John Paczkowski

Recent Posts by John Paczkowski

$1.9 Billion in Capex? What’s Apple Planning?

157880064_mSo6o-Th-2Here’s an interesting data point from Apple’s recent 10-K filing with the U.S. Securities and Exchange Commission: The company has budgeted $1.9 billion in capital expenditures for fiscal 2010. That’s 70 percent more than the $1.1 billion it spent in 2009. What does Apple (AAPL) plan to do with those additional funds?

According to its 10-K, the company “anticipates utilizing approximately $1.9 billion for capital asset purchases during 2010, including approximately $400 million for Retail facilities and approximately $1.5 billion for corporate facilities, infrastructure, and product tooling and manufacturing process equipment.”

That’s a wide range of potential applications–wider, in fact, than it has been in years past, as Caris & Company analyst Robert Cihra notes. “Interestingly…this year’s 10K added wording for purchases of ‘product tooling and manufacturing process equipment’ which could imply Apple reversing course to actually build certain products/components in-house,” Cihra said in a note to clients today. “Beyond that are signals of Apple investing in massive new data center capacity (e.g., North Carolina) that could support anything from iTunes/iPhone Apps through new ‘cloud computing.'”

Sounds plausible. After all, there’s a lot a company like Apple could do with an additional $1.9 billion in capital expenditures. Certainly, an iTunes TV subscription service would require some investment. A tablet/slate device might as well. Whether that’s where this money is headed–if it’s headed anywhere at all–remains to be seen. Who knows, perhaps Apple intends to blow it all on CEO Steve Jobs’ dream of the “ultimate computer factory.”

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work