Print 24 comment(s) - last by gpoly.. on Apr 7 at 5:57 AM

It went from less than $3 billion in 2011 to nearly $5 billion now

Former Apple CEO Steve Jobs wanted Apple's huge, second campus to be built by 2015, but issues with going way over budget has tacked on an extra year to the completion date. 

Back in June 2011, Jobs presented plans for Apple's new corporate building before the Cupertino City Council. It looked like a spaceship, and was capable of holding 12,000 employees. 

The plans consisted of a 2.8 million square foot campus with 176 acres of trees (adding 6,000 trees total). There were curved exterior walls and 40-foot panes of concave glass from the floor to the ceiling. 

At that time, the budget was a little under $3 billion. Jobs wanted to break ground in 2012 and have the Apple spaceship complete by 2015. 

However, the budget has since grown to nearly $5 billion today, and the company doesn't plan to start building until June. The project likely won't be complete until 2016. 

What's causing the delay? Apple is taking a little extra time to cut down that giant budget, which has ballooned since initial plans went through.

Apple is currently working with architect Foster + Partners to chop about $1 billion from the budget before going any further. Apple had hired Norman Foster’s firm back in 2010 when plans were just begining. Apple's general contractor is a joint venture of DPR Construction (Redwood City, California) and Skanska USA Building (New York).

But the company still needs to work out agreements with several other subcontractors in order to begin. Contractors will be submitting bids by May of this year. 

Despite having $137 billion in the bank, Apple is likely looking to cut the budget a bit because its shares have fallen 38 percent since its high of $700 per share in September 2012. Also, competitors like Samsung are making a huge splash in the mobile market with high-tech smartphones and tablets that rival the iPhone/iPad in price, design and functionality.

Investors aren't too happy with the $5 billion budget, either. 

“This is rubbing salt in the wound, to spend at a level that most anyone would say is extravagant, at a time when they’re being so stingy on dividends," said Keith Goddard, the chief executive of Tulsa-based Capital Advisors, which owns 30,537 shares of Apple. "This headquarters would perpetuate the negative story.”

Samsung recently announced that it plans to top Apple's spaceship headquarters by building a $300 million green campus, which will be placed in San Jose, California. It will feature a 1.1 million square foot campus with sports courts, cafes and gardens. Even the design is interesting, with alternating layers of larger and smaller floors to give a ridged appearance to the building.

Source: BusinessWeek

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By Plester on 4/4/2013 1:32:43 PM , Rating: 5
It will be an impressive monument to a bygone company someday.

RE: Hubris
By Ammohunt on 4/4/2013 2:16:28 PM , Rating: 2
Like most company headquarters that stay in California. Stockton today Cupertino tomorrow? San Jose?

RE: Hubris
By synapse46 on 4/5/2013 8:12:33 AM , Rating: 2
While I'm sure a 300million dollar building is nice, I doubt it is hurting a company grossing 45billion a quarter.

RE: Hubris
By Schadenfroh on 4/4/2013 2:22:46 PM , Rating: 2
I remember seeing WorldCom's old HQ in Clinton, Mississippi as a derelict wreck of what was once the center of the telecom world after its meltdown.

Maybe Apple can later sell this new building and lease it back to stay afloat like Sony / AMD one day.

RE: Hubris
By Dorkyman on 4/4/2013 3:22:02 PM , Rating: 5
The real reason for the cost overruns is that Apple insisted on a closed environment--they needed to create their own iConcrete, iSteel, and iGlass. So of course it was going to cost more.

But that way they can have total control of the user experience.

RE: Hubris
By marvdmartian on 4/5/2013 7:56:56 AM , Rating: 4
I heard that the reason for the delay and cost overrun is because Tim Cook can't buy dilithium crystals at the same price that Steve Jobs was able to buy them for. Once it's completed, though, they'll be able to take off, and return Steve's remains back to his planet of birth.

RE: Hubris
By Jeffk464 on 4/5/2013 12:57:07 PM , Rating: 2
Its the wrath of Kahn, they will use the genesis project to bring back steve jobs.

RE: Hubris
By gpoly on 4/7/2013 5:57:40 AM , Rating: 2
The signs are there. Like the multi-millionaire who lives larger than he can afford and finally goes out and buys that Mega Yacht he neither needs nor can afford. You see it so many many times. It's not so much about the $5 Billion, it's about the mindset. Do Apple really NEED a building like this? They are a COMPANY, not a religion. Just a single billion dollars gets you a LOT of space in a normal business park! If I was a shareholder, I wouldn't be too happy, particularly now they are selling a fairly "mature" set of products into very mature markets (or even declining in the case of the iMac). The dream run is over and they need to be working harder and focusing on some new and innovative products to replace the mature ones, not building shrines.

“We do believe we have a moral responsibility to keep porn off the iPhone.” -- Steve Jobs

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