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Apple’s Unusual Acquisition
---------------------------
April 23, 2008, 8:08 am
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There has been all kinds of speculation about what Apple might do with
its pile of cash, especially as it tries to build on the success of
its iPhone. There’s plenty of fuel for auto insurance speculation: At the end of
2007, the electronics giant had more than $18 billion in cash and
short-term securities on its balance sheet.
According to Forbes.com, Steven Jobs has quietly found one way to
spend nearly $280 million streetwear style that money: Apple agreed to buy a
boutique designer of semiconductors. The move is remarkable because
Apple only rarely acquires outside companies, preferring to cook up
new products in-house.
How rare is an Apple deal?
Well, consider that the line reading “Cash used for business
acquisitions” on Apple’s annual cash flow statement was blank in 2003
and 2004 — and was finally removed altogether in 2005, presumably
lumped into “Other.”
Among Apple’s largest deals in recent years was its $30 million
purchase of Emagic, a music-production software company, in 2002, and
its $66 million purchase of PowerSchool, a Web-based student
information service, in 2001. (Apple has since sold off some of
PowerSchool’s assets.)
When Apple does make a deal, it doesn’t exactly shout it from the
rooftops. At the very bottom of its latest quarterly filing with
regulators, Apple said it issued 109,027 shares in December 2007 “to a
privately held company in connection with an acquisition of assets.”
It didn’t say the company’s name or what the assets were.
After being called by Forbes.com, Apple acknowledged that it has
agreed to buy PA Semi for what Forbes, citing undisclosed sources,
said was about $278 million in cash. Not exactly a blockbuster deal,
but highly significant by customized playing cards standards. (As a DealBook term life insurance observed, this deal would appear to be different from the stock-based
one mentioned in the quarterly filing.)
Forbes said the move suggests that Apple may be considering a move
away from Intel, which provided the chips for successful offerings
like the MacBook series of notebook computers.
Forbes wrote:
Few in the high-tech world are as wary as Jobs of turning control
of core components over to a partner. The PC industry has been his
proving ground; over the past three decades, he has watched
numerous PC makers that have built their products around Intel’s
microprocessors wind up in fierce battles for narrower and
narrower profit margins.
Writing on Computerworld’s blog, Seth Weintraub said the news of
Apple’s deal “astounded just about everyone.”
Apple is scheduled to release its quarterly earnings Wednesday
afternoon. Expect some questions about Apple’s unusual chip deal.
Correction: A previous version of this item incorrectly said that
Intel provides chips for Apple’s iPhone.
Go to Article from Forbes.com »
Go to Article from Apple Insider.com »
39 comments so far...
* 1. April 23rd,
2008
9:14 am
Correction: Intel has not provided the chip for the iPhone. Unless
of course you have insider information regarding the internals of
the second generation iPhone…
â Posted by The Marching Pig
* 2. April 23rd,
2008
9:58 am
I dont think they are referring to the iphones chips i think apple
wants to quit using itntel on there pcs and starting using there
own processors.
â Posted by Count Morgan
* 3. April 23rd,
2008
10:16 am
The acquisition creates a situation where Apple is not beholden to
Intel. It produces pricing pressure with an alternate solution.
That would indeed be within Apple’s, or any sensible company’s,
character.
â Posted by Jeff
* streetwear fashion April 23rd,
2008
10:25 am
Wonder. Not so sure if dumping Intel at this moment makes sense
but what if a new category of touch-based PCs/devices are being
developed and this energy efficient processor is meant for those
items. Kinda like for a rather large iPhone/iPodish device.
â Posted by K.Hollister
* 5. April 23rd,
2008
11:41 am
No surprise here, given that Apple has changed their processors
from Motorola ,IBM, and currently INTEL. There are a few semi-
conductor companies to go around, but not enough Steve Jobs,
get it.
â Posted by moondigit
* 6. April 23rd,
2008
11:51 am
The funny thing is, PA Semi builds POWER chips. This would have
made a lot more sense (and was rumored) before Apple switched from
POWER to x86.
â Posted by Sam
* 7. April 23rd,
2008
12:12 pm
The very reasons Apple is making the move are cited by AMD when
custom faces playing cards Intel of forcing PC makers into becoming “Intel Inside”
distributors. Remeber, it wans’t a long time ago when Intel was
being investigated for maintaining monopolies and predetory
prectices to keep the competitors off the market. It seems that
Mr. Jobs has playing cards custom poker a long time hitch coming with Intel due to
onerous contract provisions.
â Posted by Sage08
* 8. April 23rd,
2008
12:41 pm
These chips will most probably be aimed at future iPhone-scale
mobile products from Apple as opposed to their desktopps and
laptops. I doubt that they are dumping Intel any time soon.
â Posted by Mark Boudreau
* 9. April 23rd,
2008
12:41 pm
I’m not sure why people think this is a surprise or a move “away
from Intel”. Apple uses the ARM architecture for its handheld
needs and has done so ever since it co-founded the ARM company.
It’s looking for the best product for the job, that hardly affects
its relationship with existing suppliers.
I think this purchase has a pretty obvious logic. Apple want to do
well in the handheld business and they see two issues which are
critical to its success: power and size, that is, low power and
small size. PA Semi obviously have expertise in this field and
Apple wants it.
Part of why Apple succeed is their focus. They don’t stray from
the product lines they have chosen, and they do what products they
have chosen to create well. If they’re going to do better than
other people they can’t just have good software, which they have,
they need to have better hardware than the competition. They have
wisely invested in the critical areas where they get a jump over
the competition, differentiating their product where it matters
most to the customer: long battery life and a sleek, attractive
product.
â Posted by nutjob
* 10. April 23rd,
2008
12:50 pm
The storyline and the math are not consistent:
Apple said it issued 109,027 shares in December 2007 âto a
privately held company in connection bridge size playing cards an acquisition of
assets.â It didnât say the companyâs name or what the assets
were.
At an avg price of $190/share in Dec07 those shares were worth
about $20.7M which is far from the $278M cash forbes.com says they
paid for PA Semi.
So what did they purchase with the shares?
â Posted by ddlang
* 11. April 23rd,
2008
12:54 pm
@ Count Morgan…
Apple’s latest business success on the personal computing side
have been due to the Intel switch. Getting away from Intel-based
chips would be suicide.
â Posted by stu
* 12. April 23rd,
2008
1:24 pm
PA Semi doesn’t manufacture chips - they are chip designers. And
the chip mentioned sounds a lot like IBMs latest PowerChip (the 6
I think it is) - which came out right after Apple went Intel.
Wonder how application developers will handle the switch(s) - not
indie clothing much platform independent/universal coding going on.
â Posted by pHaZm
* 13. April 23rd,
2008
1:28 pm
At the end whole life insurance the nineties Apple Computer bought into AMD and
everyone started the Wall Street speculation that Apple was
changing its chipmakers fom IBM and Motorola to AMD. At that time,
Steve Jobs said emphatically “it was an investment.” It was.
The truth is Intel Atom technology remains insufficient and
expensive for the iPod and iPhone — but it is improving. The truth
is that Nokia and Samsung are entering the market along with a
number of other entries.
Steve Jobs does NOT like to be out on a limb with one provider of
key components — all the way back to 1976 he’s always had two.
(Only Sculley moved Apple away from that approach.) This is
Apple’s insurance policy — and again it may also only be an
“investment.” Don’t read too much into it, or you’ll create more
fantasy than learn mandarin chicago does when he speaks. In best life insurance cases it’s good for
Apple’s stocks.
â Posted by Frank Sowa
* 14. April 23rd,
2008
1:28 pm
Purpose is to develope the os for their promotional playing cards which to combine
everything electrical in the volvo insurance into one control system centered
around the LCD and Plasma televisions.
â Posted by ww terry
* 15. April 23rd,
2008
1:30 pm
Apple would have no desire to replace Intel in their Mac lines -
the investment to do so (and maintain momentum) would be massive.
There are other major areas where this deal works. The iPhone and
iPod are two excellent opportunities, as are other hand held
products that Apple may be working on renters insurance their R&D labs.
Don’t look for something for a year - then look for Apple to
surprise us again.
â Posted by Ken
* 16. April 23rd,
2008
full color playing cards pm
Apple is purchasing a “boutique designer of semiconductors”, not a
company that will replace Intel chips.
My opinion is that since the move to Intel and the hacks to allow
the OS to run on plain vanilla PC’s, Apple has been searching for
a way to return the uniqueness (and also lock out the hackers) to
their products.
â Posted by pingpong
* 17. April 23rd,
2008
1:31 pm
Could an Apple iChip or iProcessor be far off?
â Posted by Steve Hanes
* 18. April 23rd,
2008
1:36 pm
@ ddlang,
You’re quoting the independent fashion share price. Apple probably issued
preferred stock to the company.
â Posted by maclovin
* 19. April 23rd,
2008
1:39 pm
The chip industry is littered with hasbins. Development and
manufacturing of chips takes huge resources. This is a waste of
Apple’s focus, energy and time. What a bizarre purchase. Jobs is
dropping acid again.
â Posted by DUMBmove
* 20. April 23rd,
2008
1:54 pm
It’s a high stakes card game by Computer & electronics players.
$280 million is a small investment for a psychological, if not
actual, edge. Whether or not Jobs excercises his option to use
their own chips, he now holds the cards in his hand to either
bluff, or play them. He can also spin off a whole new family of
devices from this new platform. better auto insurance buys him a seat at the chip
table if he wants to use it. Look back at his history. After being
bounced from Apple he developed Pixar, motorcycle insurance has catapulted him
into a dominant role at Disney. Jobs didn’t mandarin tutor chicago where he is by
being dumb, and this will be no exception.
â Posted by Jay Fee
* 21. April 23rd,
2008
2:10 pm
I love apple and google. They should merge, buy microsoft and sell
it in small pieces.
â Posted by Joe
* 22. April 23rd,
2008
2:12 pm
nutjob,
You must be a nut if you think any of Apples products have a long
battery life. They sell ipods where the battery dies at 13 months.
Then they want $87 to replace the battery. I bought 4 for my
family and each one started to die at 13 months. Macbook air?
Apple claims 5 hours battery life, they “claim”. No review has
been even close to that. Most are 2 1/2 to 3 hours. Other small
factor laptops have the same or better and those have a replacable
battery.
â Posted by Art
* 23. April 23rd,
2008
2:14 pm
I believe that Apple just as in their past protected their
computer hardware from being easily copied as the toolbox was ROM
chips used on the motherboard in the days of the PowerPC chip, but
those chips ran to hot and slow. Now with Intel chips and the
hacintosh surfboard shape playing cards the EFI chip protection on the board has been
cracked.
I think Apple has bought this boutique semi heart shape playing cards company to
design a special patented chip that they can use to keep OS X
possibly on just their hardware.
Have to wait for a future model to find out for sure.
â Posted by Dave Bissett
* 24. April 23rd,
2008
2:20 pm
I think Steve knows what he is doing, getting away from Intel.. if
that is what this is really saying.. Apple, for a long time, has
made their own parts; requiring little from other kids on the
block.. I think the switch to intel, was just to offer the ability
to run XP on the Mac easily, and be able to offer it house insurance in
this PC heavy market, without having emo clothing have the down time of
making new chip architecture.. Now that that is accomplished, they
can go back to almost completely designing their own machines. I
do not agree getting away from Intel chips is suicide, at least on
the cpu side of things. Intel Chips are only, currently,
moderately better then others out there. It won’t be long with the
new designs of 64bit, multi-core, HT3.0, and other designs
(CPU/GPU or GPU Mobo) that will level the playing field Intel
patents hold power on..
â Posted by justy
* 25. April 23rd,
2008
2:22 pm
I don’t really think Apple moving away from Intel chips will have
as big of an impact as a lot of people seem to think. The vast
majority of Apple users either were already dedicated, or decided
to try them out because of their frustrations with the PC market
or Windows. To say that their success is because of Intel is
somewhat narrow-minded. They have had a phenomenally popular
advertising campaign for many of their products, new styles on
repeats, and features you can’t get in other brands.
Look at the iPod Touch. Not too many mainstream brands offer
things like that.
Apple sells a lot more than just computers with Intel chips. Of
course they’d need more options.
â Posted by Mark
* 26. April 23rd,
2008
2:27 pm
the 109,027 shares were probably hush money to
close down Thinksecret.com
the company jobs sued and forced out of business in Dec 07
â Posted by Duff
* jumbo playing cards April 23rd,
2008
2:28 pm
Please. Apple switch from Intel? Using a company life insurance one’s ever
heard of and that best insurance no market penetration whatsoever? With the
vast growth in the computer market they’ve experienced lately? I
have a bridge I want to sell you. I agree with Stu, that would be
suicide. PA Semi’s CPU is a low-power dual-core chip that’s
designed primarily for embedded applications. Apple, having deep
experience with the Power architecture, probably sees a synergy
with an upcoming mobile design. I doubt even Jobs is that
egotistical that he’d unilaterally dump the single most effective
partnership Apple has ever had.
â Posted by rgrace
* 28. April 23rd,
2008
2:40 pm
I’m thinking Apple is making a game console with the PA Semi chip
designs.
â Posted by Ron
* 29. April 23rd,
2008
2:48 pm
Well, I’d love to hear Steve’s explanation.
â Posted by auramac
* 30. April 23rd,
2008
3:05 pm
It probably has a lot to do with the costs of manufacturing —
buying the processors for one’s devices is a noticeable cost. If
you design the processor yourself, you drop the processor cost by
maybe two orders of magnitude. This is a nice advantage,
particularly for high-performance, low-power processors. It means
that you can chinese teacher chicago earn more per-unit profit, or can lower the
cost of your device (which both can lead to higher profit). Note
that PA Semi’s processors are unsuitable for the cards playing custom — they run
around 2 Watts, while the current iPhone processor is estimated at
around 0.3 Watts!
â Posted by Josh
* 31. April 23rd,
2008
3:12 pm
Yeah, Apple is buying a small boutique chip design company and
will dump Intel like a hot potato just as soon as those new
employees get their cubicals set up.
The reason is that it is *so* damn easy to compete with that Intel
company who think they’re so great just because they have a few of
those those $5B 45nm semiconductor plants and boat loads of
billions to keep their technological edge up.
Forget IBM, Motorola to AMD failures. A few boutique guys on a
defunct architecture for laptops and desktops and no manufacturing
capability are just going to blow this industry wide open.
Um… NOT!
Apple is either looking at some specialized low power hand held
chip, and/or circuitry to make it harder to duplicate the Mac,
and/or getting some people who can evaluate future chip choices.
The battle for laptop and desktop chips was won long ago and Apple
was stupid not to see it sooner and did better once they did. The
name is Intel. The battle for cellphone, hand held etc is still
open.
â Posted by GaryB
* 32. April 23rd,
2008
4:38 pm
This article starts off wrong. iTunes is made from Apples purchase
of Soundjam. So it is not so rare as you stated.
â Posted by PTB
* 33. April 23rd,
2008
4:40 pm
iTunes is made from Apples purchase of Soundjam. So acquiring
another company is not so rare. Look how successful that purchase
was.
â Posted by j2b
* 34. April 23rd,
2008
6:19 pm
Ichat. period.
I also like my Apple stock purchased in 1996.
â Posted by Mr.radiotube
* 35. April 24th,
2008
5:51 am
Just wondering:
Maybe will seen iPlay console soon? Xbox, PS and Wii are made on
Power architecture so why no Apple
â Posted by Wawrzek
* 36. April 24th,
2008
6:00 am
Recently a non-Apple company offered to the market a cheap
Intel-based desktop that came pre-installed in Leopard, the latest
Mac OS X operating system. They used some clever software routines
to trick Mac OS X to think that the Intel-PC is a Mac.
Perhaps they will homeowners insurance introducing some new chipsets into their
hardware to prevent this from happening. The margins from Apple’s
hardware sales is relatively one of the highest in the computer
industry.
â Posted by dogsick
* 37. April 24th,
2008
8:40 am
OK. Personally, I feel that these chips will more likely be aimed
at the mobile market. P.A. Semi supposedly specializes in low
power chips. These would be important for things such as iPods and
iPhones, not the computer lines.
Maybe the chips could be for a new product. Having your own chip
designers means that you are not limited to some other companies
standard chips. Instead, you can create a customized one for your
own specific needs.
Also, if you create your own chip, it means that the competition
can’t use the same ones, giving you an advantage.
â Posted by playing cards promotional AISR
* 38. April 24th,
2008
8:43 am
it’s a mistake and reveals jobs’ need for a medication adjustment
â Posted by fanboy666
* 39. April 24th,
2008
12:45 pm
So are we moving toward a vertically integrated computer industry
again?
http://sramanamitra.com/2008/04/24/apples-dramatic-risk
s-and-ambitions/
â Posted by Sramana Mitra
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