The information age has taken leaps during the pandemic which is a good thing for just about all tech companies, but similar to most things in life some companies benefit a little more than others. One of the big winners has been Apple. Last month Apple announced it was going to spend $430 billion in the next 5 years including opening a $1 billion dollar research centre in North Carolina.
In an article by Stephen Nellis of Reuters, in addition to the announced spending, Apple said it was generating enough cash to buy back $90 billion of stock, along with its other plans.
In computers, there are 2 large markets, US and China, in China Apple’s sales have doubled led by more than $6.5 billion in iphone sales and Mac computers were a 1/3 higher than analyst’s estimates.
At the present time, the global chip shortage has not been a problem for Apple and one of the strength’s of Apple is their supply chain expertise.
Apple is making more money from its App Store, music or itunes and services for fitness.
For the quarter ending March 27, Apple sales were $89.6 billion and profits at $1.40 a share. Analysts were expecting $77.4 billion and $0.99 a share.
Besides the buyback of shares, Apple raised its dividend 7% to 22 cents a share.
The iphone sales were $47.9 billion; sales of Mac and iPads were $9.1 billion.
Apple has 660 million paying subscribers on its platform up from 620 million (which is the reason why services fees have increased).
Linking to dividend paying stocks, Apple is the type of stock you want to own over the long term because it has products it can sell at high margins (iphones) and a guaranteed subscription base of fees. The ability to add extra fees is easily possible with over 600 million subscribers. Given the ability of Apple to research and development and big tech to track everything people do, advertising fees should increase. As an investor you like that, as an individual, sometimes you think it is too much, but there is a trade off.
There are more questions than answers, till the next time – to raising questions.