Apple's Spaceship Headquarters Having Budget Overruns
April 4, 2013 1:23 PM
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.
"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation
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