Apple becomes richest tech company
Friday, August 6th, 2010
REUTERS
The iPhone, iPad, iPod and Mac computer maker has accumulated a cash pile that totals nearly $46 billion, the biggest cash hoard among US tech companies and equivalent to one-fifth of Apple’s market capitalization.
And yet, due to an ultra-conservative investment strategy and low interest rates, that cash is earning next to nothing for Apple, which rarely makes acquisitions and does not pay a regular dividend or buy back stock.
“Oppenheimer probably has the most enviable CFO job on the planet,” joked Creative Strategies analyst Tim Bajarin, who has been following Apple since the early 1980s.
Analysts say Apple’s near-death experience in the 1990s helps explain why it likes to remain liquid by investing in safe but low-yielding US Treasury and agency debt. The company earned a mere 0.76 per cent on its cash and investments in its most recent quarter, down from 1.43 per cent in fiscal 2009, 3.44 per cent in 2008 and 5.27 per cent in 2007.
Despite these low returns, Apple does not face much pressure these days to put its cash to better use. Any dissenting investors are probably appeased by the meteoric rise in the company’s share price, which has tripled since 2007.
“When a company is growing as fast as Apple, cash management is pretty far back in people’s thoughts,” said Pacific Crest Securities analyst Andy Hargreaves.
“But that’ll change at some point,” he added, estimating that Apple’s cash could hit a cool $65 billion by the end of fiscal 2011 if the company continued to generate free cash flow at the current pace. For now, Oppenheimer has a mantra that he repeats on every quarterly earnings conference call: He tells Wall Street that Apple’s investment priority is the “preservation of capital” with a focus on “short-dated, high-quality investments.”
Bajarin said Oppenheimer’s cautious approach dates from his time at Automatic Data Processing Inc, but Apple’s conservatism is also driven by Chief Executive Steve Jobs. Both Jobs, 55, and Oppenheimer, 47, subscribe to the Silicon Valley maxim that “only the paranoid survive,” he said.
They remember the dark days when Apple was struggling to stay alive and had to lay off thousands to cut costs. When Oppenheimer joined the company in 1996 as its controller for the Americas, a series of bad management decisions had eroded profits and sent its share price diving to less than $5. Things got so bad that one of the first things Jobs did when he returned to Apple was take a lifeline in the form of a $150 million investment from Microsoft Corp in 1997.
You thought Google Inc’s recent spat with the Chinese government must be one of the biggest concerns for the IT giant considering the mammoth sized Internet market in China? Not really! For the search giant has many more challenges to contend with: slowing growth, regulatory scrutiny, shift in ad spending and more.
While Mountain View, California-based Google has the biggest share of online search at home and in Western Europe, it has been leapfrogged by social network Facebook Inc as the most popular US Web site.
Google’s ventures in mobile, video and display ads have failed to match the success of search. To catch up in social media, Google added a social- networking feature called Buzz to its Gmail e-mail, letting users share photos, comments and clips from its YouTube site. The site drew criticism over privacy, prompting Google to scale back some of Buzz’s features.
Like Microsoft, Google faces regulatory obstacles to efforts to break into faster-growing markets. The Federal Trade Commission is investigating whether the AdMob deal would squelch competition in the mobile ad market.
As sales gains diminish, some investors are concerned that Google has begun to resemble Microsoft Corp, which generates billions of dollars in cash from its mature flagship business yet has struggled to conquer new markets. Google’s sales increased 9 percent last year after almost doubling in 2005.
Google shares, which doubled last year, have dropped 8.6 percent in 2010, the sixth-biggest decline among the 75 technology stocks in the Standard & Poor’s 500 Index. The stock is 24 percent below its peak of more than $740 in 2007.
Google has been piling up cash faster than it can find ways to spend it. Its cash and marketable securities surged 54 percent to $24.5 billion at the end of 2009 from a year earlier and made up 60 percent of total assets, up from 50 percent. Meanwhile, research and development costs rose only 1.8 percent to $2.8 billion.
For now, Microsoft is betting on IE9’s speed and performance. The company claims that the new browser will be faster than Firefox 3.6. The company says Web and application developers will want to upgrade to the next version of Microsoft’s Web browser, IE9, for its optimized performance and better support for several standards: HTML5, DOM, and CSS3. IE9 is also the first browser to provide hardware-accelerated SVG support.
It is too early to comment on IE9’s user interface. For, there is still no beta release. The platform preview is essentially a frame for showing off the new browser’s JavaScript and rendering engines. So, there’s no Back button, bookmark manager, history feature, toolbars, and other so-common features in a browser interface.
Internet Explorer Platform Preview is not a full Web browser. It is intended to give developers an opportunity to test and provide feedback on the underlying platform for Internet Explorer 9.
No. As mentioned above, the Platform Preview is not a fully-functional browser. It opens links in a user’s default browser, not the Preview app. Since the Platform Preview cannot be registered as a default browser on a user’s system, the links do not open in it.
No, it does not, though it does share some settings with your existing Internet Explorer installation. Platform Preview installs side-by-side with earlier versions of Internet Explorer and any other browser(s) on your computer.
Microsoft has released some technology demos that show IE9’s better support for JavaScript, its HTML5 capabilities, and support for hardware-accelerated graphics. Some demonstrations include, flying images, map zooming, pulsating bubbles and GPU-powered falling balls.
Users need a Windows PC running either Windows 7 or Vista. On Vista, you need to have installed Internet Explorer 8 and you need to install the Platform Update for Windows Vista, available on Windows Update since October, 2009.
No. Microsoft has said that IE9 will not be available on Windows XP. According to the company, “IE9’s GPU-powered graphics take advantage of new technologies available in Windows 7 and back-ported only to Windows Vista. These technologies depend on advancements in the display driver model introduced first in Windows Vista.”
Microsoft has still not given any fixed time period for the beta release of IE9. The company says that the beta version will be released as a full browser once the build has reached the customer quality bar.
The IE9 Platform Preview can be downloaded from Microsoft’s Web site ie.microsoft.com/testdrive/ .
The images were posted online two days before the January 27 event at which Apple unveiled an iPad tablet computer that will begin shipping worldwide in March.
“You may have seen our Chrome OS tablet concepts from last Monday; in the video, some floating hands interact with a touch surface,” Google Chrome lead designer Glen Murphy wrote in a personal blog post.
Google made images and video of Google tablet gesture control capabilities available online for developers to consider.
According to the Chromium form factors site, “While its primary focus is Netbooks, Chrome OS could eventually scale to a wide variety of devices. Each would have vastly different input methods, available screen space, and processing power.” Chromium is the name of the open-source developer project that underlies the branded Chrome product.
Google’s mobile Android software is built into iPhone competitors, including the Internet firm’s own Nexus One smartphone released in January.
IT companies have been trying to make tablets for years, with little success. Apple hopes its design will change that with its iPad selling from $499 to $829.
