Apple — still the favorite of the private investment — has now become a hedge fund itself. Return on Investment is not merely a line on its balance sheet, it’s a business line for the company’s products.
Apple is no longer the company of Steve Jobs that just makes great products that the world did not know it wanted prior to its introduction. No, Tim Cook’s vision is a cross between Apple Capital Management and IBM.On the hedge fund side, Apple announced Tuesday in its earnings report that it would buy back $100M in shares — a record amount for corporate America and raise its dividend to the highest in the world.
On the IBM side, Apple greatest growth was in services. That’s code for up selling consumers off of the existing product line. No innovation needed. You have Apple TV, well then let me sell you a subscription to HBO. That’s a servicing profit.
Apple in fact only saw a 3% rise in iPhone sales for the quarter, but since the iPhone X is a $1,000 the margins are great.
It’s just such a disappointment that Apple no longer has the great minds to figure out what I don’t have, but will need once they manufacture it.
And of course the Street loved the plan, with shares up more than 5% in pre-market trading Wednesday morning. Here is my problem with comparing Apple to a hedge fund and IBM. Neither are doing very well in this economic environment and haven’t for many years. So what does the future hold for Apple Capital Management?
Don’t get me wrong, making money for shareholders is a great thing and Apple should be applauded for handing out over $275B back to shareholders since 2012, including $200B in buybacks. But somehow I still hold Apple up to a higher calling to give me that “One More Thing”.
Perhaps those days are long gone, and that shows what Steve Jobs really meant to the world.