[HN Gopher] Apple surpasses Saudi Aramco to become the most valu...
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Apple surpasses Saudi Aramco to become the most valuable company
Author : Zaheer
Score : 127 points
Date : 2020-07-31 20:08 UTC (2 hours ago)
(HTM) web link (www.cnbc.com)
(TXT) w3m dump (www.cnbc.com)
| paulpauper wrote:
| Amazon, Google will soon follow. I see amazon being worth $10-30
| trillion eventually,,, bigger than apple.
| hmate9 wrote:
| $10-30 trillion is probably not a valuation that should be or
| will be allowed by regulators. The business would have to be
| split up.
| Cookingboy wrote:
| At the point of $10-30T market cap you probably own, even if
| not literally, but figuratively, whatever regulators there
| are.
| Twixes wrote:
| Barring massive inflation in a short period
| nwellnhof wrote:
| Just for reference, $35T is the total market cap of the US
| stock market.
| jonluca wrote:
| Wait, apple makes up 5% of the entire US stock market? That
| feels... weird.
| throwaway6000 wrote:
| ROFL paulpauper
| baron816 wrote:
| Apple should be investigated for violating the law of large
| numbers.
| actuator wrote:
| Among all the big tech, I think Apple is probably the most
| resilient. The sort of brand loyalty and image they have, any
| company would love to have it. It makes even the less polished
| products from their stable escape the sort of ire and financial
| impact that most other companies face.
|
| Take the example of maps, it was clearly a way inferior product
| to the best in market Google Maps, still a lot of users(my
| physical and social media circle at least) persisted with it.
| This gives them immense power to grow out products that can
| become really strong platforms in the future.
|
| Also, their ecosystem lock in is really strong. I think in due
| time it is really going to stifle competition. For example, it
| would be really interesting to see how the headphone industry
| adapts to this where incumbent brands like Bose, Sennheiser with
| their own brand power have seen their market share erode very
| fast. Apple has already sold 100+ million airpods.
| shmerl wrote:
| It's also one of the most toxic and unhealthy for the industry.
| As you pointed out, they are proponents of extreme lock-in and
| anti-competitive behavior. And it's not good when such toxic
| company also has such pools of money. They can do too much
| damage.
| actuator wrote:
| I am not sure of what can be done though in hardware at
| least. Software, certainly there can be regulation to keep
| the playing field open so companies like Spotify can survive
| on their own merit.
|
| Hardware, maybe by enforcing APIs to be accessible to all
| hardware manufacturers. But at the end of the day, if they
| build a new product either inhouse/acquisition, should it be
| stopped just because they have money/brand loyalty. I don't
| agree with that.
| jiggawatts wrote:
| > any company would love to have it.
|
| But few companies would love to do what it takes to get it.
|
| Things like protecting customer privacy and taking security
| seriously.
|
| I once saw a 1 hour presentation on the cryptography design of
| the iPhone compared to an Android phone. The IOS design used
| layers of fine-grained encryption and was obviously carefully
| thought out to protect the consumer from: device theft,
| misbehaving apps, illegal searches by law enforcement, and even
| nation-state levels of spying.
|
| The Android phone had a feature that basically said "Encrypted:
| Yes".
|
| That's the difference. I see that difference everywhere, with
| every organisation. The right attitude gets rabidly loyal
| customers, the wrong attitude relegates you to the low-cost
| section of the store.
| JumpCrisscross wrote:
| More than any of the others, Apple at least tries to have
| _values_. Not everyone agrees with them. But I challenge anyone
| to identify a positive value mainstream America would associate
| with Microsoft, Google or Facebook.
| actuator wrote:
| Have a look at some of these[1]. Some of them are vacuous,
| but I would definitely not call a lot of them positive values
| mainstream America would associate with.
|
| At the end of the day they are a corporation whose job is to
| make profit not possibly die by being idealistic. I would
| even argue that the privacy thing, while commendable is a
| selling point more than an ideal they hold dear.
|
| [1] https://en.m.wikipedia.org/wiki/Criticism_of_Apple_Inc.
| JumpCrisscross wrote:
| > _a selling point more than an ideal they hold dear_
|
| I agree. Note that I didn't mention privacy. We both
| understood that implicitly. That's partly marketing. But
| it's underwritten by some truth, if not a comprehensive
| truth.
|
| Values, in my view, are meaningful if strived for. They
| don't need to be perfectly attained to be valid. Apple has
| made tradeoffs and incurred costs to strive towards
| protecting privacy, and it's been consistent in that aim
| over its history.
|
| Even to this imperfect standard, I struggle to come up with
| analogs for the others.
| actuator wrote:
| I think that's a luxury Apple can afford though and an
| outcome of their approach to devices.
|
| Take the example of Maps, for anyone to create a good
| maps experience they need a lot of money, A $1000 phone
| with about $200-300 actual component costs has enough
| margin for other things, even software. So the price is
| kind of included in the phone. Even if we just give $10
| of this to Maps as it is a core experience, that is $2-3
| billion per year.
|
| For other companies trying to compete, it is either ads
| or subscription. So even if you charge $20 per year, you
| need 100 million paying users. Apple also incurs the cost
| of running it but it gets hidden the price of the phone,
| others don't have this luxury. Though, I think certainly
| a company like Samsung which has significant device
| revenue can try this approach.
|
| Also, in case of ideals if I have to give an example of a
| company that tries to uphold one ideal very well would
| be, Google's efforts to improve diversity.
| https://diversity.google
| jiggawatts wrote:
| Microsoft cares deeply about backwards compatibility,
| providing platform stability to large enterprises, which
| value such things very highly. IBM is similarly popular with
| big business for the same reason.
|
| Google -- for a while at least -- cared deeply about web user
| experience and performance. The Google start page ushered in
| an era of minimalist UIs that load _fast_ and don 't bombard
| the user with fifty irrelevant things. They came up with the
| trick to send more than the 4 initial packets after the TCP
| connect so that they could send the entire front-page content
| in the minimum feasible number of round trips. They're still
| working on protocols like HTTP/3 and QUIC with similar goals.
|
| Facebook... umm... let met think... err... I got nothing.
| hpen wrote:
| Yes but look at google now. Full of ads
| SahAssar wrote:
| I think a lot of us view that as merely marketing. I don't
| think apple's values are any more concrete or "real" than the
| other companies you mentioned.
| jeremymcanally wrote:
| I honestly didn't either until I worked there. It's
| actually for real. They take their values and culture
| really seriously, which was refreshing and very cool.
| zhoujianfu wrote:
| I remember when I sold all my Apple stock back at $250 (pre-
| previous-split) thinking "at this point they'd have to become the
| most valuable company on EARTH to go up much more!"
| caiobegotti wrote:
| What I don't understand is not the value of Apple as a company,
| because I clearly see the value of their products directly as a
| customer for more than a decade, but WHY IN HELL they have so
| much actual cash piling up. I won't say they should split it with
| investors and blablabla but, really, why a company like that
| would have a cash stockpile so gigantic (around 200 billion USD)
| for so long without a long-term plan shared with stakeholders? It
| seems nearly impossible for them to use all that money with
| whatever comes up for half a century at least.
| reaperducer wrote:
| _WHY IN HELL they have so much actual cash piling up_
|
| If nothing else, it can keep paying their all of their
| employees, not just the work-from-home IT crowd, during a
| pandemic shutdown.
| bennettfeely wrote:
| Okay, so now what to do with the other $199 billion
| Thaxll wrote:
| Even banks don't have 200B in cash?
| sushshshsh wrote:
| I can think of a few ways to spend 200 billion very quickly to
| be honest. I think this is one of the smarter things that Apple
| does.
|
| Imagine if they started engaging in pointless acquisitions in
| the idea that this cash should be put to use. You'd have
| another Nokia, another Sun..
| Swizec wrote:
| You know how everyone jokes that we expect consumers to have 6
| months of savings for emergencies, but big corporations start
| begging for bailout within days of the epidemic?
|
| With $260bil revenue and $55bil net income, Apple's monthly
| expenses are around $17bil. That means they need $102bil cash
| on hand for emergencies.
|
| As someone else mentioned, they've experiences near bankruptcy
| before. Maybe they never wanna be there again.
| pydry wrote:
| They're holding out for a tax holiday.
|
| Meanwhile they think it's better to hold the cash rather than
| pay tax on it. The shareholders own the money either way.
| hilbertseries wrote:
| Why didn't they use the one provided by the tax cuts a few
| years back?
| jonas21 wrote:
| They'd still have to pay 21% on it. They're probably
| waiting for a tax holiday like the one in 2004 where
| companies could bring back cash at a 5.25% tax rate.
| hpen wrote:
| That is just sick. They should pay a tax rate at least as
| high as what the average worker pays if not higher
| yrral wrote:
| A lot of their cash is overseas, and so to bring it back into
| the US to either issue a dividend (which is suboptimal from a
| tax perspective) or to buyback their own stock, they need to
| pay US corporate tax on the income (this is on top of the tax
| charged in the foreign countries.)
| HenryKissinger wrote:
| What do you mean when you say that their cash is overseas? I
| assume Apple does not have stacks of green bills in giant
| vaults overseas. Is it in foreign banks?
| mmm_grayons wrote:
| Apple runs what may be the world's largest hedge fund,
| Braeburn Capital [0], that it uses to invest its cash
| reserves. But yes, I'm sure a fair amount of it is in
| foreign bank accounts.
|
| https://en.wikipedia.org/wiki/Braeburn_Capital
| markvdb wrote:
| A lot of Apple's non-US profits were/are in Bermuda. See
| https://en.wikipedia.org/wiki/Double_Irish_arrangement .
| i_am_proteus wrote:
| It's in bank accounts in Ireland.
| ska wrote:
| Paying taxes in a country doesn't mean the realized
| income stays in that country.
| vishnugupta wrote:
| Indeed, some of it is in banks in tax havens such as
| Ireland and Singapore. They are also in the form of US
| treasury bills bought through their offshore entities in
| the same havens. So I guess at least some money does make
| it back to the US ;-)
| nwellnhof wrote:
| The cash (or other short-term investments) could even be
| held in US bank accounts owned by non-US subsidiaries of
| Apple.
| vishnugupta wrote:
| For sure! With this offshore thingy one could create a
| mind bending structure to trap tax authorities in an
| infinite loop trying to trace the origin.
|
| I was completely ignorant about this menace until I
| started reading couple of books to educate myself ---
| Treasure Islands and Moneyland...recommend them both.
|
| Since then I just use the term offshore to encompass any
| of those hundreds or so possible structures.
| chrsstrm wrote:
| Not just that US income tax needs to be paid, but also that
| cash needs to be converted into USD, which poses a problem in
| relation to fluctuating rates on currency conversion.
| Currency conversion rates is a running theme in Apple's SEC
| filings and was also mentioned in yesterday's call. In fact,
| there is an entire paragraph in last year's annual report
| that discusses how they built a model to not just optimize
| conversion to USD, but also predict the total cost so that
| they could also hedge against it. There's also a note which
| says their foreign tax obligations are still under review
| from 2016 forward, so they might be prevented from moving the
| money until that picture becomes more clear as to how much is
| owed.
| paulpauper wrote:
| Because it is a public company. Public companies are under
| strict fiduciary duties. If it were private, it would just go
| to the owners and investors in large dividends. Dealing with so
| much money requires considerable deliberation.
| ska wrote:
| This doesn't make sense to me. Apple absolutely could return
| most of this to shareholders via a dividend if they chose to
| (less taxes if they bring from offshore, etc.) It's not at
| all clear the best exercise of the boards fiduciary duty is
| to hold cash.
| ChrisLomont wrote:
| As of March they had 100B USD. Is there a link for 200B?
|
| Ah, finance sites claim 100B in cash. Rest is not cash, nor on
| hand, but 100B in securities awaiting maturation.
| Solstinox wrote:
| Look around at all the companies shaking taxpayers for loose
| change because they could not handle a moderate economic
| downturn. A responsible company needs a cash stockpile for the
| same reason a responsible person needs savings, to weather
| storms.
| mrfusion wrote:
| Sounds like a prudent idea. On the other hand I'd worry about
| the macro economic effects if every company held large
| amounts of unproductive capital.
| beervirus wrote:
| It's not sitting under a mattress. It's surely invested in
| something productive.
| anbotero wrote:
| I think in this particular case, it's cash, or at least
| the promise from a bank or fund or whatever the hell it
| is, that they can count on that money in cash whenever
| they one.
| r00fus wrote:
| Having a large cash hoard gives them a shield against external
| financial manipulation from Wall St.
| draw_down wrote:
| They do stock buybacks, which return cash to investors in the
| form of higher share price.
| kgwgk wrote:
| Buybacks return cash to investors mostly in the form of
| "investors selling their shares back to the company get
| dollars in exchange."
| greedo wrote:
| I thought that buybacks reduced the amount of shares in
| total, increasing the value of the remaining shares?
| [deleted]
| JumpCrisscross wrote:
| > _WHY IN HELL they have so much actual cash piling up_
|
| In 1997, Apple was on the verge of bankruptcy [1]. That
| experience deeply scarred the company's culture. Prior to that,
| Apple didn't hoard cash (relative to revenues). Afterwards, it
| did.
|
| At this point, the instinct is overplayed. But cultures are
| difficult to change. So the obsession with runway remains.
|
| [1] https://www.businessinsider.com/apple-comeback-
| story-2010-10...
| jayparth wrote:
| I think you're off base. It's simply not runway at this
| point. That like 200 years of runway at their peak losses.
|
| It's pretty simple why they have such a big cash pile. They
| literally don't have a better place to put it.
| polishTar wrote:
| They of course can always do a buyback or dividend (unless
| of course there's some tax reason why it's beneficial to
| defer till later).
| JumpCrisscross wrote:
| > _It 's simply not runway at this point_
|
| Not saying it is.
|
| The last time Apple's culture was re-forged, runway was an
| existential priority for Steve. It remained a priority for
| the rest of his life. As such, it remains one today. Call
| it a ritual, if you like; an act once practical, now
| maintained for being part of a culture.
|
| The limitless alternative to amassing cash piles is
| returning it to shareholders. Apple does that, but it is
| averse to accelerating its pace.
| playingchanges wrote:
| Yep, same problem Warren Buffett has.
| throwaway5792 wrote:
| Apple's operating expenses for the last year was around
| $200bn.
| Judgmentality wrote:
| This a little misleading, as it's hard to imagine Apple
| making zero revenue well, ever. They could possibly be
| losing money, but there is no plausible scenario where
| they lose that much money. It's hard to imagine a
| scenario where they lose even an order of magnitude less
| money than that.
| scarface74 wrote:
| Just imagine the unlikely scenario that a pandemic shut
| down factories in China.....
| wmf wrote:
| That would probably also cut expenses. And if they got
| into a severe product shortage they could also turn off a
| lot of marketing.
| scarface74 wrote:
| What would they actually sell?
| wmf wrote:
| During a severe supply shortage they would sell nothing
| but they would also have lower expenses so the loss would
| be manageable.
| lostlogin wrote:
| Services revenue is something they appear to be pushing
| hard and it seems to do well financially.
| newsclues wrote:
| Also in this era the tech industry was highly competitive and
| cutthroat and cash reserves were a war chest against attacks
| and for rapid expansion (acquisitions). MS and others had
| similar cash reserves as a strategic asset.
| hindsightbias wrote:
| I dont care how much they amass, I wonder wtf they can't be
| bothered to throw $50M into OSX fixes.
| vlkr wrote:
| Net cash is "only" 81 billion and long term plan is share
| buybacks, they already bought back around 200 bil iirc.
| one2know wrote:
| Well, in corporate tech America management thinks that it is
| their money, they just haven't figured out a way to remove it
| from the company yet.
| mzs wrote:
| Because there is not enough they want to buy strategically.
| crazygringo wrote:
| _Wow_ , it's up over 10% since yesterday. At 1.84T, it's not that
| far away from 2T.
|
| Though Saudi Aramco was the first company ever to hit 2T (back in
| December), so Apple wouldn't be the first, if it makes it.
| coralreef wrote:
| Something like 30-40 years for the first trillion, and maybe
| only a few more years for the next trillion.
| JoshTko wrote:
| I have the iPhone XR for almost 2 years and the uncased exposed
| metal rim is virtually flawless. It's details like this that make
| me love the iPhone and is part of why I'm a longtime investor.
| PopeDotNinja wrote:
| I resisted getting an iPhone for a long time. But I bought my
| first one last month. I have to say I like it a lot. Very
| polished.
| dwaltrip wrote:
| The 2020 iPhone SE is my first iPhone. I bought it when it
| first came out, and I'm very happy with it so far. Especially
| since I have a MacBook Pro laptop. Being able to text from my
| laptop is such a huge improvement.
| asadlionpk wrote:
| The cross-device copy paste thing is also very useful
| (between iPhone and Mac).
| reidjs wrote:
| Agreed! As someone who has to use a bunch of different
| computers/devices throughout the day I have been looking
| for a way to do this with computers I'm not logged into.
| Right now I use pastebin, but I'm thinking of building a
| pastebin web app that will take the text, convert it to a
| QR code and then you scan the code to get the text into
| your phone's clipboard.
| nostromo wrote:
| I love Apple but I'm frustrated for a few reasons.
|
| 1. I'm sick of charging everything constantly. I feel like my
| phone, AirPods, laptop and watch batteries are always needing
| too much attention. I would prefer larger devices with bigger
| batteries.
|
| 2. The screens for these devices are too fragile. The devices
| are beautiful, but require ugly cases or regular, expensive
| repairs.
|
| 3. There are too many missing devices in Apple's ecosystem. A
| pro computer under $3k. A TV. A smart speaker that isn't
| crippled. Smart home devices that don't suck. Apple should stop
| trying to compete (poorly) with Netflix and should focus on
| their ecosystem of devices and services.
| ihumanable wrote:
| For your second point, there was a recent article about
| Corning's next generation Gorilla Glass Victus. Survives more
| drops and drops from higher distances. Corning is the
| supplier for the Apple for glass and so this could be
| improving in the next generation.
|
| https://9to5mac.com/2020/07/23/corning-debuts-next-gen-
| goril...
| robohoe wrote:
| I just wish it wasn't such a smudge/finger print magnet.
| social_quotient wrote:
| Agreed, and that's the issue I have with the cash pile. They
| should be trying and failing quickly at a number of things,
| big things, including the small items you raised. Take a guy
| like Elon, give him a 500bn in cash and see what happens. The
| world would change in a big way.
|
| Capital should be either sunk hugely into the R&D to change
| the world or should be returned to shareholders to better
| allocate it.
|
| That said, These guys aren't playing the game 1 qtr at a
| time. Not even a year at a time. They play the 100+ year game
| and likely they don't see this money as "big".
| mmm_grayons wrote:
| I'd love to see Apple do some serious work on the battery
| side. If anyone's equipped to do it, it is (though I'm less
| certain of this after the "sapphire" debacle). You wouldn't
| believe how hard it is to actually get new battery tech to
| market: I've probably seen a dozen start-ups pitch
| technologies that could substantially improve capacity,
| longevity, safety, size, weight, manufacturing cost, or a
| combination of the above. None have yet succeeded at scale.
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