Apple's $5 Billion Mistakehttp://www.fool.com/investing/general/2013/04/05/apples-5-billion-mistake.aspx Tim Brugger
April 5, 2013
With its stock price down 35% over the past six months, and concerns about a lack of innovation and growing competition, Apple (NASDAQ: AAPL) doesn't need the PR nightmare that its new uber campus will likely become. According to an "anonymous insider," who spoke with Businessweek, Steve Jobs' dream of "building the best office building in the world" will become a reality -- for what's estimated to be a staggering $5 billion price tag. The money itself isn't the problem, of course; Apple has that in its petty cash drawer. But the timing of the project? That's another matter altogether.
The new digs
Initially, Jobs and Apple were working with about a $3 billion budget. Now, with projected costs ballooning to $5 billion, Jobs' dream campus would cost about three times that of your typical downtown commercial high-rise building on a per square foot basis. According to the aforementioned "insiders," part of the delay in breaking ground -- Jobs had hoped for a 2012 start date -- lies in Apple CEO Tim Cook and his team's attempts to shave $1 billion in costs.
Cook's found himself between a rock and a hard place. Altering Jobs' vision for the new campus would enrage Apple fans, who still revere Jobs as an iconic, larger-than-life figure. But proceeding with a $5 billion project when shareholders are sitting on massive losses, and big hitters like David Einhorn are screaming for Apple to share some of its $137 billion in cash, has the makings of a publicity disaster.
What should really concern investors
As for Microsoft (NASDAQ: MSFT) and Google (NASDAQ: GOOG), both have entered the mobile hardware side of the market, but neither are hamstrung by having to build their own devices to expand offerings as Apple is with its iOS, so bringing the "next great thing" to market takes nothing more than an OS licensing deal. Microsoft recently released its own Surface Pro and, while it's expensive, hopes are high. Microsoft's RT tablet is another story, as poor sales by its RT partners have some discounting RT by as much as $220. Google's expected to roll out the next generation of its Nexus 7 in July, directly targeti