right number, adding interest and rent gets us closer. So, by the same concept, the economic size of a company, something we can indeed compare to GDP, is the wages, profits, interest and rent paid by that company. That is the measure of economic size that at least conceptually equals the way we calculate GDP.

I’m not going to start trying to estimate Apple’s wage bill but say it’s $30 billion. Add that $18 billion profit at an annual rate and call it $100 billion. Somewhere around Slovakia or Morocco then. Yes, that’s incredibly impressive for a company, that’s a truly hefty economic organisation. But it’s just not the size of Hong Kong, Denmark or any of the others that are being used as comparisons.

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Amid blow-out quarter, Apple barely mentions Mac sales - Computerworld

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Apple blowout may only be the beginning: Analysts - CNBC

The rollout of the Apple Watch, which will be shipped in April, also has the potential to help the company's stock keep momentum, analysts said.

Read MoreWhy Apple stock is still cheap: Analyst

"The smart watch industry is significant, and we believe Apple has an opportunity to be the leader in this new product category. Given the company had approximately 800 million iTunes accounts (most with credit cards) as of April 2014, we believe Apple has a large group of Apple enthusiasts to sell into," White said in his note to clients.

The Cantor Fitzgerald analyst said the device could also become Apple's fastest selling new product category during the first year on the market, surpassing the iPad, which had 19.5 million units sold in its debut year. He forecasts the company selling 20.6 million units during the first year, driving revenue of $9.6 billion. This translates to about 6.8 million unit and revenue of about $3.2 billion for the 2015 fiscal year, White said.

But the pressure is on Apple to get its smartwatch correct right out of the gate, which could be a problem given the recent reports of the device having a poor battery life.

"Apple cannot afford to misfire with the Apple Watch. It's too big of a company for any product to be a failure. ... The one thing that becomes pivotal this year is the success of Apple Watch early on," Basenese said. "It's going to naturally drive more iPhone sales, so the adoption of the watch becomes critical."

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Why is Apple sitting on $142bn? - BBC News

28 January 2015
Last updated at 08:11 ET By Jamie Robertson Presenter, BBC World News

King Midas, you may remember, had a problem with gold. Everything he touched turned to the yellow stuff.

Fine for a while, but not when he realised "everything" meant just that - everything.

He might have had some sympathy with Apple's problem of simply having too much money.

And the biggest quarterly profit in history, $18bn, is actually adding to Apple's biggest headache - an excess of cash.

In short the company is making money far faster than it can spend it.

Its cash pile now stands at close to $142bn (£93.5bn).

The problem is how to generate a return with that money for shareholders.

It has enough, in theory, to buy 480 or so of the companies in the S&P 500.

Or Lithuania, three times over.

But simply buying up companies is a complex and intricate business and suitable take-over targets are few and far between.

Its latest, the subscription music service Beats, cost just $3bn - and that was its largest purchase ever.

Apple Campus

It can invest in its own development, and it is spending an estimated $5bn on the 176-acre Apple Campus headquarters site.

But still the money keeps rolling in.

Most of it gets parked in what the accounts call "cash and cash equivalents" and short and long term marketable securities: government and corporate bonds.

Apple manages the cash through a subsidiary, Braeburn Capital, based in Reno, Nevada which has no state corporate income tax, or taxes on corporate shares.

It is in effect one of the largest hedge funds in the world.

But shareholders like shareholder activist, Carl Icahn, have been demanding the company simply must hand some of that cash back to shareholders by buying back shares.

Share buybacks

Hedge fund manager David Einhorn of Greenlight Capital went so far as to sue the company two years ago to try to get a payout.

They argue that cash, invested largely in government securities gives a paltry rate of return.

Einhorn argued that getting the excess cash off Apple's balance sheet and back to shareholders would increase the value of the company by $50 per share or more.

So the company obliged and in 2012 started buying back its own stock . Last year it spent some $45bn buying back Apple shares.

The problem is it has not made much difference. The latest set of results show it has as much cash as it has ever had.

In total, the amount of cash in the group is around $178bn. Some $35bn in debt reduces that figure to the $142bn mentioned above.

Debt? Why on earth, when you have more wealth in your piggy bank than the average developing nation generates in a year, would you want to borrow more?

The answer is that little of that cash is easily accessible to pay shareholders. Some 89% of it lies offshore out of the hands of the Internal Revenue Service.

Tax reform

Bringing it back would subject it to a top corporate tax rate of 35%.

Far easier to borrow the money instead. And since it has a such a cash pile behind it, banks are happy to lend to Apple at rock bottom rates - even by today's standards.

Last year Apple funded its share buy-back with a $17bn bond issue.

So, in effect, Apple did what Icahn and Einhorn wanted.

The share price has recovered from around $60 in mid 2013 to around $110 this week.

But the cash mountain remains.

Chief Executive Tim Cook told Congress two years ago that much of it could eventually come back to the US.

He even admitted Apple would be happy to pay more tax, but only if there was a "dramatic simplification of the corporate tax code" including a "reasonable tax on foreign earnings that allows the free flow of capital back to the United States".

But of course if the money did flow freely back to the US, no one is guaranteeing it would be invested any more wisely than it is at the moment.

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Apple iPhone sales trample expectations as profit sets global record - Reuters

An iPhone 6 phone is seen on display at the Fifth Avenue Apple store on the first day of sales in Manhattan, New York September 19, 2014.

Credit: Reuters/Adrees Latif

(Reuters) - Apple Inc (AAPL.O) quarterly results smashed Wall Street expectations with record sales of big-screen iPhones in the holiday shopping season and a 70 percent rise in China sales, powering the company to the largest profit in corporate history.

The company sold 74.5 million iPhones in its fiscal first quarter ended Dec. 27, while many analysts had expected fewer than 70 million. Revenue rose to $74.6 billion from $57.6 billion a year earlier.

Profit of $18 billion was the biggest ever reported by a public company, worldwide, according to S&P analyst Howard Silverblatt. Apple's cash pile is now $178 billion, enough to buy IBM (IBM.N) or the equivalent to $556 for every American.

Apple Chief Executive Officer Tim Cook said the Cupertino, California-based company would release its next product, the Apple Watch, in April.

Shares rose about 5 percent to $114.90 in after-hours trade.

Daniel Morgan, senior portfolio manager at Apple-shareholder Synovus Trust Company in Atlanta, Georgia, said that the report was a good sign in a quarter where big tech companies such as IBM and Microsoft Corp (MSFT.O) have disappointed.

Apple Chief Financial Officer Luca Maestri told Reuters in an interview that the company did not sell more iPhones in China than the United States, despite some earlier predictions by research analysts.

But the big-screen iPhone 6 and 6 plus drove revenues in China were up 70 percent in the quarter from a year earlier. The company's success in the competitive Chinese market can be attributed to its partnership with China Mobile Ltd (0941.HK), the largest global mobile carrier, and the appeal of the larger screen size of the iPhone 6 and 6 Plus.

Maestri said he does not expect Apple to struggle because of China's slipping economic growth. "We haven't seen a slowdown," he added.

Maestri also said the company doubled iPhone sales in Singapore and Brazil.

Apple will reach 40 company stores in greater China by mid-2016, Maestri told analysts on a conference call.

Carolina Milanesi, an analyst with Kantar Worldpanel ComTech, also lauded a 14 percent rise in unit sales of Apple Macintosh computers and sales of older iPhone models.

Apple was well positioned for the current quarter in China, she added, which will include the Chinese New Year holiday and reflect Apple's attempts to sell through new channels.

Apple reported net profit of $18.02 billion, or $3.06 per diluted share, compared with $13.07 billion, or $2.07 per share, a year earlier. That topped expectations of $2.60 per share, according to Thomson Reuters I/B/E/S. Analysts had expected revenue of $67.69 billion.

Maestri said that Apple faced "a clear headwind" from the strong dollar but that it had included the challenge in its forecasts. Apple predicted revenue of $52 billion to $55 billion in its fiscal second quarter, compared with Wall Street's average target of $53.79 billion.

Cook said that the company's new mobile payment service, Apple Pay, which lets customer buy products from select merchants with their phones, was in its "first inning" and the company would consider adding new features as it looked at expanding outside the United States.

(Reporting by Christina Farr in San Francisco; Additional reporting by Supantha Mukherjee in Bengaluru and Caroline Valetkevitch in New York; Editing by Peter Henderson, Ted Kerr and Lisa Shumaker)

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Apple Is Not As Big As Israel, Greece, Denmark Or Hong Kong, Please, Get A Grip - Forbes

Apple's results were certainly impressive: the largest quarterly results for any company ever and obviously therefore the best Apple has ever achieved. But along with that we’ve had an outbreak of one of my pet peeves, the comparison of corporate turnover to the GDP of a country. Therefore we’ve variously had people insisting that Apple’s now the size of, or comparable to, Israel, Greece, Denmark and Hong Kong. Please people, please my fellow journalists, try to understand this. The GDP of a country and the turnover of a company are two conceptually very different things. We really shouldn’t be trying to compare one with the other.

As examples, here’s the Mail:

Apple today announced a record quarterly profit of $18billion (£11.8bn) – the biggest ever made by a public company.

The U.S. tech giant also posted record revenue of $74.6 billion (£49.2bn) for the three months to December 31, outstripping the quarterly GDP of Israel, Greece or Denmark.

And the Independent:

Apple’s total revenue for the first quarter was $74.6bn. If this trend continues for the next three quarters, that would bring total revenue to at least $298.4bn, which is a larger figure than the GDP of Hong Kong.

Telegraph:

$18bn

Apple’s record-breaking profit, bigger than the quarterly GDP of Greece, equal to Yemen, and almost as big as Denmark

That last is particularly good as the $18 billion profit number is a better one to use than turnover, but slightly marred by the fact that the quarterly GDP of Greece is more like $60 billion and that of Denmark rather higher. And that of Yemen is about half that Apple number. So quite what brain spasm went on there I’m not sure.

The bit that I do know about is that we shouldn’t be trying to compare the turnover of a company with the GDP of a country. They are conceptually two entirely different things. And they cannot be compared against each other as a useful measure of the size of an economic organisation. GDP is the value added in an economy and turnover is just that, the turnover, not that value added. As an example one of the world’s largest markets is partially based in London. The global foreign exchange market, or that part of it that happens in London, turns over perhaps $2 trillion a day. And there’s 260 0r so trading days in a year (ignoring that Sunday part that happens in the Middle East). So we’ve $520 trillion of turnover happening in a country where the entire GDP in a year is around $2.5 trillion (rough numbers, £1.5 trillion). Obviously we’re measuring very different things here then. And turnover isn’t going to be a good guide if the other thing we’re measuring is that value added.

The easiest way to get to the right answer is to look at the way we calculate GDP from the income side. All of the value produced is obviously equal to all of the value consumed and both must be equal to everybody’s incomes. So, we can just add up the incomes of everyone in a country and we have our GDP number (technically more difficult than this but conceptually that’s it). And profits plus wages will get us pretty close to the right number, adding interest and rent gets us closer. So, by the same concept, the economic size of a company, something we can indeed compare to GDP, is the wages, profits, interest and rent paid by that company. That is the measure of economic size that at least conceptually equals the way we calculate GDP.

I’m not going to start trying to estimate Apple’s wage bill but say it’s $30 billion. Add that $18 billion profit at an annual rate and call it $100 billion. Somewhere around Slovakia or Morocco then. Yes, that’s incredibly impressive for a company, that’s a truly hefty economic organisation. But it’s just not the size of Hong Kong, Denmark or any of the others that are being used as comparisons.

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Amid blow-out quarter, Apple barely mentions Mac sales - Computerworld

From CIO: 8 Free Online Courses to Grow Your Tech Skills



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Apple stock pushes toward record after massive holiday sales - San Jose Mercury News

FILE - In this Aug. 25, 2011 file photo, an Apple employee walks between Apple buildings at Apple headquarters in Cupertino, Calif. (Paul Sakuma/AP photo)

CUPERTINO -- Apple stock hopped Wednesday after the tech giant announced record profit and revenue in the holiday-shopping quarter, nearing the company's all-time high as analysts predicted more growth to come.

Apple shares gained 5.7 percent to $115.31 and moved as high as $118.12 Wednesday, shy of the $119.75 record price set in November, when excitement about initial sales of the iPhone 6 and iPhone 6 Plus spurred investors. Those initial sales of Apple's newest smartphones led to a blockbuster quarter, with Apple announcing Tuesday that it sold a record 74.5 million iPhones in three months, leading to profit of $18 billion -- $3.06 a share -- and total sales of $74.6 billion.

While growth in iPhone sales was massive, with Apple's holiday-quarter sales increasing more than 46 percent from the same quarter a year ago, analysts wonder if the company will be able to repeat the performance this year after setting such a high bar.

"Now that consumers have these 'apparently amazing' iPhone 6/6+s, with better batteries and larger screens, this propensity to upgrade will probably be lower than it was in this past cycle," Berenberg analyst Adnaan Ahmad wrote in a note. "In our opinion, this is not good news for Apple's iPhone business."

Ahmad is the most bearish analyst on Wall Street in regard to Apple, however, with a "sell" rating and $60 price target that puts him far out of the mainstream, but colleagues from Pacific Crest Research and Nomura Equity Research expressed similar views.

Those views appeared to be in the minority, however, as most analysts praised Apple and predicted more huge quarters to come.

BTIG analyst Walter Piecyk emphatically stated in a blog post Wednesday that Apple will be able to sell more iPhones in 2015, which means the stock is not accounting for any earnings growth from new products such as the Apple Watch, which CEO Tim Cook said will debut in April.

"Apple can deliver on strong revenue and EPS growth in 2015 and the stock valuation does not adequately reflect that," Piecyk wrote, later adding, "Apple's current stock price (even after rising more than 5 percent after the close) is substantiated by the growth potential of its existing products with a free look on the growth potential of new product categories."

Citigroup analyst Jim Suva pointed out that changes in wireless plans are allowing consumers to upgrade their smartphones without waiting two years to avoid penalties, which he called a big factor in Apple's sales total and a continuing plus for the stock.

"We believe investors do not fully grasp this change in behavior by the wireless carriers and the positive impact to Apple," Suva wrote.

Another factor cited as a positive for Apple is the large pile of cash the company is pushing back to shareholders. Apple said in its report that it spent $5 billion on its own stock in the fourth quarter and paid $2.8 billion in dividends, part of a plan to return $130 billion to shareholders that is nearing completion.

"We spent over $8 billion on our capital return program, bringing total returns to investors to almost $103 billion, over $57 billion of which occurred in just the last 12 months," Chief Financial Officer Luca Maestri said in a prepared statement Tuesday.

Analysts believe Apple will increase the total it plans to return to shareholders because of the massive amounts of cash it continues to collect, however.

Apple "will announce an update to the program in April and we think that it will raise its capital return program further still," FBN Securities analyst Shebly Seyrafi wrote, while RBC Capital Markets analysts predicted Apple would increase the program to $200 billion.

Apple's massive repurchase plan is decreasing the number of shares on the open market, which is likely to keep its world's-best market capitalization -- the total value of all its shares -- from setting records even if its stock price reaches a new mark. Apple reported a share count slightly lower than 5.9 million Tuesday, after having 6.3 million shares available at the same time last year, giving it a market cap of $678.2 billion at the close of trading.

Contact Jeremy C. Owens at 408-920-5876; follow him at http://ift.tt/1drGiGq.

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Why is Apple sitting on $142bn? - BBC News

28 January 2015
Last updated at 08:11 ET By Jamie Robertson Presenter, BBC World News

King Midas, you may remember, had a problem with gold. Everything he touched turned to the yellow stuff.

Fine for a while, but not when he realised "everything" meant just that - everything.

He might have had some sympathy with Apple's problem of simply having too much money.

And the biggest quarterly profit in history, $18bn, is actually adding to Apple's biggest headache - an excess of cash.

In short the company is making money far faster than it can spend it.

Its cash pile now stands at close to $142bn (£93.5bn).

The problem is how to generate a return with that money for shareholders.

It has enough, in theory, to buy 480 or so of the companies in the S&P 500.

Or Lithuania, three times over.

But simply buying up companies is a complex and intricate business and suitable take-over targets are few and far between.

Its latest, the subscription music service Beats, cost just $3bn - and that was its largest purchase ever.

Apple Campus

It can invest in its own development, and it is spending an estimated $5bn on the 176-acre Apple Campus headquarters site.

But still the money keeps rolling in.

Most of it gets parked in what the accounts call "cash and cash equivalents" and short and long term marketable securities: government and corporate bonds.

Apple manages the cash through a subsidiary, Braeburn Capital, based in Reno, Nevada which has no state corporate income tax, or taxes on corporate shares.

It is in effect one of the largest hedge funds in the world.

But shareholders like shareholder activist, Carl Icahn, have been demanding the company simply must hand some of that cash back to shareholders by buying back shares.

Share buybacks

Hedge fund manager David Einhorn of Greenlight Capital went so far as to sue the company two years ago to try to get a payout.

They argue that cash, invested largely in government securities gives a paltry rate of return.

Einhorn argued that getting the excess cash off Apple's balance sheet and back to shareholders would increase the value of the company by $50 per share or more.

So the company obliged and in 2012 started buying back its own stock . Last year it spent some $45bn buying back Apple shares.

The problem is it has not made much difference. The latest set of results show it has as much cash as it has ever had.

In total, the amount of cash in the group is around $178bn. Some $35bn in debt reduces that figure to the $142bn mentioned above.

Debt? Why on earth, when you have more wealth in your piggy bank than the average developing nation generates in a year, would you want to borrow more?

The answer is that little of that cash is easily accessible to pay shareholders. Some 89% of it lies offshore out of the hands of the Internal Revenue Service.

Tax reform

Bringing it back would subject it to a top corporate tax rate of 35%.

Far easier to borrow the money instead. And since it has a such a cash pile behind it, banks are happy to lend to Apple at rock bottom rates - even by today's standards.

Last year Apple funded its share buy-back with a $17bn bond issue.

So, in effect, Apple did what Icahn and Einhorn wanted.

The share price has recovered from around $60 in mid 2013 to around $110 this week.

But the cash mountain remains.

Chief Executive Tim Cook told Congress two years ago that much of it could eventually come back to the US.

He even admitted Apple would be happy to pay more tax, but only if there was a "dramatic simplification of the corporate tax code" including a "reasonable tax on foreign earnings that allows the free flow of capital back to the United States".

But of course if the money did flow freely back to the US, no one is guaranteeing it would be invested any more wisely than it is at the moment.

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Apple iPhone sales trample expectations as profit sets global record - Reuters

An iPhone 6 phone is seen on display at the Fifth Avenue Apple store on the first day of sales in Manhattan, New York September 19, 2014.

Credit: Reuters/Adrees Latif

(Reuters) - Apple Inc (AAPL.O) quarterly results smashed Wall Street expectations with record sales of big-screen iPhones in the holiday shopping season and a 70 percent rise in China sales, powering the company to the largest profit in corporate history.

The company sold 74.5 million iPhones in its fiscal first quarter ended Dec. 27, while many analysts had expected fewer than 70 million. Revenue rose to $74.6 billion from $57.6 billion a year earlier.

Profit of $18 billion was the biggest ever reported by a public company, worldwide, according to S&P analyst Howard Silverblatt. Apple's cash pile is now $178 billion, enough to buy IBM (IBM.N) or the equivalent to $556 for every American.

Apple Chief Executive Officer Tim Cook said the Cupertino, California-based company would release its next product, the Apple Watch, in April.

Shares rose about 5 percent to $114.90 in after-hours trade.

Daniel Morgan, senior portfolio manager at Apple-shareholder Synovus Trust Company in Atlanta, Georgia, said that the report was a good sign in a quarter where big tech companies such as IBM and Microsoft Corp (MSFT.O) have disappointed.

Apple Chief Financial Officer Luca Maestri told Reuters in an interview that the company did not sell more iPhones in China than the United States, despite some earlier predictions by research analysts.

But the big-screen iPhone 6 and 6 plus drove revenues in China were up 70 percent in the quarter from a year earlier. The company's success in the competitive Chinese market can be attributed to its partnership with China Mobile Ltd (0941.HK), the largest global mobile carrier, and the appeal of the larger screen size of the iPhone 6 and 6 Plus.

Maestri said he does not expect Apple to struggle because of China's slipping economic growth. "We haven't seen a slowdown," he added.

Maestri also said the company doubled iPhone sales in Singapore and Brazil.

Apple will reach 40 company stores in greater China by mid-2016, Maestri told analysts on a conference call.

Carolina Milanesi, an analyst with Kantar Worldpanel ComTech, also lauded a 14 percent rise in unit sales of Apple Macintosh computers and sales of older iPhone models.

Apple was well positioned for the current quarter in China, she added, which will include the Chinese New Year holiday and reflect Apple's attempts to sell through new channels.

Apple reported net profit of $18.02 billion, or $3.06 per diluted share, compared with $13.07 billion, or $2.07 per share, a year earlier. That topped expectations of $2.60 per share, according to Thomson Reuters I/B/E/S. Analysts had expected revenue of $67.69 billion.

Maestri said that Apple faced "a clear headwind" from the strong dollar but that it had included the challenge in its forecasts. Apple predicted revenue of $52 billion to $55 billion in its fiscal second quarter, compared with Wall Street's average target of $53.79 billion.

Cook said that the company's new mobile payment service, Apple Pay, which lets customer buy products from select merchants with their phones, was in its "first inning" and the company would consider adding new features as it looked at expanding outside the United States.

(Reporting by Christina Farr in San Francisco; Additional reporting by Supantha Mukherjee in Bengaluru and Caroline Valetkevitch in New York; Editing by Peter Henderson, Ted Kerr and Lisa Shumaker)

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Apple Is Not As Big As Israel, Greece, Denmark Or Hong Kong, Please, Get A Grip - Forbes

Apple's results were certainly impressive: the largest quarterly results for any company ever and obviously therefore the best Apple has ever achieved. But along with that we’ve had an outbreak of one of my pet peeves, the comparison of corporate turnover to the GDP of a country. Therefore we’ve variously had people insisting that Apple’s now the size of, or comparable to, Israel, Greece, Denmark and Hong Kong. Please people, please my fellow journalists, try to understand this. The GDP of a country and the turnover of a company are two conceptually very different things. We really shouldn’t be trying to compare one with the other.

As examples, here’s the Mail:

Apple today announced a record quarterly profit of $18billion (£11.8bn) – the biggest ever made by a public company.

The U.S. tech giant also posted record revenue of $74.6 billion (£49.2bn) for the three months to December 31, outstripping the quarterly GDP of Israel, Greece or Denmark.

And the Independent:

Apple’s total revenue for the first quarter was $74.6bn. If this trend continues for the next three quarters, that would bring total revenue to at least $298.4bn, which is a larger figure than the GDP of Hong Kong.

Telegraph:

$18bn

Apple’s record-breaking profit, bigger than the quarterly GDP of Greece, equal to Yemen, and almost as big as Denmark

That last is particularly good as the $18 billion profit number is a better one to use than turnover, but slightly marred by the fact that the quarterly GDP of Greece is more like $60 billion and that of Denmark rather higher. And that of Yemen is about half that Apple number. So quite what brain spasm went on there I’m not sure.

The bit that I do know about is that we shouldn’t be trying to compare the turnover of a company with the GDP of a country. They are conceptually two entirely different things. And they cannot be compared against each other as a useful measure of the size of an economic organisation. GDP is the value added in an economy and turnover is just that, the turnover, not that value added. As an example one of the world’s largest markets is partially based in London. The global foreign exchange market, or that part of it that happens in London, turns over perhaps $2 trillion a day. And there’s 260 0r so trading days in a year (ignoring that Sunday part that happens in the Middle East). So we’ve $520 trillion of turnover happening in a country where the entire GDP in a year is around $2.5 trillion (rough numbers, £1.5 trillion). Obviously we’re measuring very different things here then. And turnover isn’t going to be a good guide if the other thing we’re measuring is that value added.

The easiest way to get to the right answer is to look at the way we calculate GDP from the income side. All of the value produced is obviously equal to all of the value consumed and both must be equal to everybody’s incomes. So, we can just add up the incomes of everyone in a country and we have our GDP number (technically more difficult than this but conceptually that’s it). And profits plus wages will get us pretty close to the right number, adding interest and rent gets us closer. So, by the same concept, the economic size of a company, something we can indeed compare to GDP, is the wages, profits, interest and rent paid by that company. That is the measure of economic size that at least conceptually equals the way we calculate GDP.

I’m not going to start trying to estimate Apple’s wage bill but say it’s $30 billion. Add that $18 billion profit at an annual rate and call it $100 billion. Somewhere around Slovakia or Morocco then. Yes, that’s incredibly impressive for a company, that’s a truly hefty economic organisation. But it’s just not the size of Hong Kong, Denmark or any of the others that are being used as comparisons.

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Amid blow-out quarter, Apple barely mentions Mac sales - Computerworld

From CIO: 8 Free Online Courses to Grow Your Tech Skills



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Why is Apple sitting on $142bn? - BBC News

28 January 2015
Last updated at 08:11 ET By Jamie Robertson Presenter, BBC World News

King Midas, you may remember, had a problem with gold. Everything he touched turned to the yellow stuff.

Fine for a while, but not when he realised "everything" meant just that - everything.

He might have had some sympathy with Apple's problem of simply having too much money.

And the biggest quarterly profit in history, $18bn, is actually adding to Apple's biggest headache - an excess of cash.

In short the company is making money far faster than it can spend it.

Its cash pile now stands at close to $142bn (£93.5bn).

The problem is how to generate a return with that money for shareholders.

It has enough, in theory, to buy 480 or so of the companies in the S&P 500.

Or Lithuania, three times over.

But simply buying up companies is a complex and intricate business and suitable take-over targets are few and far between.

Its latest, the subscription music service Beats, cost just $3bn - and that was its largest purchase ever.

Apple Campus

It can invest in its own development, and it is spending an estimated $5bn on the 176-acre Apple Campus headquarters site.

But still the money keeps rolling in.

Most of it gets parked in what the accounts call "cash and cash equivalents" and short and long term marketable securities: government and corporate bonds.

Apple manages the cash through a subsidiary, Braeburn Capital, based in Reno, Nevada which has no state corporate income tax, or taxes on corporate shares.

It is in effect one of the largest hedge funds in the world.

But shareholders like shareholder activist, Carl Icahn, have been demanding the company simply must hand some of that cash back to shareholders by buying back shares.

Share buybacks

Hedge fund manager David Einhorn of Greenlight Capital went so far as to sue the company two years ago to try to get a payout.

They argue that cash, invested largely in government securities gives a paltry rate of return.

Einhorn argued that getting the excess cash off Apple's balance sheet and back to shareholders would increase the value of the company by $50 per share or more.

So the company obliged and in 2012 started buying back its own stock . Last year it spent some $45bn buying back Apple shares.

The problem is it has not made much difference. The latest set of results show it has as much cash as it has ever had.

In total, the amount of cash in the group is around $178bn. Some $35bn in debt reduces that figure to the $142bn mentioned above.

Debt? Why on earth, when you have more wealth in your piggy bank than the average developing nation generates in a year, would you want to borrow more?

The answer is that little of that cash is easily accessible to pay shareholders. Some 89% of it lies offshore out of the hands of the Internal Revenue Service.

Tax reform

Bringing it back would subject it to a top corporate tax rate of 35%.

Far easier to borrow the money instead. And since it has a such a cash pile behind it, banks are happy to lend to Apple at rock bottom rates - even by today's standards.

Last year Apple funded its share buy-back with a $17bn bond issue.

So, in effect, Apple did what Icahn and Einhorn wanted.

The share price has recovered from around $60 in mid 2013 to around $110 this week.

But the cash mountain remains.

Chief Executive Tim Cook told Congress two years ago that much of it could eventually come back to the US.

He even admitted Apple would be happy to pay more tax, but only if there was a "dramatic simplification of the corporate tax code" including a "reasonable tax on foreign earnings that allows the free flow of capital back to the United States".

But of course if the money did flow freely back to the US, no one is guaranteeing it would be invested any more wisely than it is at the moment.

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Apple iPhone sales trample expectations as profit sets global record - Reuters

An iPhone 6 phone is seen on display at the Fifth Avenue Apple store on the first day of sales in Manhattan, New York September 19, 2014.

Credit: Reuters/Adrees Latif

(Reuters) - Apple Inc (AAPL.O) quarterly results smashed Wall Street expectations with record sales of big-screen iPhones in the holiday shopping season and a 70 percent rise in China sales, powering the company to the largest profit in corporate history.

The company sold 74.5 million iPhones in its fiscal first quarter ended Dec. 27, while many analysts had expected fewer than 70 million. Revenue rose to $74.6 billion from $57.6 billion a year earlier.

Profit of $18 billion was the biggest ever reported by a public company, worldwide, according to S&P analyst Howard Silverblatt. Apple's cash pile is now $178 billion, enough to buy IBM (IBM.N) or the equivalent to $556 for every American.

Apple Chief Executive Officer Tim Cook said the Cupertino, California-based company would release its next product, the Apple Watch, in April.

Shares rose about 5 percent to $114.90 in after-hours trade.

Daniel Morgan, senior portfolio manager at Apple-shareholder Synovus Trust Company in Atlanta, Georgia, said that the report was a good sign in a quarter where big tech companies such as IBM and Microsoft Corp (MSFT.O) have disappointed.

Apple Chief Financial Officer Luca Maestri told Reuters in an interview that the company did not sell more iPhones in China than the United States, despite some earlier predictions by research analysts.

But the big-screen iPhone 6 and 6 plus drove revenues in China were up 70 percent in the quarter from a year earlier. The company's success in the competitive Chinese market can be attributed to its partnership with China Mobile Ltd (0941.HK), the largest global mobile carrier, and the appeal of the larger screen size of the iPhone 6 and 6 Plus.

Maestri said he does not expect Apple to struggle because of China's slipping economic growth. "We haven't seen a slowdown," he added.

Maestri also said the company doubled iPhone sales in Singapore and Brazil.

Apple will reach 40 company stores in greater China by mid-2016, Maestri told analysts on a conference call.

Carolina Milanesi, an analyst with Kantar Worldpanel ComTech, also lauded a 14 percent rise in unit sales of Apple Macintosh computers and sales of older iPhone models.

Apple was well positioned for the current quarter in China, she added, which will include the Chinese New Year holiday and reflect Apple's attempts to sell through new channels.

Apple reported net profit of $18.02 billion, or $3.06 per diluted share, compared with $13.07 billion, or $2.07 per share, a year earlier. That topped expectations of $2.60 per share, according to Thomson Reuters I/B/E/S. Analysts had expected revenue of $67.69 billion.

Maestri said that Apple faced "a clear headwind" from the strong dollar but that it had included the challenge in its forecasts. Apple predicted revenue of $52 billion to $55 billion in its fiscal second quarter, compared with Wall Street's average target of $53.79 billion.

Cook said that the company's new mobile payment service, Apple Pay, which lets customer buy products from select merchants with their phones, was in its "first inning" and the company would consider adding new features as it looked at expanding outside the United States.

(Reporting by Christina Farr in San Francisco; Additional reporting by Supantha Mukherjee in Bengaluru and Caroline Valetkevitch in New York; Editing by Peter Henderson, Ted Kerr and Lisa Shumaker)

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Apple Is Not As Big As Israel, Greece, Denmark Or Hong Kong, Please, Get A Grip - Forbes

Apple's results were certainly impressive: the largest quarterly results for any company ever and obviously therefore the best Apple has ever achieved. But along with that we’ve had an outbreak of one of my pet peeves, the comparison of corporate turnover to the GDP of a country. Therefore we’ve variously had people insisting that Apple’s now the size of, or comparable to, Israel, Greece, Denmark and Hong Kong. Please people, please my fellow journalists, try to understand this. The GDP of a country and the turnover of a company are two conceptually very different things. We really shouldn’t be trying to compare one with the other.

As examples, here’s the Mail:

Apple today announced a record quarterly profit of $18billion (£11.8bn) – the biggest ever made by a public company.

The U.S. tech giant also posted record revenue of $74.6 billion (£49.2bn) for the three months to December 31, outstripping the quarterly GDP of Israel, Greece or Denmark.

And the Independent:

Apple’s total revenue for the first quarter was $74.6bn. If this trend continues for the next three quarters, that would bring total revenue to at least $298.4bn, which is a larger figure than the GDP of Hong Kong.

Telegraph:

$18bn

Apple’s record-breaking profit, bigger than the quarterly GDP of Greece, equal to Yemen, and almost as big as Denmark

That last is particularly good as the $18 billion profit number is a better one to use than turnover, but slightly marred by the fact that the quarterly GDP of Greece is more like $60 billion and that of Denmark rather higher. And that of Yemen is about half that Apple number. So quite what brain spasm went on there I’m not sure.

The bit that I do know about is that we shouldn’t be trying to compare the turnover of a company with the GDP of a country. They are conceptually two entirely different things. And they cannot be compared against each other as a useful measure of the size of an economic organisation. GDP is the value added in an economy and turnover is just that, the turnover, not that value added. As an example one of the world’s largest markets is partially based in London. The global foreign exchange market, or that part of it that happens in London, turns over perhaps $2 trillion a day. And there’s 260 0r so trading days in a year (ignoring that Sunday part that happens in the Middle East). So we’ve $520 trillion of turnover happening in a country where the entire GDP in a year is around $2.5 trillion (rough numbers, £1.5 trillion). Obviously we’re measuring very different things here then. And turnover isn’t going to be a good guide if the other thing we’re measuring is that value added.

The easiest way to get to the right answer is to look at the way we calculate GDP from the income side. All of the value produced is obviously equal to all of the value consumed and both must be equal to everybody’s incomes. So, we can just add up the incomes of everyone in a country and we have our GDP number (technically more difficult than this but conceptually that’s it). And profits plus wages will get us pretty close to the right number, adding interest and rent gets us closer. So, by the same concept, the economic size of a company, something we can indeed compare to GDP, is the wages, profits, interest and rent paid by that company. That is the measure of economic size that at least conceptually equals the way we calculate GDP.

I’m not going to start trying to estimate Apple’s wage bill but say it’s $30 billion. Add that $18 billion profit at an annual rate and call it $100 billion. Somewhere around Slovakia or Morocco then. Yes, that’s incredibly impressive for a company, that’s a truly hefty economic organisation. But it’s just not the size of Hong Kong, Denmark or any of the others that are being used as comparisons.

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Amid blow-out quarter, Apple barely mentions Mac sales - Computerworld

From CIO: 8 Free Online Courses to Grow Your Tech Skills



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Apple blowout may only be the beginning: Analysts - CNBC

The rollout of the Apple Watch, which will be shipped in April, also has the potential to help the company's stock keep momentum, analysts said.

Read MoreWhy Apple stock is still cheap: Analyst

"The smart watch industry is significant, and we believe Apple has an opportunity to be the leader in this new product category. Given the company had approximately 800 million iTunes accounts (most with credit cards) as of April 2014, we believe Apple has a large group of Apple enthusiasts to sell into," White said in his note to clients.

The Cantor Fitzgerald analyst said the device could also become Apple's fastest selling new product category during the first year on the market, surpassing the iPad, which had 19.5 million units sold in its debut year. He forecasts the company selling 20.6 million units during the first year, driving revenue of $9.6 billion. This translates to about 6.8 million unit and revenue of about $3.2 billion for the 2015 fiscal year, White said.

But the pressure is on Apple to get its smartwatch correct right out of the gate, which could be a problem given the recent reports of the device having a poor battery life.

"Apple cannot afford to misfire with the Apple Watch. It's too big of a company for any product to be a failure. ... The one thing that becomes pivotal this year is the success of Apple Watch early on," Basenese said. "It's going to naturally drive more iPhone sales, so the adoption of the watch becomes critical."

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Why is Apple sitting on $142bn? - BBC News

28 January 2015
Last updated at 08:11 ET By Jamie Robertson Presenter, BBC World News

King Midas, you may remember, had a problem with gold. Everything he touched turned to the yellow stuff.

Fine for a while, but not when he realised "everything" meant just that - everything.

He might have had some sympathy with Apple's problem of simply having too much money.

And the biggest quarterly profit in history, $18bn, is actually adding to Apple's biggest headache - an excess of cash.

In short the company is making money far faster than it can spend it.

Its cash pile now stands at close to $142bn (£93.5bn).

The problem is how to generate a return with that money for shareholders.

It has enough, in theory, to buy 480 or so of the companies in the S&P 500.

Or Lithuania, three times over.

But simply buying up companies is a complex and intricate business and suitable take-over targets are few and far between.

Its latest, the subscription music service Beats, cost just $3bn - and that was its largest purchase ever.

Apple Campus

It can invest in its own development, and it is spending an estimated $5bn on the 176-acre Apple Campus headquarters site.

But still the money keeps rolling in.

Most of it gets parked in what the accounts call "cash and cash equivalents" and short and long term marketable securities: government and corporate bonds.

Apple manages the cash through a subsidiary, Braeburn Capital, based in Reno, Nevada which has no state corporate income tax, or taxes on corporate shares.

It is in effect one of the largest hedge funds in the world.

But shareholders like shareholder activist, Carl Icahn, have been demanding the company simply must hand some of that cash back to shareholders by buying back shares.

Share buybacks

Hedge fund manager David Einhorn of Greenlight Capital went so far as to sue the company two years ago to try to get a payout.

They argue that cash, invested largely in government securities gives a paltry rate of return.

Einhorn argued that getting the excess cash off Apple's balance sheet and back to shareholders would increase the value of the company by $50 per share or more.

So the company obliged and in 2012 started buying back its own stock . Last year it spent some $45bn buying back Apple shares.

The problem is it has not made much difference. The latest set of results show it has as much cash as it has ever had.

In total, the amount of cash in the group is around $178bn. Some $35bn in debt reduces that figure to the $142bn mentioned above.

Debt? Why on earth, when you have more wealth in your piggy bank than the average developing nation generates in a year, would you want to borrow more?

The answer is that little of that cash is easily accessible to pay shareholders. Some 89% of it lies offshore out of the hands of the Internal Revenue Service.

Tax reform

Bringing it back would subject it to a top corporate tax rate of 35%.

Far easier to borrow the money instead. And since it has a such a cash pile behind it, banks are happy to lend to Apple at rock bottom rates - even by today's standards.

Last year Apple funded its share buy-back with a $17bn bond issue.

So, in effect, Apple did what Icahn and Einhorn wanted.

The share price has recovered from around $60 in mid 2013 to around $110 this week.

But the cash mountain remains.

Chief Executive Tim Cook told Congress two years ago that much of it could eventually come back to the US.

He even admitted Apple would be happy to pay more tax, but only if there was a "dramatic simplification of the corporate tax code" including a "reasonable tax on foreign earnings that allows the free flow of capital back to the United States".

But of course if the money did flow freely back to the US, no one is guaranteeing it would be invested any more wisely than it is at the moment.

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Apple iPhone sales trample expectations as profit sets global record - Reuters

An iPhone 6 phone is seen on display at the Fifth Avenue Apple store on the first day of sales in Manhattan, New York September 19, 2014.

Credit: Reuters/Adrees Latif

(Reuters) - Apple Inc (AAPL.O) quarterly results smashed Wall Street expectations with record sales of big-screen iPhones in the holiday shopping season and a 70 percent rise in China sales, powering the company to the largest profit in corporate history.

The company sold 74.5 million iPhones in its fiscal first quarter ended Dec. 27, while many analysts had expected fewer than 70 million. Revenue rose to $74.6 billion from $57.6 billion a year earlier.

Profit of $18 billion was the biggest ever reported by a public company, worldwide, according to S&P analyst Howard Silverblatt. Apple's cash pile is now $178 billion, enough to buy IBM (IBM.N) or the equivalent to $556 for every American.

Apple Chief Executive Officer Tim Cook said the Cupertino, California-based company would release its next product, the Apple Watch, in April.

Shares rose about 5 percent to $114.90 in after-hours trade.

Daniel Morgan, senior portfolio manager at Apple-shareholder Synovus Trust Company in Atlanta, Georgia, said that the report was a good sign in a quarter where big tech companies such as IBM and Microsoft Corp (MSFT.O) have disappointed.

Apple Chief Financial Officer Luca Maestri told Reuters in an interview that the company did not sell more iPhones in China than the United States, despite some earlier predictions by research analysts.

But the big-screen iPhone 6 and 6 plus drove revenues in China were up 70 percent in the quarter from a year earlier. The company's success in the competitive Chinese market can be attributed to its partnership with China Mobile Ltd (0941.HK), the largest global mobile carrier, and the appeal of the larger screen size of the iPhone 6 and 6 Plus.

Maestri said he does not expect Apple to struggle because of China's slipping economic growth. "We haven't seen a slowdown," he added.

Maestri also said the company doubled iPhone sales in Singapore and Brazil.

Apple will reach 40 company stores in greater China by mid-2016, Maestri told analysts on a conference call.

Carolina Milanesi, an analyst with Kantar Worldpanel ComTech, also lauded a 14 percent rise in unit sales of Apple Macintosh computers and sales of older iPhone models.

Apple was well positioned for the current quarter in China, she added, which will include the Chinese New Year holiday and reflect Apple's attempts to sell through new channels.

Apple reported net profit of $18.02 billion, or $3.06 per diluted share, compared with $13.07 billion, or $2.07 per share, a year earlier. That topped expectations of $2.60 per share, according to Thomson Reuters I/B/E/S. Analysts had expected revenue of $67.69 billion.

Maestri said that Apple faced "a clear headwind" from the strong dollar but that it had included the challenge in its forecasts. Apple predicted revenue of $52 billion to $55 billion in its fiscal second quarter, compared with Wall Street's average target of $53.79 billion.

Cook said that the company's new mobile payment service, Apple Pay, which lets customer buy products from select merchants with their phones, was in its "first inning" and the company would consider adding new features as it looked at expanding outside the United States.

(Reporting by Christina Farr in San Francisco; Additional reporting by Supantha Mukherjee in Bengaluru and Caroline Valetkevitch in New York; Editing by Peter Henderson, Ted Kerr and Lisa Shumaker)

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Apple Is Not As Big As Israel, Greece, Denmark Or Hong Kong, Please, Get A Grip - Forbes

Apple's results were certainly impressive: the largest quarterly results for any company ever and obviously therefore the best Apple has ever achieved. But along with that we’ve had an outbreak of one of my pet peeves, the comparison of corporate turnover to the GDP of a country. Therefore we’ve variously had people insisting that Apple’s now the size of, or comparable to, Israel, Greece, Denmark and Hong Kong. Please people, please my fellow journalists, try to understand this. The GDP of a country and the turnover of a company are two conceptually very different things. We really shouldn’t be trying to compare one with the other.

As examples, here’s the Mail:

Apple today announced a record quarterly profit of $18billion (£11.8bn) – the biggest ever made by a public company.

The U.S. tech giant also posted record revenue of $74.6 billion (£49.2bn) for the three months to December 31, outstripping the quarterly GDP of Israel, Greece or Denmark.

And the Independent:

Apple’s total revenue for the first quarter was $74.6bn. If this trend continues for the next three quarters, that would bring total revenue to at least $298.4bn, which is a larger figure than the GDP of Hong Kong.

Telegraph:

$18bn

Apple’s record-breaking profit, bigger than the quarterly GDP of Greece, equal to Yemen, and almost as big as Denmark

That last is particularly good as the $18 billion profit number is a better one to use than turnover, but slightly marred by the fact that the quarterly GDP of Greece is more like $60 billion and that of Denmark rather higher. And that of Yemen is about half that Apple number. So quite what brain spasm went on there I’m not sure.

The bit that I do know about is that we shouldn’t be trying to compare the turnover of a company with the GDP of a country. They are conceptually two entirely different things. And they cannot be compared against each other as a useful measure of the size of an economic organisation. GDP is the value added in an economy and turnover is just that, the turnover, not that value added. As an example one of the world’s largest markets is partially based in London. The global foreign exchange market, or that part of it that happens in London, turns over perhaps $2 trillion a day. And there’s 260 0r so trading days in a year (ignoring that Sunday part that happens in the Middle East). So we’ve $520 trillion of turnover happening in a country where the entire GDP in a year is around $2.5 trillion (rough numbers, £1.5 trillion). Obviously we’re measuring very different things here then. And turnover isn’t going to be a good guide if the other thing we’re measuring is that value added.

The easiest way to get to the right answer is to look at the way we calculate GDP from the income side. All of the value produced is obviously equal to all of the value consumed and both must be equal to everybody’s incomes. So, we can just add up the incomes of everyone in a country and we have our GDP number (technically more difficult than this but conceptually that’s it). And profits plus wages will get us pretty close to the right number, adding interest and rent gets us closer. So, by the same concept, the economic size of a company, something we can indeed compare to GDP, is the wages, profits, interest and rent paid by that company. That is the measure of economic size that at least conceptually equals the way we calculate GDP.

I’m not going to start trying to estimate Apple’s wage bill but say it’s $30 billion. Add that $18 billion profit at an annual rate and call it $100 billion. Somewhere around Slovakia or Morocco then. Yes, that’s incredibly impressive for a company, that’s a truly hefty economic organisation. But it’s just not the size of Hong Kong, Denmark or any of the others that are being used as comparisons.

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