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  (Source: Apple Gazette)
The company's $40B USD cash stockpile allows the company to "write a check for" "big, bold things"

Apple is currently sitting on a vast pile of cash -- an estimated $40B USD -- equal to about one fifth of its market capitalization.  That's a rarity in the business world to say the least; in fact just about no company in tech industry, other than perhaps Microsoft has that much cash sitting around.

In a recent annual meeting, Apple Chief Executive Officer Steven P. Jobs discussed Apple's fiscal fatness and why he feels it's a good thing.  Sporting his traditional  trademark blue jeans and black mock turtleneck top ensemble, the Cupertino head man says that Apple is unlikely to commit to dividends or stock buybacks that would surely please the holders of Apple stock, which currently is trading at over $200/share on an average daily volume of 25M shares traded daily.

Instead, the cash allows for big moves -- like the iPad.  He states, "We're a large enough business now, that in order to really move the needle, we've got to be thinking pretty bold, pretty large. And who knows what's around the next corner.  When we think about big, bold things, we know that if we needed to acquire something, a piece of the puzzle, to make something big and bold a reality, we could write a check for it."

Some might interpret his last sentence to refer to acquisitions, but Jobs primarily is referring to internal expenditures.  Apple's current rosy financial situation came thanks to enormous risky investments in super-products like the iPod and iPhone that when they first debuted were unlike anything else seen on the market.

Apple also specializes in small acquisitions, typically to gain experience in a field it's unfamiliar with.  Describes Broadpoint Amtech analyst Brian Marshall, "Their historical use of cash has worked obviously very well.  Doing small deals, buying private companies with 100 to 150 engineers and integrating them with the Cupertino establishment and then taking their technology and making it pervasive throughout the organization."

The outlook for Apple is rather promising for the next year.  The company looks to grow and expand in the key Chinese market, opening 25 new stores there next year.  Some analysts also think that despite some public jokes and criticism about the company's new iPad tablet, that the tablet-cum-e-book reader may sell between 2 million and 5 million units.  Next month will give the first glimpse of the public's interest when the Wi-Fi version of the iPad debuts.  Some may wait until April, when the 3G version lands.

Despite its tremendous cash pile and popular products, Apple does face some key risks.  Its soaring popularity and brand image have come at the cost of increased scrutiny, and recent quality issues have soured Apple's image for some.  Apple also faces difficulties with it's tradition of intense secrecy, a tradition that reportedly leads it to maintain an army of secret agents that spy on its workforce.  The company's secretive nature recently came under fire when a worker at one of Apple's Chinese suppliers died under suspicious circumstances after losing an iPhone prototype; and a recent incident in which security guards at a parts supplier beat a foreign correspondent didn't help things much either.

Probably the biggest threat it faces, though, is maintaining the momentum on its products.  When the iPhone and unibody MacBook Pro debuted they had hardware on par with their top of the line competitors and they enjoyed sleeker packaging -- keys to justifying the devices' price premium.  Now several phones beat the iPhone's hardware in various areas (and they have Flash, something Apple feels threatened by and refuses to support).  Meanwhile, the MacBook Pro's hardware, particularly its CPU and GPU selection, is looking increasingly stale.  That said, there will probably be a MacBook refresh coming very soon and another iPhone refresh this summer that will help remedy those shortcomings.



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This article is over a month old, voting and posting comments is disabled

By crystal clear on 2/27/2010 1:21:44 AM , Rating: 2
I stand for accuracy in reporting & correct analysis of the subject,free of any bias & any hidden agenda.

Apple in the past & even today is criticized for just anything it does/did,without any effort from neither the D.T. staff & commentators to do even the basic research to justify their comments/opinions/facts/reporting.

Now read this-
Supplier Responsibility
2010 Progress Report

In 2009, Apple conducted audits at 102 facilities, including annual audits of all final assembly manufacturers, first-time audits of component and nonproduction suppliers, and 15 repeat audits of facilities where a core violation had been discovered.

During most of our audits, suppliers stated-
that Apple was the only company that had ever audited their facility for supplier responsibility
.


More on the report-

Underage labor
Apple discovered three facilities that had previously hired 15-year-old workers in countries where the minimum age for employment is 16. Across the three facilities, our auditors found records of 11 workers who had been hired prior
to reaching the legal age, although the workers were no longer underage or no longer in active employment at the time of our audit.

In each of the three facilities, we required a review of all employment records for the year prior to our audit, as well as a complete analysis of the hiring process to clarify how underage people had been able to gain employment.

Apple required each facility to develop and institute appropriate management systems—such as more thorough ID checks and verification procedures—to prevent future employment of underage workers.

Improper disposal of hazardous waste

Apple discovered three facilities that had hired noncertified hazardous waste disposal companies. We classified these instances as core violations and required all three facilities to immediately stop shipping waste and to hire certified vendors for all of their hazardous waste disposal. Apple required each facility to engage a third-party consultant and to undergo a thorough review of their systems for managing hazardous substances.
In addition, Apple required these facilities to perform immediate inspections of their wastewater discharge systems. We also required them to hire an independent environmental professional to conduct an onsite environmental review and implement management systems to prevent future violations.

Falsification of records

Three core violations involved suppliers who deliberately provided falsified records during our audit. One facility attempted to conceal evidence of historical cases of underage labor. Two other facilities presented falsified records that concealed evidence of violations of Apple’s Code regarding working hours and days of rest. In all three cases, Apple auditors uncovered
the falsified records by cross-referencing audit data.
In one instance, Apple’s 2008 audit had revealed falsified records for working hours and days of rest. When Apple returned in 2009 for a core violation reaudit, the facility again falsified records—presenting worker timecards, daily production output records, and quality control records that indicated no violations related to working hours or days of rest. When Apple investigated further, we uncovered additional records and conducted worker interviews that revealed excessive working hours and seven days of continuous work.
When confronted with this information, the facility provided Apple with accurate timecards. Based on the repeat core violation and inadequate actions, Apple is terminating all business with this facility. In all three cases, Apple required an independent audit to review human resources records and to look for additional falsified records. These follow-up investigations did not reveal any additional falsified documents. In the two cases involving working hours and days of rest, our auditor confirmed workers had been paid the appropriate amount for hours actually worked.

Frequent Violations and Corrective Actions

Following are details around our audit findings in subcategories where our audits revealed noncompliance across many facilities.

Working hours

Apple’s Code sets a maximum of 60 work hours per week and requires at least one day of rest per seven days of work, while allowing exceptions in unusual or emergency circumstances.

http://regmedia.co.uk/2010/02/26/apple_supplier_re...




By porkpie on 2/27/2010 10:47:56 AM , Rating: 2
Good post. Personally, I loathe Apple with every breath of my body...but I loathe biased reporting even more.


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