2001: Apple will soon be releasing its quarterly report, and macolytes everywhere are waiting with bated breath. We’ll either be celebrating or bracing for a pummeling on the market.
So far, Apple has managed to remain reasonably unscathed. With the Cube more or less gone, some of the deadweight has been cut, and Apple still has a very strong lineup of machines.
Unfortunately, one of Apple’s buffers that has cushioned the blow of low revenues is slowly eroding.
Apple has consistently sold ARM shares to prop up the bottom line. This tactic usually worked quite well at keeping Apple in the black.
Unfortunately, Apple’s ARM shares are nearly exhausted. You can only return to the well so many times before it runs dry, after all. At last count, Apple had about 8 million ARM shares left. This sounds like plenty and, in boom times, it would have been.
With the tech stock depression, 8 million shares are not worth nearly as much as they were last year. Apple must sell more shares to bring in more money – not a good situation because they now have fewer shares to sell.
Apple without ARM may seem like an ugly prospect. However, there is a bright side.
ARM could easily be seen as a crutch for Apple. Trouble brewing? Sell more ARM shares. Can’t make that forecast? Sell more ARM shares.
Without ARM, Apple must be more aggressive in meeting its targets. Lean as it is now, Apple must become even leaner.
All of this means that Apple consumers have more to gain. An anxious company will likely have a more aggressive product schedule; better, more innovative approaches to problems; and the incentive to forge stronger alliances with other companies.
Of course, I may be laying a disproportionate amount of Apple’s fate on ARM, but if the last few quarterly outings are any indication, ARM plays a large role in Apple’s profits.
As an alternative, Apple could look for a severely undervalued company with huge future prospects. If Apple got in early, it could repeat the ARM balancing act.
It doesn’t look very promising, however. Low-cost tech stocks, while a dime a dozen, don’t look like they’ll be skyrocketing anytime soon. More dependable stocks don’t have the return that Apple would love to see.
I won’t mind seeing the final ARM shares sold off. I’d rather have Apple face the financial future head-on instead of staying behind a cushion.
keywords: #strongarm #armshares
