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Apple Now Debt Free, Says Internal Memo
An anonymous reader writes "99mac.se publishes an internal memo from Steve Jobs to Apple employees today.
According to the Memo, Jobs states that "Today is a historic day of sorts for our company." Apple used $300 million in cash to pay off the rest of their debt, and is now a debt-free company. A big turnaround from over $1 billion in debt in mid-1997.
Also noted in the memo is that Apple has $4.8 billion in the bank at this time." (Since this is not coming straight from Apple, confirmation -- or debunking -- would be helpful.)
when's their next SEC filing deadline?
The crashing success of iTunes, and iPods? Along with OS X and the resurgence of the iMacs? I don't think its that hard to accept that they are now in the black.
Good quote, too many chars. Seriously, the slashdot 120 char limit sucks!
the birth of the next corporate monster...now totally unfettered by the chains of debt
Choice is good - including platform choice.
Who needs the market share when you've got a cool 4 billion bucks in the bank, and the mind share - apple equals style and coolness, like it or not.
Now back to my beige box... :(
Something to keep in mind is that debt isn't necessarily bad. Many companies use a combination of equity and debt to finance their operations. Sometimes no debt with lots of cash can actually be dangerous, particularly with the ongoing rise in leveraged buyouts. Granted, Apple is probably protected against this since there is very little to be gained by "breaking up" Apple. (I'd wager it's not even possible.)
It's how a company uses its debt and the amount of debt relative to things like cash flow, equity, etc., that's important.
-- Fugacity: Confusing chemists since 1908
But you go right ahead and keep the faith. Obviously reality isn't bothering you enough to change your thinking.
Debunking the "59 Deceits"
Yeah, and your mother owes you millions for dropping you as a child, since those of us who weren't dropped, went to the store and bought a $40 optical scroll-wheel mouse ;-)
(Sorry, pet peeve for those who complain about the fact that a computer, designed+marketed to be EASY TO USE, comes out of the box with only one mouse button but is perfectly capable of using a fancier one if your heart desires).
Please help metamoderate.
Regardless of your choice of architecture or OS, this news is great for consumers and technology users. I may not use a Mac, but as long as Apple is out there, out of debt, and profitable I don't have to worry about Microsoft having free reign over the direction of the computer industry. XP Pro works fine for me right now when I need to get real work done (sidenote: please, Linux, work completely on laptops soon!), but if Gates & Co. decide to slide farther down some restrictive draconian path of DRM I know that I can switch in a heartbeat.
We all saw what happened when AMD became a viable competitor for Intel, processor speeds dramatically increased and prices dropped.
Without Apple continuing to innovate and capture user mindshare we'd all probably be stuck using something along the lines of Windows ME.
ce n'est pas un Sig.
Actually, the Democrats are traditionally known as "tax and spend", which means they pay as they go, whereas the current administration has chosen to borrow and spend...
Stop by my site where I write about ERP systems & more
Most filing is quarterly not trimesterly. Their second quarter reports have historically been published in the middle of April.
Just a quick correction (not a Troll... I'm glad they're doing well)...
Also noted in the memo is that Apple has $4.8 billion in the bank at this time.
and
Apple has $4.8 billion in total assets
Are not synonymous. Assets include buildings, machinery, office equipment, which I'm sure Apple has laying around somewhere...
Saying Android is a family of phones is akin to saying Linux is a family of PCs.
You'r thinking of Dell. I have literally always said that my 2 Dell laptops felt like they were manufactured by Fisher-Price. They were made of cheap, flimy pastic; worse than cheaper brands of notebooks.
Allps products are usually built like tanks. The iBooks (though cheap in price) are sturdy little buggers, and the powerbooks are elegant and sturdy.
While they may LOOK odd, at least their made of sturer stuff.
mbbac
(Sorry, pet peeve for those who complain about the fact that a computer, designed+marketed to be EASY TO USE, comes out of the box with only one mouse button but is perfectly capable of using a fancier one if your heart desires).
The hockey puck wasn't hated because it only had one mouse button. It was hated because it wasn't easy to use. It will go down in history as the worst designed mouse ever.
Debt is a very useful thing to have if you need extensive capital investment in material things or you need a pool of money to fund the development of an idea.
If you have no need to do capital investments in things like plant and equipment or buying another company then debt is a BAD thing because you're paying interest and usually more than you'd get investing in a similar risk item.
Americans seem to have an idea that being in debt is a good thing. For some things like a House which will normally be a long term asset whose value will be more than the total cost of the debt this is an OK idea. For cars and such its usually not a great idea as the asset depreciates very quickly, for computers its even worse. Unless of course you use that asset for something useful like running your business (one of the reasons Graphics people don't care about the cost of a new Mac is that it pays for itself very quickly).
So lets look at Apple. Their major assets are their people and ideas. If they have enough revenue to continue to pay those people they shouldn't borrow for it. R&D is normally expensive but most of what Apple does is consumer design, software development and (some) assembly. CPU's, Disks etc are all developed by others - sometimes with input from Apple. For these things they don't need extensive physical assets like factories and machinery. They need enough space for everyone to work, and they can get someone else to build/assemble their designs at very little risk to themselves usually.
This is one of the reasons why tech companies usually have very little debt.
In Apples case debt would only be good if they needed to acquire another company and believed they could run the acquisition better than the current management or they needed to invest significantly in something else that required a large chunk of change up front.
Low debt may make a company a takeover target but in Apples case you'd 1. Have to pay a significant premium over the value of their cash assests and 2. be really sure you could run the company better than Steve and his key people. Otherwise you'd be buying a declining asset or looking to put a competitor out of business. Microsoft might like to try but the Anti-trust brigade would have a field day.
As long as Apple stays profitable and can fund its own R&D internally it doesn't need more debt.
OK, I'm shopping right now anyway. I go to dell.ca and apple.ca and try to build equivalents.
Dell:
Dual Xeon 3GHz, 1GB RAM, 250GB SATA, modem, good keyboard low-end mouse, DVD+RW/CD-ROM, Audigy Soundblaster w/ firewire, ATI Fire GL X1 128MB, Win2K, no monitor:
$6,711 [CDN]
Apple:
Dual 2GHz G5, 1GB RAM, 250GB SATA, modem, Superdrive, Radeon 9800 pro, everything else standard, no monitor:
$5,044.00 [CDN]
OK so they aren't exactly equivalent. The Dell includes a floppy; the Apple's missing a mouse button. More, the Apple comes with optical sound connects, firewire800, and gigabit ethernet (no mention of the Dell's onboard networking in the summary). The Superdrive is way better than the Dell's DVD+RW. The Dell has a better video card by a bit. Some think that the Xeons would be faster but that probably depends heavily on application, and the g5's have a huge bus bandwidth. Not to mention other technology differences underneath it all, like case design and wireless integration. Oh, and, umm, bundled software and the operating systems.
Disclaimer: I'm comparing Apples and Dells because they're tier 1 manufacturers and people think Dells are cheap.
So, like, DUDE! why is the Dell costing $1600+ more than the Apple? Is it worth it? Which one is better made, longer lasting, which one is faster over all, which the better deal?
Damn those pesky terrorists
What you say is true, all else being equal.
However, you fail to consider the intangible benefits of being able to show investers that you went from $1 billion in debt to no debt whatsoever.
In 1997 Apple was in very bad shape, and investors and consumers were distancing themselves from the potential for losses and orphaned technology.
There is now a great reassurance to people who might buy Apple products that the company is recovered fully, will exist indefinitely, and can be safely counted upon.
Jobs likely expects the benefits to outweigh any loss of financial opportunity here.