Wednesday, April 23, 2008

What to do when you have $Bs in the bank?

Buy up a rival (P.A. Semi) to your current best chip supplier (Intel).

Seems Intel might not be able to get the power needs of their low power chips low enough. Intel was looking to buy PA, but Apple got there first.

On the plus side, Apple won't have to share the chips with anyone else like they would have if they'd just let Intel make the deal.

4 comments:

Bike Bubba said...

That ought to make the pricing discussions with Intel less than friendly in the future. More than one company has found that partial vertical integration can be a disaster.

My thought on what they ought to do with those billions; lower their prices a bit and start eating into the margins of the PC crowd as people realize that Apple really isn't always the high cost option.

Marklark said...

Hmmm... Good point.

One thing $s in the bank does is keep the stock price up in the "not easily acquirable" range.

They occasionally buy companies/products and remake them in their own image. I'm hoping that they'll do more of that. This does add value to the Mac as the software is better than basic.

Also, I think that Intel isn't the current supplier of iPod/iPhone chips, so if that's where this acquisition is aimed, it shouldn't affect the relationship with Intel very much.

Bike Bubba said...

Call me skeptical of the "$ in the bank makes a takeover difficult" argument. (heck, call me skeptical of MOST of the theories of big financiers, it's fair) What makes a takeover difficult is a well-run company that pleases current stockholders. If your stock is strong and dividends are being paid, why change the management team?

Operating capital is just that--too much money in the bank simply means that executives don't have a vision for how to run a business.

Marklark said...

It is quite possible that they have no clue what to do with the $s in general, just using it when they see an "obvious" need...

After all, there are a lot of lefties in the hierarchy...