Joseph 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 IPE
NewsTalk ZB 8 July 2016Family First Comment: Good. Neither will weThe mother who petitioned to make it mandatory for parents to know if their children under 16 have an abortion, has pledged not to give up.Hilary Kieft’s 15-year-old daughter had an abortion at boarding school, but Ms Kieft didn’t find out about it until a year later when her daughter attempted suicide.A select committee has rejected the suggestion of mandatory notification, but agreed to strengthen post-abortion counsellingMs Kieft told Mike Hosking she’s disappointed with the decision.“I’m grateful for the minor changes they’re going to do. We still can’t protect our girls. It’s still going to carry on the same. You are going to have girls that are going to try to commit suicide and girls that will commit suicide. How then are we to help them.”Family First director Bob McCoskrie said politicians are taking power away from parents, who should have a protective factor.“The politicians have treated parents as being a potential enemy and to be treated as hostile. For some reason we should only trust professional counsellors and we shouldn’t trust parents.”READ MORE: http://www.newstalkzb.co.nz/news/national/mum-who-petitioned-for-abortion-law-change-wont-give-up/.
Neil Warnock wants to steer Crystal Palace to safety this season because he feels he owes the club’s supporters. “I’m sure certain people think we might plummet now we’ve got new people on board but I don’t see that. “I look at where these players finished in the league table and I think they warranted that – if anything I think we’re even better now.” Club-record signing James McArthur could make his debut against Burnley on Saturday along with fellow new arrivals Kevin Doyle and Zeki Fryers. Palace are open to sending some of their fringe players out on loan, including Paddy McCarthy and Peter Rammage, but Warnock says he is happy with the balance of his squad. “We were looking for players that weren’t going to disrupt anything already here because the dressing room is probably the most important thing,” he said. “I’m just looking forward to the game now and seeing how we play and it’ll be nice with the crowd – Selhurst Park is a very special place. “I’m sure Burnley will be looking at this game as a winnable game and we’ll be the same.” Burnley’s Sean Dyche is grateful for the admiration Warnock has shown him during his time as a manager, but insists there will be no “love-in” when two winless sides meet. Warnock revealed last season that he voted for Dyche to be the LMA Manager of the Year – over the likes of Pulis and Brendan Rodgers – for his efforts in guiding the unfancied Clarets into the Premier League. The 65-year-old had also called to offer support to Dyche during the lowest ebb of his fledging career when he was sacked by Watford in the summer of 2012. But while there is clearly a mutual respect between the two men who will line up in opposite dugouts at Selhurst Park this weekend, the need for a first top-flight win of the season will be Dyche’s sole focus. “He’s someone who has shown me an awful lot of respect,” Dyche said of Warnock. “I know him a little bit and he’s always spoken well of myself as a young manager and I do thank him for that because his record speaks for itself at the varying clubs he’s had. “I thought he had chosen the time to say ‘no, that’s it, I’ll go and enjoy the family’ – but he’s obviously got the bug again which happens in football. It’s a great game, that’s why we all love it, and he certainly loves it. “Make no mistake, there will be no love-in when the whistle blows with Neil; he wants his team to perform and so do I.” Dyche has the chance to blood his three deadline day signings in this fixture after George Boyd, Nathaniel Chalobah and Michael Keane all arrived at Turf Moor to swell one of the thinnest squads in the entire division. Providing adequate competition for places was always going to be a challenge for the Clarets following a season in which they rarely changed their line-up from week to week, but Dyche is happy that nobody can now be assured of a starting berth. “We are happy with the business we’ve done,” added Dyche. “It rounds the group off in a nice way. We’ve got demand more or less all over the pitch, there’s no safety net for players wondering about their shirt and we wanted that. “It is hard for clubs like ourselves because we can’t carry vast squads, and we probably wouldn’t wish to, but when the window shuts, it is shut. There’s no loans or anything like that so it means you do have to have a deeper squad.” Danny Ings, who joined Chalobah and Keane in the England Under-21 squad, is considered fine following a bout of illness so fellow striker Sam Vokes (knee) is expected to be Burnley’s only absentee at Selhurst Park. “I do feel it’s the right club for me and I do feel like I owe a little bit to the fans,” Warnock said. “The fans know how it was when we were in administration – it was very difficult to keep the boat rolling.” He added: “When I came back with QPR I thought I’d get a bit of stick. “It was probably the most emotional day I’ve ever had in my life because the majority of the ground was behind me. “It was a fabulous day for me so it’s nice to get the opportunity now, when it’s a bit hectic again, to try to steady the ship.” Pulis was named the Barclays Premier League manager of the season after leading Palace to 11th place in the table and the players were disappointed with his exit 48 hours before the start of the campaign. Warnock, however, insists there has been no bitterness towards him and has backed his players to prove the doubters wrong. “I think they had a great time with Tony,” Warnock said. Warnock left Selhurst Park for QPR in March 2010 after Palace had been put into administration and the club was fraught with financial problems. He returned to the Eagles a fortnight ago after Tony Pulis’ shock departure and Warnock admits he wants to pay the fans back for the loyalty they have shown him. Press Association