IPE Views: How big can an Apple grow?

first_imgJoseph Mariathasan wonders what, if anything, can check the technology giant’s astonishing growthApple was valued at more than $770bn (€687bn) at its peak in February, making it by far the single-most valuable listed company on the planet. Despite its mammoth size, its chief executive, Tim Cook, announced that it could grow at a rate more akin to a start-up. But how large can a company grow? For some companies, there may be a clear upper limit – how many cans of sweetened fizzy drinks can Coca-Cola sell to a global population, with increasing worries over an epidemic of obesity-related afflictions such as diabetes?That may be a reasonable question to ask of Coca-Cola, but can an analogous question be asked of Apple, with an enormous market, global distribution and a strong brand that, despite being enormous, still has a lot of growth in front of it? Will the limit to Apple’s growth be set when every person on earth has an iPhone?Mega companies were clearly growth companies at an early stage of their lives to reach their gargantuan sizes. But, at what stage should mega-cap mega brands be seen as purely post-growth and value/dividend plays? Deciding when a company such as Apple has reached that position is unclear. The limits to growth are clearly dependent on the business strategy a company chooses to follow. Apple is clearly not a one-trick pony. It is not just a hardware company like Dell, having built an ecosystem around a seamless integration of innovative products and applications way beyond production of commodity hardware. The limits to growth are further away for companies with three key characteristics. First, as famously outlined by Warren Buffet as the companies he favours, are those with an economic moat that protects them against competitors, with a well-known brand name, pricing power and a large portion of market demand. This can provide the ability to grow enormously, but, sometimes, disruptive technologies can overwhelm even the widest moat. Kodak is a classic example, where its domination of photography could not withstand the impact of digital technology. But Apple has become the ultimate consumer brand, with the ability to create interest in any new product or variation of an existing product by just adding the prefix ‘i’.A second economic driver for growth also requires high-quality companies to be able to get better as they get bigger. Bigger does not always mean better, and the banking industry is the prime example of this. Citibank has a global footprint, but its value lies in having a few particularly strong local franchises in countries like Mexico.The insurance industry is another case in point. Life insurance and property and casualty insurance are locally regulated and require capital to be domiciled in local markets, giving few benefits in size, beyond reducing the overall volatility of results. Reducing volatility benefits senior management but not shareholders who could gain equivalent diversification themselves. At the reinsurance level, however, size can bring benefits because of the nature of the business and the size of the transactions. For Apple, the iPhone ecosystem that has grown is a classic example of something that gets better the bigger it grows.The third key characteristic that virtually all mega companies have is the ability to seek customers in the emerging markets.Any constraints to its size are further away for Apple than for most other companies, as it has all the three factors for growth in spades. So what can be the limits to growth for Apple? “The biggest risk for most of the companies we own is anti-trust regulation in the US that will force them to split apart,” said one fund manager on his Apple weighting. “We don’t like that problem, but we certainly prefer it to others we might have!”That is exactly what happened to the old AT&T, which once dominated the US telephone market and was forced to split up in 1982 into seven regional telephone companies – the ‘baby Bells’. That is unlikely to happen to Apple, given that it does not operate in oligopolistic markets and its innovations have attracted rapid and ferocious competition.There appears to be no limits to size for Apple. But then, AT&T, at its height, employed 1m people. Apple employs less than one-tenth of that. A great investment for its shareholders but perhaps also a sign of the problems society faces with the new generation of mega companies that are great at producing returns for shareholders but lousy at producing jobs.Joseph Mariathasan is a contributing editor at IPElast_img read more

Man found dead

first_imgSalvador’s lifeless body was discovered by his aunt Helen Martinez, 56, around 7:35 a.m. on May 9, a police report showed.According to Martinez, Salvador was binge drinking and was not eating his daily meals days before the incident. Initial investigation conducted by the Talisay City police station showed no indication that the man was murdered.Martinez’s body was brought to a mortuary for a “post-mortem examination.”/PN BY MAE SINGUAY AND CYRUS GARDEBACOLOD City – He was found dead inside their house in Barangay Katilingban, Talisay City, Negros Occidental.Police identified him as 46-year-old Raul Salvador.last_img

Santa Ana Esports Arena to host finals of NBC and FACEIT Rocket League tournament

first_imgThe Santa Ana Esports Arena has been revealed as the location for the final of the Universal Open Rocket League tournament, a $100,000 (£766k) tournament run by FACEIT and NBC Sports.The Grand Finals will take place in Southern California on August 26th-27th and will feature the top sixteen teams that have made it to the final event. Tickets are already on sale to the event, which cost $15 for a single-day or $25 for the entire weekend. They can be purchased here. Qualification can be achieved through battling through Regionals — which will be hosted at NBC Sports Regional Network studios on August 5th-6th and 12th-13th and will be live-streamed on the NBC Sports app as well as the Telemundo En Vivo app amongst other social media platforms. The final hour of each Regional will be shown live on participating NBC Sports Regional Networks as the company broadens its esports operations. The Grand Finals will also have substantial television coverage. In the UK, Germany, Australia and across multiple countries in Latin America it will be broadcast on Syfy. In the United States the finals will be broadcast on NBCSN and there will also be a plethora of on-demand content available across NBC, NBCSM, Telemundo Deportes as well as FACEIT and Rocket League’s website. The tournament is a deviation from traditional competitive Rocket League. The fast-paced flying car meets soccer game is normally played with three players on each team, yet NBC has chosen a two versus two format. The esports landscape is gradually seeing Rocket League become the go-to title for a mild introduction to the burgeoning esports world, with soccer and flying cars fairly easy to comprehend when compared to the likes of Dota 2 and League of Legends which are incredibly complex in their own right. Esports Insider says: A dedicated esports arena for the Grand Finals of NBC’s Rocket League venture seems apt. Here’s hoping the tournament is well received and the best two versus two teams are greeted by a sell-out crowd as they bid for the inaugural championship and the lion’s share of a whopping $100,000.last_img read more