Apple Inc., (NASDAQ: AAPL)- The Cupertino giant is expected to hit a whopping US$15 billion in capital expenditures this fiscal year.
Apple is one of the very least companies around the globe that has set an example of how a company could ideally evolve in terms of financial configuration. The colossal tech firm has been flourishing in this last decade, but so has its expenses.
One can notice egregious levels of investments made by the creator of the iPhone, mainly in manufacturing process equipment, product tooling, and other infrastructure required to make products.
On Tuesday, the company released earnings and has now filed its 10-K annual report with the SEC. Take a look on what Apple plans to spend in the year 2016, according to the filing:
“The Company’s capital expenditures were $11.2 billion during 2015. The Company anticipates utilizing approximately $15.0 billion for capital expenditures during 2016, which includes product tooling and manufacturing process equipment; data centers; corporate facilities and infrastructure, including information systems hardware, software and enhancements; and retail store facilities.”
Just to get a more spherical idea, note that Apple has been budgeting its capital expenditures at approximately $10 billion since 2013, while in reality, this amount was reached between the years 2011 and 2012, when it was a fair amount more than the $8 billion that Apple had expected to spend.
Simply put, the company is willing to exceed the competition by committing itself to constant technology advances in manufacturing. And that is what makes its products stand out from rival companies who cannot afford the competition – in this case financially.
The only rival that could follow up at this point seems to be Samsung. However, the South Korean company needs to direct its immense capital budget toward its semiconductor manufacturing operations. In the meantime, the firm recently announced that it would direct a larger part of its capital expenditures towards its phone department instead.
This must be a reaction to this year’s losses, since Samsung has lost high-end smartphone share to Apple and thus is now expecting full year capital expenditures to grow $24 billion.
With all that being said, one could begin wondering how could Apple put its overseas financial resources into good use. The answer is in fact surprisingly simple; since the tech giant aims at working with partners that are based abroad, Apple is openly attempting to establish manufacturing equipment within their facilities, it gets to tap to its foreign reserves for that purpose.
What would be much more interesting to observe, is Apple’s capital expenditures in case that the company eventually expands its ecosystem and activities like the Apple Car, a project that could hypothetically require a capital budget twice as much as the iPhone or the Mac computers.
Via: The Motley Fool
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