March 2012
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Month March 2012

Apple's dividend and share re-purchase plan: the impact on cash growth

Today Apple announced both a dividend and a share re-purchase plan which, when combined, will consume 45% of Apple’s current US cash reserves.

The dividend will be $2.65/share/quarter and the buyback will cost $10 billion over three years. The dividend will therefore cost about $2.5 billion per quarter (starting next quarter) and the re-purchase will cost about $833 million per quarter (starting next fiscal year).

However, note that Apple’s cash has been growing far more quickly. It increased by $16 billion last quarter or $37 billion over the last year. This rate of increase is itself increasing.

To illustrate, I prepared the following chart. It shows historic net income, change in cash and a forecast of the costs of the new uses of cash and future net income (based on my estimates).

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5by5 | The Critical Path #29: The Consequences of Disruption

We discuss the five characteristics of disruption: Net growth and value creation, inevitability, increased speed of change, necessity for macroeconomic growth, historical consequences. This and much more will form the basis of discussion for Asymconf.

via 5by5 | The Critical Path #29: The Consequences of Disruption.

[Asymconf] What are the jobs that the entertainment industry is hired to do?

@mastermmik: love how @asymco thinks of everything and everyone as being “hired” to do something. lol

via Twitter.

Hiring products to do jobs for us is not a difficult cognitive leap to make. But can we extend the metaphor to “everything and everyone?” Aren’t there parts of the human experience that are outside the realm of the implied trade that hiring suggests?

Of course there are.

What is disruption and how can it be harnessed?[1]

The phenomenon we call business disruption could benefit from a different name. Although it signifies a disturbance or an interruption in an industry, it’s much more than that.

The nominal definition I work with is that disruption is the “transfer of wealth in an industry from dominant incumbents to disadvantaged entrants.” It’s a convenient definition because it’s brief, it puts the emphasis on economic value and because it alludes to a reversal of fortune and the implied extraordinariness.

However, there are several nuances lost and contradictions ignored in this definition. I want to enumerate them here and now:

  1. Although in a disruption there is a transfer of wealth, that wealth is not necessarily conserved. An industry that undergoes a disruption often emerges larger, more productive or more influential. Disruption typically creates net growth.
  2. Although extraordinary and spectacular it is also very commonplace. Disruption is not rare. In fact, it rarely fails to happen. One could even say that if it does fail to happen, it’s a symptom of an industry in crisis.
  3. Being so common, it can be seen as a regular occurrence. But if the regularity of disruption can be considered to have a clock cycle, its frequency is increasing.
  4. Disruption in the literal sense implies discomfort, displacement and even destruction. But it’s necessary to the health of any economy. The analogy to biology is that death is the most important thing in life.
  5. Although only recently characterized and studied in cases set in the past century, the pattern is evident throughout history.

I’ve offered examples of these consequences or side-effects of disruption but I’ll emphasize once more the example I’m most familiar with. To illustrate the primary definition, the AMP index is a measure of the success of one company relative to a set of peers in the mobile phone industry. It’s the average of four market shares: mobile phone units, smartphone units, revenues and operating profits.

This chart shows the shift in AMP index values for the competitors whose data is public and which make up the vast majority of units sold:

Reception and workshop at the Apple Investor Summit: Registration now open

Regarding the recently proposed Reception and workshop at the Apple Investor Summit, registration is now open.

You can purchase tickets here: asymco-workshop

Details and venue:

Time: 6:30 PM Thursday, March 15th
Location: Room 511, Los Angeles Convention Center, West Hall (across from the Ballroom).

 

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The new feeds and speeds: iPad vs. MacBook Air and iMac

At last year’s iPad 2 launch, I compared the specs of the newly announced iPad with those of a laptop and desktop from five years earlier. This year I am comparing the new iPad with Apple’s computers from four years earlier:

The new iPad now exceeds the total display resolution, has similar speed and storage capacity while having twice the battery life of the thinnest laptop of four years ago. It also has very high quality cameras and GPS and cellular network connectivity which have yet to appear on mainstream PCs. It’s still a lot smaller and half the price and has a larger selection of available software titles at prices a fraction of its elder cousin.

5by5 | 5by5 Specials #5: Fat Wireless: iPad 3rd Generation

Dan Benjamin is joined by Marco Arment of Instapaper.com and Horace Dediu of Asymco.com to discuss the just-announced Apple iPad 3rd Generation.

via 5by5 | 5by5 Specials #5: Fat Wireless: iPad 3rd Generation.

5by5 | The Critical Path #28: False Profit

Horace interviews writer/producer Dan Abrams. Dan talks us through the budgets and cost structures of independent movies as well as the obstacles to innovation presented by the current industry structure. We talk about some of the new concepts that are emerging as means to overcome these obstacles. We also talk about new forms of distribution and financing that enable long-tail film and TV content. Dan also talks about his upcoming mockumentary about the Global Financial Crisis (www.falseprofitthemovie.com).

via 5by5 | The Critical Path #28: False Profit.