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Apple Posts Earnings, Denies Bid for Universal
Lars T. writes "A number of things: Apple posts Q2 results, and denies it bid for Universial Music. Now a Register article quotes a Reuters article that 'Vivendi Universal director Claude Bebear didn't express his views on the merger talks between Vivendi's Universal Music Group (UMG) and Apple,' which was the claim of the Bloomberg article. Now who needs General Hospital?"
Someone really ought to take all the times businseses explicitly say "We are not doing X", and gather data on how often they are in fact doing X. Classify by type of X - corporate mergers, new products, swindling customers, etc.
I mean, I'm really curious exactly how much stock to put in Apple's denial here...
Anyone have any ideas?
Philip Sandifer's academic website
Hmm, it actually looks like vivendi had a significant boost last week...and dropped yesterday after the announcement.
The anti-salmon
It honestly defies all conventional wisdom that a company set beside a large monopoly can still survive with a profit and imbue such incredible loyalty from its consumer base. If there were a couple of big players and Apple was a niche player in left field it would be different. But still..
They cost more.
They are generally slower (I know this is getting better everytime they make the consumer cough up money for a new version Mac OS X).
There is less software available in the retail markets.
Before you take a LART to me. This is leading to something.
Why?
This is a loaded question really since I am a linux user on x86 and understand there are plenty of reasons not to want to follow the mainstream. But I know my reasons and why others use linux.
I am actually curious.
Macheads with the computer world so very Windows focused why do you still buy macs?
ACK
A lot of guys who did just that on MF back in the 90's are now in Tennis Prison.
That said, I own no AAPL stock, and think they are no worse an investment than anything else on the NASDAQ right now... which may be damning them with faint praise, but there you have it.
Information wants to be anthropomorphized.
My father has been a Mac fan my entire life, and he was disappointed to find that I was a DOS and later Windows user. But it was to be expected; I wanted to play games and I wanted the BBS software of the time.
Once I got into college and started studying computer science, my respect for unix grew. I played with an ancient laptop installed with Linux over the summer and really learned a lot about this exciting area. But due to (in my opinion) poor applications, it would not be a desktop OS to me. All it really took to switch me to the Mac was a few evenings on my dad's Powerbook playing with OS X.
The interface was intuitive and clever. The whole thing looked professional and yet beautiful at the same time, not much like the previous Mac OS I'd remembered. The apps worked together, had really cool features, and were generally more pleasant to use and look at than on Windows; plus, most of them actually came with the machine as standard. Mail's junk mail filtering and simple interface had me entranced. The way iTunes automatically sorted and managed all of your mp3s based on their id3, while providing ripping and burning support, amazed me (I can stick an audio CD in my computer, it'll rip it in iTunes, add it to the library appropriately, and eject it automatically). For some reason, even Microsoft apps such as Office and IE look and feel much nicer, and even have added functionality! And, of course, I could access a unix terminal at any time.
On the unix side, there's plenty to be done. You can load an entire KDE installation and run it on top of Aqua. While in Cocoa-based apps such as Safari -- where I type this -- I can use emacs-style keys like ctrl-a, ctrl-e, ctrl-k, ctrl-y in this comment field. And I was finally free of the registry.
And it's all packaged. It's all so easy. It removes a huge portion of the headaches, the real currency of computers. There are a huge number of "little things" I could say I prefer about the Mac that add up to a really pleasant overall experience. If I was a gamer or multimedia expert I might be disappointed with the recent hardware speed issues, but don't be mistaken. The 1 Ghz G4 is fast as hell, and I can play Warcraft III (and many other mainstream games) or use Photoshop very smoothly.
I don't think it's perfect. I've had crashes and have been frustrated by a lack of some Windows app I wanted. But I will say I do think it is better. At this point, I'm fairly certain my next machine will be a Mac. Ideologically, it appeals to me more than Microsoft. I genuinely feel that Apple is out to make good stuff and change things for the better, while Microsoft seems more purely capitalist.
OK, this has way too long, but it's helped me put off studying for a test ;)
Part of the reason for this is regulatory, the other part is semantic. To some extent you are complaining about the fact that they didn't announce the merger until they announce it. But for there to be a state of the world where they had announced the merger, there must have been a state of the world when they did not announce it. You can't complain about the non-announced state of the world, because it only comes into being as a result of the announced state of the world. Enough semantics/quasi-logic - there are good legal reasons.
These deals are highly complex, and you can only announce them once all of the legal details are done, which may come two months after you agree on price (or a formula to determine the price, if you are buying with your own stock), and the agreement on price may come several months after the initial agreement to transact. Any confirmation of talks, or preliminary agreement, could have been construed as a confirmation of a deal, which was not yet finalized. So they have to deny the talks, until everything is done. Otherwise you will have the SEC, Elliott Spitzer, 100 civil suits, and an army of nazi frogmen crawling all over your company in the split second that it takes to say the words "selective disclosure" and "insider trading".
so why did they register AppleUniversal.com a few days ago?
Domain Name: APPLEUNIVERSAL.COM
Registrar: BULKREGISTER.COM, INC.
Whois Server: whois.bulkregister.com
Referral URL: http://www.bulkregister.com
Name Server: NSERVER2.APPLE.COM
Name Server: NSERVER.APPLE.COM
Status: ACTIVE
Updated Date: 11-apr-2003
Creation Date: 11-apr-2003
Expiration Date: 11-apr-2004
NOTICE: The expiration date displayed in this record is the date the
registrar's sponsorship of the domain name registration in the registry is
currently set to expire. This date does not necessarily reflect the expiration
date of the domain name registrant's agreement with the sponsoring
registrar. Users may consult the sponsoring registrar's Whois database to
view the registrar's reported date of expiration for this registration.
It's not so much how much profit they're making, it's where that profit is coming from that's a concern.
Everyone makes a big deal out of Apple's cash horde ($4b? $5b?), and about how the "market" isn't valuing Apple at much more than its cash value per share. I haven't looked at the numbers in a long time, but we can safley assume that Apple isn't keeping its $4b in cash under the mattress. That means that they put it somewhere where they expect it to make some return, even if they only put it into the equivalent of your savings account.
How much money do you think Apple is making on their cash horde in interest alone? Again, I don't have those numbers, but I suspect that they made more in interest than the $14m they reported in profit. That means that they are actually losing money from operations, and using their interest income to make up the difference.
Apple IMHO has been using that cash wisely, without that interest income they would be posting losses every quarter and really in danger of dying. That cash is keeping the company afloat. Now they're thinking of spending it all (and then some). All I have to say is that, as a shareholder, the return they get on that investment needs to be better than their current interest income, or else I'm bailing out.
It is true that the Universal music label is a profitable concern (bringing in >$200m per year IIRC), but everyone predicts that the entire music industry is going down the toilet. If Jobs can figure out a way to keep the music label profitable in the long term, then this purchase makes sense.
We'll have to see what Apple's much-hyped music service is all about. If it convinces me to buy music again, than I will assume it will convince others too, and then maybe the unit will be profitable long-term and this deal will make sense...
As is pointed out in other reports their margins are up because they're selling less machines but with greater profit margins on each one. I want to point out that apple is doing quite well for being in the middle of a recession /and/ selling machines based on a chip that, according to rumors, is nearing the end of its life. We're probably seeing less sales because professionals are holding off buying until they see what's on the horizon. I think if the rumors of the IBM 970 chip turn out to be true, you'll see the number of units sold skyrocket
Those are not good numbers. That's a net of less than 1%. I'm not saying they're dying, but those are not good numbers. Are you willing to buy a piece of a company with numbers like this?
For $1000 you can buy 0.000021% of the AAPL ($1000 / current AAPL Market Cap). 0.000021% of AAPL's current net tangible assets is about $835. In other words, you only need to have enough confidence in Apple to have a net growth of 20% over the period of your investment.
To make a totally invalid comparison, that same $1000 could buy you 0.00000037% of MSFT. Which only gets you about $195 of MSFT's net tangible assets. You have to have enough confidence in Microsoft for them to grow 413% over the period of that investment.
This completely ignores how profitable either company is per quarter or per year (P/E ratio, which is a totally valid benchmark), but any long-term estimate of that is much more speculative than the numbers I list above. Conclusion: AAPL is insanely cheap. If the stock market was rational, it would be priced much higher, and at this price you SHOULD be willing to buy a piece of a company with numbers like this.
I'm not a smorgasbord.