Flush with cash, Apple has an opportunity to pick up smaller tech companies whose valuations have plummeted.
From Tripp Mickle’s “Big Tech Greets Markets’ Slide With a Shrug” in Saturday’s New York Times:
Apple, Amazon, Microsoft and the parent companies of Facebook and Google have lost $2.7 trillion in value so far this year, about the annual gross domestic product of Britain.
So what have the companies done about this thrashing on Wall Street? Microsoft has doubled its employees’ bonus pool, Google has committed to hiring more engineers, and Apple has showered its top hardware talent with $200,000 bonuses.
The dissonance between the stock market’s relative panic and the business-as-usual calm among tech giants foreshadows a period when analysts, investors and economists predict that the world’s largest companies will widen their lead in their respective markets…
In the months ahead, Microsoft, Google, Apple and Amazon are expected to boost hiring, buy more businesses and emerge on the other side of a bearish economy stronger and more powerful — even if they shed some of their total valuation and their relentless growth of the last few years.
“Big tech can say, ‘Forget the economy,’” said Richard Kramer, founder of the London-based advisory firm Arete Research. Flush with cash, he said, “they can invest through the cycle.”
My take: Time to go talent shopping.
Apple is way ahead in chip design, but the competition for talent, globally is high. In addition the old giants, Qualcomm, Intel, Samsung, NVIDIA, AMD, we have Google, Meta, Microsoft, Tesla and the network technology companies that design their own chips, and quit a few startups. mainly focused on AI and cyber security.
Natural selection will sort this out. Who ya gonna bet on?
Good point. Cash is becoming king again. Interestingly, Apple wasn’t shy about adding low interest debt when it was available – though some questioned that strategy – and thus both helped to move itself closer to cash neutral and to displace higher interest debt.
But Apple can’t just buy for the sake of taking advantage of a good deal. It needs to properly digest each aquisition, fitting it into place with attention to the whole. Apple is an incredibly smoothly functioning machine, but is also a gargantuan one.
Thus, for the forseeable future, Apple will continue generating far more cash than is required to keep growing at an acceptable pace. For those of us that have been invested for a long time, even moderate investments are becoming meaningful. For those that are considering investing going forward, there is almost literally no time like the present.
I’d call it a “semi-accomodative” stance, but why bicker. I also see the present pain as caused by more elements than a Fed that didn’t move quickly or agressively enough. We were literally just recovering from the Great Recession that a bitterly divided Congress did almost nothing to heal early on [some would say purposefully], when we were nailed by the worst pandemic to hit the world since the Spanish Flu. And as we are slowly recovering from that (again, with a divided Congress dragging its feet), we get hit with the very real existential threat of WW III, and a concommitant massive hit on energy costs.
Blaming ALL THIS on the Fed is, in a word, simplistic..
“We already see the pain caused” is a political statement. If you don’t want a response, you need to stop sticking political POV’s in your posts.
Oh, and the alternative to the present leadership was far, far worse. Let’s not leave out that not-so-minor detail….
Talk of a recession is all about 2023. Sub prime loans are beginning to default. Credit defaults are rising to concern levels. Buyers of cars at list prices (and even above list prices) are finding that they can’t sell their cars at a price to pay off their outstanding loans. While car loans are a small part of the economy, this soon will roll over into home mortgages as houses have sold for premiums in recent years. Folk who can’t meet their monthly obligations will find they are underwater. Reminds me of the 2007-2008 economic crises.
Meanwhile, gas prices are a minimum of $5 in every state now heading above $7 in California. Some folk want be able to fill their tanks and some even get to work. Many of our rural folk must drive to larger cities for their jobs since no jobs exists for them in rural areas. While they have jobs in urban areas, they soon will be unable financially to get to their jobs to work. There is no public transportation for them.
I’m questioning if some on this chat board in their optimistic outlook for Apple going forward are looking more in the rear view mirror of Apple’s performance and consumers demand for Apple’s services and products in the past, instead of focusing on the consumer today confronted with digesting the financial road that lie ahead for them. In such instances those consumers will cling to their devices and shun new hardware as long as possible. Those folk will not view Apple products as essential. We should know in the coming quarters when Apple reports. No matter, among all the equities out there for investing Apple deservedly is one of the chosen.
I was at the Apple Store Country Club Plaza yesterday, which is a semi-upscale shopping part of Kansas City, and it was absolutely packed. I picked up an Apple Watch SE for a grade school graduate and a new iPad (Sept, 2021 release) for her grade school aged brother. They had very limited iPad stock, but they did have some.
Probably the most disappointing part of the retail experience is that this is the second time I didn’t receive an Apple Bag with my purchase. You have to request one. Aside from that, the service was excellent, Apple Pay checkout an absolute breeze and I saw products flying off of shelves. If there’s one product I *didn’t* see selling, it was the HomePod mini. Apple Watches and iPhones were literally selling like hotcakes.
Softengi, 4Experience and nomtek in Poland. Program-Ace, Onix-Systems and Ni-X in Ukraine. These are established AR/VR shops. Supporting talent where they live serves a greater purpose than watching these skilled folks relocate to Sofia or Berlin.
A fellow rugby fan who worked with IBM for many years has said that Bulgarians were widely chosen for tech support roles because that adapted such great fluency in foreign languages.
Berlin is also a significant cultural melting pot (or at least was in the 90s and 00s after the Wall fell: I haven’t been back since 2006).
In London in 2015, the vast majority of the service industry were from Poland (and possibly Russia). Post-BREXIT. I have no idea where *that* state of things will go.
Come to think of it, with “remote work” becoming so much more common, it’s hard to say how and where to employ and compensate people.
I suppose I somewhat end up agreeing with you, but I also think that gathering in meat-space is valuable. The “ease” of a simple Microsoft Teams chat takes away from the proper planning for the event, and .. it’s just not the same as seeing the person you are talking to. While I am sure that the “coincidental bumping into’s” that Apple touts are exaggerations, being all together in one place in meat-space does have its merits.