Apple has massive cash reserves that it can't really put to use. That cash isn't doing much of anything for anybody, so growing it any further is pointless. Going cash neutral here means "instead of uselessly adding to our cash reserves, we're going to aggressively dispose of our revenue", which presumably means dividends (they wouldn't have the cash reserves they do if they thought they had other productive ways to spend the money)
They have a lot of productive options to choose from, but it's either charity, or improving their products beyond being faster. Apple would sooner dump money into the ocean than do either.
Apple could hire more engineers to make it's software less buggy at least and to fix a lot of long time small annoyances. And to double their devtools engineer count to make the entire company and all of their external developers more effective.
It's debt to cash-in hand ratio. Apple currently, as of March 2021, had US$120.2B of debt [1]. So, if they have $120.2B of cash, then it neutralizes their balance sheet. And, that's what the net cash neutral position is.
As other explained, it's to keep cash inflows and outflows as close to even as possible. They have enough cash for future investments and thus don't need to stockpile any more. Apple has been saying this for awhile, and at this point I see it as a joke/humblebrag ('we're making so much money we literally can't spend it all').
Apple has been continually buying back shares with the goal of having as much cash on hand as debt (simplification). This returns the cash to shareholders.
>“This year we launched our most powerful products ever, from M1-powered Macs to an iPhone 13 lineup that is setting a new standard for performance and empowering our customers to create and connect in new ways,” said Tim Cook
one platform for all their products. (one ring to rule them all) how much did Apple saved by going with their own in-house designed chip?
Dividends are not an efficient mechanism to return cash to investors. The recipient is forcefully taxed.
Share buybacks technically accomplish the same; the proportional increase in shareholder value should be the same. However, investors who do not want to recognize income that year do not have to; whereas investors who need the dividend income can sell a small number of appreciated shares.
Is it possible that its not 100% shortage problem but rather a problem with Apple's iPhone business? It has been a decline for a while now. They have nowhere as big of a market share and generally they've shifted towards services as a hedge.
Most discussions and news sites report shortage issues but I wonder if there is an underlying deeper reason.
Oops, I meant to say deccelerated. But it appears to be worse - stagnant at 14%. So, I think the real reason they need to ask themselves - why? They've tried a few things with low cost iPhone SE models to gain market share but it has failed thus far. Perhaps it is the inertia of switching OS/GUI, or perhaps it is an indictment of how bad the iPhone UI has gotten. Or, that Android and other phone manufacturers are offering mutually exclusive things that iPhone simply cannot satisfy. It surely isn't the shortages.
I agree, once alot of providers stopped offering subsidized prices for phones with contracts I feel like myself and others stopped buying a new iphone every 2 years. The larger models cost as much as a laptop and that is a really steep cost for the average American to deal with every 2 years.
The phones also started stagnating in additional utility for new models. Smaller and smaller portions of people gain anything going from one model to the next. A $500 iPhone SE has plenty of camera and processing power for people, and it is basically an iPhone 8.
No, it hasn't been growing. It has been stagnant and stuck at 14% for quite a while.
Shouldn't we question whetever comes out of the shareholder's meeting? The classic is 2017 BTC boom that deluded NVidia's shareholders, no one questioned it and then in 2018, Jensen speaks up in the shareholders mtg that we're now in a Bitcoin hangover. Obviously, they've accelerated since then, but the point remains.
It's important to play a devils advocate even if you're wrong. No one in this thread seems to be doing that.
I really have no horse in this race, just putting out contrarian views from the herd.
Gross margin on the the increase in services sales looks astonishing. Has there been a one off increase in eg fees for Google search in services revenue?
It always had a lot of potential in terms of profitability, theoretically you can get the marginal cost of a digital item to nearly zero if you have a large scale.
Agreed but lots of Apple’s growing services don’t have low marginal costs - Apple Music - or they are investing heavily - Apple TV - so this seemed a bit surprising.
Readit News
Can someone more business savvy explain what that means?
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It's debt to cash-in hand ratio. Apple currently, as of March 2021, had US$120.2B of debt [1]. So, if they have $120.2B of cash, then it neutralizes their balance sheet. And, that's what the net cash neutral position is.
[1] - https://simplywall.st/stocks/us/tech/nasdaq-aapl/apple/news/...
Edit - I missed adding liabilities. But, it will complicate the above terminology, a bit more. Although, I hope you got the idea.
No dividends or stock buybacks to reduce cash, but no accumulating it either.
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one platform for all their products. (one ring to rule them all) how much did Apple saved by going with their own in-house designed chip?
https://investor.apple.com/dividend-history/default.aspx
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https://investor.apple.com/dividend-history/default.aspx
Share buybacks technically accomplish the same; the proportional increase in shareholder value should be the same. However, investors who do not want to recognize income that year do not have to; whereas investors who need the dividend income can sell a small number of appreciated shares.
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Most discussions and news sites report shortage issues but I wonder if there is an underlying deeper reason.
What? Where did you get that information from? Their total units of sale is definitely not declining. And market share remains steady according to this: https://www.statista.com/statistics/216459/global-market-sha....
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Shouldn't we question whetever comes out of the shareholder's meeting? The classic is 2017 BTC boom that deluded NVidia's shareholders, no one questioned it and then in 2018, Jensen speaks up in the shareholders mtg that we're now in a Bitcoin hangover. Obviously, they've accelerated since then, but the point remains.
It's important to play a devils advocate even if you're wrong. No one in this thread seems to be doing that.
I really have no horse in this race, just putting out contrarian views from the herd.
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So I guess those results are a disappointment.