A huge uptick in planned spending has analysts scratching their heads
How revenue tracks CapEx. Source: Morgan Stanley
Once a year in its Form 10-K Apple (AAPL) reveals to the SEC -- and to investors -- how much it has set aside in the year ahead for so-called CapEx -- capital expenditures on land, buildings, machinery, equipment and leasehold improvements (i.e. retail stores).
In that regard, the 10-K the company filed last week was a doozy:
The Company anticipates utilizing approximately $8.0 billion for capital expenditures during 2012, including approximately $900 million for retail store facilities and approximately $7.1 billion for product tooling and manufacturing process equipment, and corporate facilities and infrastructure, including information systems hardware, software and enhancements.
That $8 billion is a record, up sharply from the $4.6 billion it set aside last year. And the $7.1 billion that's left when you subtract out the spending on retail stores is a 78% increase from the $4 billion it invested in manufacturing equipment and corporate infrastructure in 2011.
Several analysts have taken a crack at what this means. Both Barclay's Ben Reitzes and Morgan Stanley's Katy Huberty note that in the past, Apple's growth in revenue has closely tracked its growth in capital expenditures, and each takes the CapEx guidance as a sign that Apple's fiscal 2012 revenue will outpace their estimates:
Huberty expects Apple to spend about $1 billion of that $7.1 billion on its new headquarters. Reitzes seems to think that much of it will be spent on server farms for iCloud.
Asymco's Horace Dediu has a different -- and considerably more detailed -- take on CapEx spending. He breaks it down into its component parts and compares estimated spending with actual cash outlays. Apple's spending on machinery and equipment, he points out, most closely tracks its production of iOS devices (iPhones, iPads and iPod touches), suggesting that iOS device production in 2012 will grow at the same rate is always has: 100% per year. See his chart below.
A sampling of reactions to Apple's (AAPL) profits growing 125% year over year
IDC's Al Hilwa: "Apple's growth in the third quarter was simply jaw-dropping. In 20 years of following tech I have seen very few companies in the $90 to $100 billion run-rate and none that have produced 80% organic quarterly growth. The success of the iPad truly crystallizes the point that we are living in an era of rapid MORE
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A ruling in Barclays v. TheFlyOnTheWall shifts the balance of power away from content producers in favor of news aggregators. But Google News may still face obstacles.
By Abigail Field, contributor
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The company finally has enough iPhone 4s in stock -- just in time for the Christmas rush
Source: Barclays Capital
From the day it launched the iPhone 4 in June, Apple (AAPL) has ramping up production, trying to get supplies to the point where they could meet demand.
The company reached that point of retail equilibrium last week, when shipping delays in its online store, which had been listed at 3 weeks MORE
Philip Elmer-DeWitt - Nov 9, 2010 10:38 AM ET
No longer an industry underdog, the company must tread more carefully, says an analyst
In a note to clients issued Tuesday, Barclays Capital's Ben Reitzes has added his voice to the chorus of commentators with free advice for Apple's (AAPL) executive team, now that it's caught the eye of federal regulators.
The Federal Trade Commission has reportedly won the toss and is looking into two possible antitrust issues: Adobe's (ADBE) complaint MORE
Philip Elmer-DeWitt - Jun 15, 2010 11:12 AM ET
"We just met with Apple executives at the company's headquarters in Cupertino, CA, including Peter Oppenheimer, Greg Joswiak, and Eddy Cue."
Thus begins a note to clients sent Thursday by Barclays Capital analyst Ben Reitzes. The note ends with Reitzes raising his Apple price target to $208 from $188 -- one of the sparks that sent Apple (AAPL) shares up 1.88% to close at $168.42 for the day.
In between, Reitzes rattles MORE
Philip Elmer-DeWitt - Aug 13, 2009 2:32 PM ETEvery morning, discover the companies, deals and trends in tech that are moving markets and making headlines. SUBSCRIBE
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| Company | Price | Change | % Change |
|---|---|---|---|
| Bank of America Corp... | 7.95 | -0.16 | -1.97% |
| Microsoft Corp | 31.27 | -0.17 | -0.54% |
| Ford Motor Co | 12.28 | -0.25 | -2.00% |
| General Electric Co | 19.39 | 0.17 | 0.88% |
| Citigroup Inc | 32.36 | -1.00 | -3.00% |
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