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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 which 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 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.
Stephen Van
Esch is the founder and president of
the
E-learning Foundry, an online training
resource for Mac users. Steve loves the Mac and is doubly bilingual,
since he's also fluent in Windows and French.
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