All in a day’s news: Apple’s way up, and Borders is toast
Two business stories from Tuesday illustrate a fact of life in the free-enterprise system:
Apple Inc. steamrolled through growing competition from smartphones and tablets running on Google Inc.’s Android operating system, as the company more than doubled its quarterly earnings and posted surging revenues on strong sales of its iPhone and iPad.
Apple’s quarterly profit rose to $7.31 billion for its fiscal third quarter, up from $3.25 billion a year earlier. Revenue soared 82% to $28.57 billion. Gross margins rose to 41.7% from 39.1% a year ago.
The results fueled a spike in Apple’s shares in after-hours trading, with the stock up 4.8% to $395.34, after ending in 4 p.m. trading at $376.85 on the Nasdaq Stock Market.
The final chapter was seven for Borders Group, the Michigan-based book-selling chain that will begin liquidating stores — including about 10 in Georgia — almost immediately.
The nation’s second largest traditional bookseller received no additional bids after a Sunday deadline passed and Monday asked a bankruptcy court for approval to liquidate. A Tuesday auction for bidders who wanted to keep Borders open for business has been canceled, according to the Wall Street Journal.
(snip)
The superstore pioneer, which put countless mom-and-pop bookshops out of business, filed for bankruptcy protection in February…but was sunk by crushing debt and sluggishness in adapting to a rapidly changing industry….Borders also suffered from a series of errors: failing to catch onto the growing importance of the Web and electronic books, not reacting quickly enough to declining music and DVD sales, and hiring four CEOs in five years without book-selling experience. (emphasis added)
Considering the current political environment, however, Apple’s cash reserves of $78 billion — more than the market capitalization of Goldman Sachs — may be a double-edged sword. How long until a certain someone in Washington decides Apple isn’t a) hiring enough people, and/or b) paying enough taxes?
– By Kyle Wingfield
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67 comments Add your comment
David Green
July 20th, 2011
5:36 am
There would be no problem if Apple were unusual and took the step of sharing it’s profits with it’s rank and file workers instead of putting it their ceo’s pocket whose personal tax rate should be 95%.
ByteMe
July 20th, 2011
5:46 am
Here’s the difference between Apple and Wynn: Apple’s not complaining that “uncertainty” and “regulations” and “Democrats” are keeping them from making a huge profit. Wynn is #WHINING and Apple is #WINNING. You see it now?
Joel Edge
July 20th, 2011
5:56 am
Apple is the future that liberals are always crooning about. High tech jobs with good incomes. Unfortunately, all of their manufacturing is done overseas.
Don’t get me wrong, great computer, great operating system. Quality is second to none. It’s all I run.
I think Jobs still makes a buck a year salary. I’m sure he wouldn’t mind if the tax that at 95%.
http://techland.time.com/2011/01/12/steve-jobs-still-makes-a-1-salary/
Karl Marx
July 20th, 2011
6:28 am
What no bailout for Borders? My god we could at least find a few billion to save them. After all after the Banks, AIG, GM we couldn’t save a book store? That’s right I forgot a book store might help the electorate get just a little smarter, Can’t have that now can we.
Lil' Barry Bailout
July 20th, 2011
6:32 am
David Green: There would be no problem if Apple were unusual and took the step of sharing it’s profits with it’s rank and file workers.
———————–
Are they not being paid?
A corporation’s profits belong to its owners, the shareholders who risked their capital to fund the corporation.
Guess they didn’t cover that in your government school!
Ayn Rant
July 20th, 2011
6:40 am
Apple is the perfect example of why the US private sector is unable to provide the jobs Americans need. Basically, Apple, like Dell and the other electronics firms, is a marketing channel for Asian goods. Apple products are manufactured in Asia. Much of its revenue comes from overseas markets.
Apple is a highly capitalized, highly profitable company that creates few jobs for Americans.
Lil' Barry Bailout
July 20th, 2011
7:44 am
Ayn, you should buy a few shares!
get out much?
July 20th, 2011
7:46 am
I wonder why Kyle doesn’t mention that Apple does not pay a stock dividend? I guess he believes that the owners are not entitled to any of the profits.
GB
July 20th, 2011
7:48 am
Why would they bother to work if the David Greens of the world take 95% of their income? And I don’t get this business about sharing with their employees. The STOCKHOLDERS own the company and its profits. Employees’ compensation certainly includes profit sharing plans as incentives for them to do a good job, but David Green seems to think the owners of the company have some kind of obligation to give what they own to someone else. Why?
WillieRae
July 20th, 2011
7:52 am
Why “should” the CEO’s pay rate be 95%? Why should the Company give profits to the people who work for Apple, have good jobs and are paid well? This is a prescription for no growth, no jobs, no innovation and general decline.
When my company fails and I lose my investment, should I look to my employees to pay for the losses? Does my staff want to share in the risk or only in the reward?
Greed and Envy are evil twins.
Tyler Durden
July 20th, 2011
8:10 am
Another morning, another looooooooooooooong reach to try and tie current events to the GOP talking points. Does the lack of substance behind your ideology ever make you wonder if it’s even worth it??!!
Kyle: if this is the best you can do, let’s take Wooten outta mothballs.
Carlosgvv
July 20th, 2011
8:14 am
Borders and Cisco together are laying off more than 20,000 people. When Apple announced it’s profit and revenue surges, did it also announce an increase in hiring? A “fact of life” in today’s free-enterprise system is that corporations that are making more money are not hiring. They are loading more work on their existing employees, knowing they don’t dare quit, and putting the extra profits in their executives pockets.
Lil' Barry Bailout
July 20th, 2011
8:19 am
“I wonder why Kyle doesn’t mention that Apple does not pay a stock dividend?”
——
Probably because he understands that an investment’s return is comprised in large part by capital appreciation, particularly for growth companies.
Duh.
Lil' Barry Bailout
July 20th, 2011
8:21 am
“did [Apple] also announce an increase in hiring?”
——
Why would it?
Lil' Barry Bailout
July 20th, 2011
8:23 am
Kyle, can we get a better class of libtard on this blog? It’s just too easy this morning!
ByteMe
July 20th, 2011
8:23 am
Borders and Cisco together are laying off more than 20,000 people
In Cisco’s case, 5000 are coming from one factory in Mexico and several hundred are coming from .. get this… VP level and above. They’ve been bloated for years and don’t really know what to do with their cash cows so that they can create new profit centers.
Aquagirl
July 20th, 2011
8:24 am
WillieRae, the Borders employees are certainly sharing the company’s risk right now, since they’ll be unemployed. And unlike the corporate fatcats who got rich along the way, the people who actually did the work of stocking and selling books won’t have savings from stock options for their retirement.
schumpeter
July 20th, 2011
8:56 am
‘creative destruction’ – just like I described many years ago
Jefferson
July 20th, 2011
8:58 am
Not everything is as bad as they say, nor is everything good as they say.
Lil' Barry Bailout
July 20th, 2011
9:08 am
The whining, business-hating, moocher class is out in force this morning!
jconservative
July 20th, 2011
9:09 am
A couple of thoughts.
” Wynn is #WHINING and Apple is #WINNING” Nice point ByteMe. The business environment is what it is. One must work within that environment.
“…corporations that are making more money are not hiring.” Nice point Carlosgvv.
In fact corporations have not been hiring for decades. Net jobs created, jobs created less jobs lost, has been going downhill since the 1980’s. Net jobs created was 27% in the 1970’s, down to 20% in the ’80’s and 90’s and a fat zero percent in the 2000’s. None of this was caused by government policy. The nature of business on a global scale just changed. And unfortunately, the last several presidents and congresses are still operating in the 1960’s business environment where what is good for GM is good for America.
Tax policy is not going to create jobs. Reagan’s tax policy was going to create jobs. The Bush tax cuts were going to creat jobs. The Obama tax cuts were going to create jobs. All have been on the books for 30 years. 10 years and 2 years respectively, and net jobs created continue to decline.
Carlosgvv
July 20th, 2011
9:16 am
Barry
Well, gosh Barry, you’re right. Why should they do more hiring in the face of all these new profits when they can pile more work on their existing employees, knowing they won’t dare quit? It’s the corporate American way, it keeps the unemployment rate high and meets your approval. Right, Barry?
Bart Abel
July 20th, 2011
9:28 am
RE: “How long until a certain someone in Washington decides Apple isn’t a) hiring enough people, and/or b) paying enough taxes?”
Where does Apple manufacture their products? How much are those workers paid? How many hours a week do they work? What are their working conditions? What is Apple’s effective corporate income tax rate?
When 14 million Americans are out of work and many large corporations are paying relatively little to nothing in corporate income taxes, despite record profits, these are reasonable questions.
Lil' Barry Bailout
July 20th, 2011
9:30 am
Carlosgvv: it keeps the unemployment rate high and meets your approval. Right, Barry?
——–
It really isn’t any of my business. If you have a problem with it, sell your Apple shares and redeploy that capital into a business that hires folks it doesn’t need, or better yet, start your very own charity/business.
Rob Woodall wants you to keep paying for his healthcare, while you pay for your own healthcare and your kids' healthcare, and help your elderly parents pay for their healthcare
July 20th, 2011
9:38 am
If one took the minimal time needed to understand Apple’s business model and performance, which I’m sure some guy in Washington already has, there would be no reason to complain about Apple not hiring enough people. Not enough taxes…….?
Kyle…..I challenge you to read and comment on this story in today’s New York Times. http://www.nytimes.com/2011/07/20/us/politics/20freshmen.html?_r=1&hp
I’m sure a majority of your knee-jerk regressive posters will cry that NYT is more useless fish-wrap than Pravda, but I have faith in your intellectual capacity and interest in what propaganda the lefties are flinging these days.
For those of you who won’t bother to click through, the article discusses the hypocricy of a number of freshman Republican Congressmen who are Tea Party favorites. These fiscally responsible representatives seem to be much less fiscally responsible when it comes to pet projects for their home districts.
For example, a Congressman from Charleston, SC wants the federales to pay for a Charleston harbor dredging project because it will accommodate bigger cargo ships and help create trade opportunities and jobs. His argument seems very reasonable but should a fiscally responsible federal government be funding a project that will increase trade opportunities and create jobs in Charleston SC?
I may be a cynic but I doubt that same Congressman would be in favor of a dredging project in Galveston, TX or Seattle.
Come on Kyle. Show you are fair and balanced and call them on the carpet.
Carlosgvv
July 20th, 2011
9:52 am
Barry
Predatory capitalism, which is ruining America, is everyone’s business. A laissez faire attitude from the public and the Govt. is exactly what these people want. Or, did you not know that?
Lil' Barry Bailout
July 20th, 2011
9:54 am
“When 14 million Americans are out of work and many large corporations are paying relatively little to nothing in corporate income taxes, despite record profits, these are reasonable questions.”
——
Your questioning attitude would be more appropriately directed toward the folks in DC who are creating an environment hostile to business–Obozo and his thugs. Questioning a business that already employs tens of thousands in the US just looks like puerile whining.
Junior Samples
July 20th, 2011
10:24 am
Kyle, Kyle, Kyle…
Seriously?
Be the hack journalist your dog thinks you are.
What’s the matter? Try, try as you might, you just couldn’t tie Borders chapter 11 to President Obama?
You can do better than this. I for one am appalled. If you truly applied yourself, you could fabricate some plausible conspiracy theory that might get you noticed on Fox News. I hear they have a spot open since Beck left… You could join the Murdoch-ship and be a real player in the Murdoch-olypse. I’ll start you in the right direction. My cell number is BR-549. See what you can find.
Lil' Barry Bailout
July 20th, 2011
10:35 am
Please define “predatory capitalism”.
Most folks who complain about capitalism do so because they just can’t cut it.
Michael
July 20th, 2011
10:42 am
Why didn’t we let creation/destruction play out with the banksters on Wall Street and the auto companies in 2008 when they were in trouble?
Lil' Barry Bailout
July 20th, 2011
10:51 am
We’d have been better off in the LONG run if we had let the market do it’s thing with those failed banks. Politicians don’t think long term tho.
BlahBlahBlah
July 20th, 2011
10:52 am
Sections 531 and 532 of the tax code deal with accumulated earnings tax. A $78 billion cash reserve might look mighty tasty to Uncle Sam.
schumpeter
July 20th, 2011
11:06 am
michael @ 1042 – good question (I’ve rolled over once or twice in my grave thinking about that)
The AntiBoortz
July 20th, 2011
12:15 pm
The 13th Amendment is burdensome to business. Shouldn’t it therefore be repealed?
Why not? He knows everything already.
July 20th, 2011
12:46 pm
Lil’Barry for head of the world.
ByteMe
July 20th, 2011
12:56 pm
We’d have been better off in the LONG run if we had let the market do it’s thing with those failed banks.
So, Lil Barry, how much would the taxpayers have had to cover if Citibank and BofA (two of the worst) had failed and the FDIC took over and had to replace depositor assets up to $100K for each account? Hint: the number is bigger than TARP’s original amount.
td
July 20th, 2011
1:19 pm
Carlosgvv
July 20th, 2011
8:14 am
Borders and Cisco together are laying off more than 20,000 people. When Apple announced it’s profit and revenue surges, did it also announce an increase in hiring? A “fact of life” in today’s free-enterprise system is that corporations that are making more money are not hiring. They are loading more work on their existing employees, knowing they don’t dare quit, and putting the extra profits in their executives pockets.
How many people lost their jobs when Obama stopped the drilling for oil in the Gulf? How many more have lost their jobs due the the now higher gas prices?
Ignorant Conservative
July 20th, 2011
1:22 pm
What’s the point of this piece? Companies succeed and fail every day of our lives. Tech companies in the Standard & Poor’s 500-stock index hold about $352 billion in cash and short-term investments. Microsoft has around $43B, Cisco has about $39B, and Google has something like $33B.
Also, conservatives don’t seem to understand when and why a business hires more people. A business will not hire more people just because they have a lot of cash on hand, or because they receive massive tax credits. Businesses hire more people when the demand for their products or services exceeds current staffing levels. Apple will hire more people when it finds itself in this situation.
Check these stats
July 20th, 2011
1:23 pm
Bush was a pro-business President. Exactly how many net job did he create Wingfield?
Lil' Barry Bailout
July 20th, 2011
1:47 pm
Unemployment during Bush presidency: 4-6% generally.
Unemployment during Obozo regime: 8-10%.
Bush is clearly superior to Obozo.
Lil' Barry Bailout
July 20th, 2011
1:50 pm
“Also, conservatives don’t seem to understand when and why a business hires more people.”
——-
Wrong. It is the libtards who think corporations should hire people they don’t need, simply because they have cash on hand.
ByteMe
July 20th, 2011
2:03 pm
How many people lost their jobs when Obama stopped the drilling for oil in the Gulf? How many more have lost their jobs due the the now higher gas prices?
Nonsense. There’s more (about 5% more) drilling going on this year in the Gulf than last year. Do your research before sounding ignorant. It’s all available on the EIA site.
ByteMe
July 20th, 2011
2:03 pm
4-6% generally.
Yeah, but it was that point right at the end when it cleared 10% that made all the rest of it seem like a bad memory, huh?
Lil' Barry Bailout
July 20th, 2011
2:49 pm
Unemployment never exceeded 8% under our President Bush. Unemployment has been higher in every month of your Idiot Messiah’s disastrous regime than it was in any month of our President Bush’s eight years.
Show Low Here We Come
July 20th, 2011
3:04 pm
The seasonally adjusted unemployment rate rose from 4.2% in January 2001, peaking at 6.3% in June 2003 and reaching a trough of 4.4% in March 2007. After an economic slowdown, the rate rose again to 6.1% in August 2008 and up to 7.2% in December 2008. From December 2007 when the recession started to December 2008, an additional 3.6 million people became unemployed. And, in January 2009, his last month in office, the nation lost 655,000 jobs, raising the unemployment rate to 7.6 percent, the highest level in more than 15 years.
Looks like W got out of town just in time…
td
July 20th, 2011
3:05 pm
ByteMe
July 20th, 2011
2:03 pm
How many people lost their jobs when Obama stopped the drilling for oil in the Gulf? How many more have lost their jobs due the the now higher gas prices?
Nonsense. There’s more (about 5% more) drilling going on this year in the Gulf than last year. Do your research before sounding ignorant. It’s all available on the EIA site.
Its not hard to be up 5% when you were at zero the year before. Go to the Texas, La or Miss and ask how many oil riggers are still out of work. I think I read at some point last year there were 100,000 out of work in the US oil business due to the spill. Some may have gone back to work but not all. On top of this if there was not such a slow down on permitting and the tree huggers not filing lawsuits everyday we could put a lot more people to work in refineries or building refineries and gas prices would be less then they are today.
Mishap
July 20th, 2011
3:08 pm
^So the trajectory of going from 5 ->7.8% in Jan ‘08-Jan ‘09 wasn’t indicative of an economy in a tailspin already?
Not a huge fan of Obama but that’s a wee bit of cherry picking don’t you think?
td
July 20th, 2011
3:20 pm
ByteMe,
Just for you reading enjoyment. You tree huggers and Dems could put 1000’s back to work tomorrow if you would only come off you high horse for a minute.
http://thehill.com/special-reports/energy-july-2011/172391-end-moratorium-on-offshore-drilling-now
vb
July 20th, 2011
3:30 pm
oh wel;
vb
July 20th, 2011
3:31 pm
another whinefest from a conservative hack “unbiased” reporter.