CapEx spending is up 9 fold in 3 years, the bulk on equipment for a few key suppliers
When Apple (AAPL) reports an uptick in its cash and marketable securities holdings — up $5.4 billion to $81.6 billion last quarter — Bernstein’s Toni Sacconaghi can usually be counted on to call for the company to return some of that cash to the shareholders (70% of whom happen to be institutions like the ones he represents). See for example Don’t be fooled by calls for Apple to declare a dividend.
But instead he issued a report to clients Monday that took a close look at what Apple is actually doing with its massive cash hoard.
Like several analysts before him, he’s struck by company’s projected $7.1 billion spending in 2012 on what it calls non-retail capital expenditures. He describes it as “staggering by any measure” and notes that it … (I quote)
(1) could hypothetically be used to construct two modern chip fabrication facilities from scratch;
(2) exceeds the last twelve month capital expenditure of all but 3 of the large technology companies that we examined; and
(3) represents a 78% Y/Y increase and more than a 9-fold increase over the last three years.
He also notes that Apple has said that the majority of its $3.4 billion year-over-year increase in CapEx would be spent in its “operations area, particular tooling.”
This leads to a key paragraph:
The irony, which Sacconaghi does not remark upon, is that Apple and Samsung are in the midst of a bitter and enormously expensive worldwide legal battle, having filed, at last count, 20 intellectual property lawsuits against one another in 12 courts in 9 countries on 4 continents.
Talk about frenemies.