After more than a decade, Apple is surpassed by Google in one key financial measure

After more than a decade, Apple is surpassed by Google in one key financial measure
Yesterday's fiscal third-quarter earnings report from Apple revealed that for the first time since 2012, the iPhone accounted for less than 50% of the company's total revenue. Now Apple has grown as a company over the seven years from 2012 to 2019, so the fact that the iPhone no longer accounts for the majority of its business might not be the end of the world. But what might be somewhat interesting for some Apple investors is the big news that for the first time in over a decade, the tech giant is no longer the king of cash.

According to the Financial Times, Google parent Alphabet is now the leader in this category with cash and marketable securities totaling $117 billion at the end of its most recent quarter. The report that Apple released on Tuesday showed that Apple's cash holdings amounted to $102 billion at the end of its fiscal third quarter, which ended in June. As Apple CEO Tim Cook pointed out yesterday, the tech giant spent $17 billion buying back nearly 88 million Apple shares and paid out $3.6 billion in dividends during the quarter. The advantage of the buybacks is that it reduces the number of shares outstanding, decreasing the "supply" of the stock. That means that even if "demand" remains the same, the stock theoretically will rise. It also artificially raises the earnings per share number, an important figure used in fundamental stock analysis. Over the last 18 months, Apple has spent $122 billion on such buybacks.

Apple is spending part of its cash hoard to artificially goose the price of its stock


But Apple is doing more with its cash than just artificially goosing its stock price (which, we must point out, goes a long way toward determining the value of the restrictive stock units handed out to its executives). The company hiked it's research and development spending by 15% in the three months covering April through June. R&D spending, necessary to develop new and innovative products, was the highest in 18 years. Can we admit that perhaps some desperation has surfaced in Cupertino? This increase in spending on future products comes after some interesting comments made earlier this year by Cook. Nearly five months ago, the executive said that the products in Apple's pipeline will "blow you away."

While Alphabet can crow about having the largest cash hoard right now, most investors would rather see a company spend its cash on buybacks, higher dividends or R&D. Back in 2013, activist investor Carl Icahn spent over $2.5 billion purchasing Apple's shares and demanded that Apple put its cash to work by buying back $150 billion of its shares. Icahn noted than even if Apple were to borrow the funds at 3%, buying back the stock would pay off with a 33% rise in the stock. Apple didn't give in to Icahn but has been actively buying back its shares

Alphabet, on the other hand, has not spent that much on stock buybacks although it has recently added $25 billion to its stock repurchase program. It has authorization from its board to buy back $37.5 billion of its stock. It also spent $25 billion on real estate last year, adding new offices in New York City for Google.

In some related news, Apple once again surpassed the one trillion dollar valuation mark earlier today. The company's fiscal third-quarter earnings report showed a 12% drop in iPhone revenue but revealed an increase in iPad and Services revenue and a surge in Wearables. Last August, Apple became the first publicly-traded company in the U.S. to be valued at one trillion dollars. But shortly thereafter, the company's shares declined from $232 in October to $142 in January before rebounding to its current level.

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14 Comments

1. sgodsell

Posts: 7533; Member since: Mar 16, 2013

What about the other rounds of Apple and their stock buy backs from over a year ago. $122 billion to stabilize their stock. Google didn't do any of that.

2. sgodsell

Posts: 7533; Member since: Mar 16, 2013

Since Apple cannot preach anymore on having the best or latest hardware specs anymore. Apple was preaching crap about privacy and security crap. It's all they had left. Yet Apple can't preach that crap anymore, especially since contractors are listening into customers Siri recordings. I guess Apple will have to change the ads that they posted. Like the one in Las Vegas will have to be changed to "What's on your iPhone, stays on your iPhone, sometimes". Or that ad in Toronto has to be changed to "Privacy is King sometimes". Hypocritical Apple.

4. Vancetastic

Posts: 1710; Member since: May 17, 2017

Did Apple slap your grandma or something?

16. Mike88

Posts: 438; Member since: Mar 05, 2019

Seems like it coz he post the same thing on every post and every website... he thinks it’s the joke of the year, adding “sometimes” to an apple slogan. I saw the same comment from him on like hundred posts, dozens of YouTube videos and 3-4 tech sites

7. iloveapps

Posts: 909; Member since: Mar 21, 2019

What about Samsung latest 56% profit drop? Why is that?

8. iloveapps

Posts: 909; Member since: Mar 21, 2019

The analysts is here but you forgot to forecast disappointing Samsung sales. Maybe you should try to focus to androids profit. Its not just apple that needs to be checked. Investors are trusting more to apple since apple doesn’t rely anymore to iphone with its sales.

13. mootu

Posts: 1537; Member since: Mar 16, 2017

Apples stock is artificially high due to Apples very aggressive stock buyback, they have had to do it to stop it plummeting like it did at the begining of the year. You have nothing to argue with so as usual you just try to deflect everything to Samsung.

15. iloveapps

Posts: 909; Member since: Mar 21, 2019

Because Sgodsell has one post which is about apple declining sales but when his Sammy reported 56% of profit decline, he’s got nothing to say. No words from him about how did it happen?

17. oldskool50 unregistered

Because Samsung decline is always based on multiple products. And the fact is Samsung doesn't depend solely on the sale of one product. Apple solely depends on revenue from iPhone which was one as high as 70%. What you fail to realize because you don't understand business, is having all your eggs in one basket is more detrimental. But because you are nothing more than a clueless troll, the fact don't matter. Samsung can stop selling all phones and yes they will lose money, but they would lose far and away less money then Apple. Since Samsung makes parts for pretty much every OEM on some level, then that means when OEMs who buy parts like OEM have a decline, then that means Samsung is gonna have a decline too. But you're too stupid to understand that. All.of Samsungs money isnt tied up in phones. It never had been and never will be. Most of their money is made through manufacturing parts for other OEMs.

10. oldskool50 unregistered

If the iPhone is now less than 50% of its revenue, then Apple is in trouble

14. mootu

Posts: 1537; Member since: Mar 16, 2017

"While Alphabet can crow about having the largest cash hoard right now, most investors would rather see a company spend its cash on buybacks, higher dividends or R&D." Apple has kept it's stock artificially high for the last 2 years. What investor doesn't want higher dividends. As for R&D, even with Apples 15% increase it still lags behind companies like Samsung, Google and Huawei. Apple has never been a big R&D spender, usually waiting for tech to become pretty much standard before adopting it.

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