Apple seems to be forging ahead in AI

Spotted this article, a merging of ideas, perhaps?

Tim is no Steve! :frowning:

The Captain

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But he hasn’t done bad.

Andy

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I wonder how much of the stock gains in recent years are due to the financial engineering Cook embraced since taking charge… as well as how much of the gains in services and iPhone expansion has been due to natural build-out from the Apple ecosystem and just “keeping up with the neighbors” in terms of iPhone features.

My impression of his performance obviously isn’t all that enthusiastic…

Rob
He is no fool who gives what he cannot keep to gain what he cannot lose.

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Rob I can’t ascertain exactly how much he has done to make apple a success. But if I was an investor I do not think I would care as long as my investment went from 10 dollars to 170 dollars. That is a cagr of 24.13 percent which in my view isn’t to bad. But at some point you have to give the person leading an organization some credit.

Andy

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I agree.

If you re-read what I wrote, I was just saying that a lot (but how much?) of Apple’s share price climb has been due to things that didn’t necessarily require any special leadership or ability, especially the financial engineering, ie, loading Apple with debt. That’s containable, but I wouldn’t say it’s laudable.

Rob
He is no fool who gives what he cannot keep to gain what he cannot lose.

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I happen to be a long time user, reseller, and developer, since 1978 or 9.

Neither did Jack Welch. Not so good his alumni.

The Captain

1978, I ran my insurance portfolio on VisiCalc and VisiDex on an Apple ][. Switched from selling insurance to Apple reseller…

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Companies can finance themselves with debt or equity or a combination of the two (mostly the latter). A good manager of a company can determine what balance of those are ideal for the company they steward. For example, some of the early Apple debt was issued at a rate that was lower than the dividend paid on the equity. That essentially means that when they issue that debt, and use the money to buy back shares, the cash flow goes up slightly (because the interest paid on that debt is less than the dividend paid on that equity). But, in general, it is wise to use the combination of debt and equity, and adjust them as necessary based on economic conditions. And it is indeed a valuable skill to be able to determine those things*.

* Despite being an engineer for many decades, I have to admit that those are indeed valuable skills.

Yeah, yeah… I have an MBA (and I’m an engineer). I know the song and dance.

“It’s wise to have debt.” Yes, the numbers show that, but it’s now a drag and a risk. Do you know why MBAs receive such derision? Because they know how to juggle the numbers but never learned common sense. I’m thankful I got my MBA after I’d been out in the world for a while and could recognize a lot of the BS… like “the efficient frontier”… what a steaming pile! lol…

Rob
He is no fool who gives what he cannot keep to gain what he cannot lose.

That’s why Apple net issuance of debt has dramatically declined in recent years. You issue debt when it is advantageous to do so, you retire debt when it advantageous as well.

Apple debt issuance/retirement net - total for the fiscal year:

2023 - $-9.901B
2022 - $-0.123B
2021 - $12.665B
2020 - $2.499B
2019 - -$7.819B
2018 - $0.432B
2017 - $29.014B
2016 - $22.057B
2015 - $29.015B
2014 - $18.266B

I suppose your explanation is considered good for others. If just for me, save your time. I understand the mechanics… for my MBA I “majored” in finance (and marketing). Not interested because it’s a bigger picture than I care to discuss. That’s the advantage of my position in life… if I’m not interested, I can walk away.

Rob
He is no fool who gives what he cannot keep to gain what he cannot lose.

Apple is yesterday’s story. Apple’s core product is their User Interface Guidelines which they acquired from Xerox PARC. It failed on Lisa but made it with Mac. After IBM failed with the PC (The IBM PC did not fail, IBM did) Apple got a makeover when they brought back Steve Jobs and switched their OS to UNIX (the OS that Jobs developed at NeXT, another dead venture resurrected as the new Mac). Once Jobs returned he took over the mobile phone industry by marrying the MacOS with other consumer electronic toys, the most successful one being the iPhone. In parallel, Apple added lots of other income streams, iStores, AppStore.

The above is a fantastic journey but the core innovation is the User Interface Guidelines. There is no new innovation at Apple. In AI Apple has lots of competitors with deep pockets, these days lot of then, some of them with Steve Jobs quality innovators which Tim Cook is not.

The above does not mean that Apple is not a good investment, it’s a different kind of investment, no longer an innovator it is a very fat cash cow. The danger is diworsification replacing innovation, empire building, because Tim Cook fresh out of great new ideas.

Apple is part of the Internet revolution but now we are in the AI revolution. Can anyone point out where Apple has an advantage in GAI over Tesla, Google, Amazon, Meta, or Microsoft? BTW, their diworsification into EVs failed. How much did that cost?

The Captain

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