Apple (AAPL) Dominates Without Doing This One Thing Most Companies Do
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There's no question that Apple (Nasdaq: AAPL) is killing it. Sales of the iPhone and iPad are as hot as ever, while MacBooks continue to carve out their share of the PC and enterprise computing business. Earnings are off the charts and today's stock price of $630 puts Apple just a few billion short of a $600 billion market cap.
Here's the thing: Apple has done this all without sports advertising. From Citi Field in New York to AT&T (NYSE: T) Park in San Fran, from a broad Aon Corp. (NYSE: AON) logo across a Manchester United jersey to the highly decorated NASCAR get-ups, Apple has eschewed the urge. And its working.
Some companies like Nike (NYSE: NKE) and Coca-Cola (NYSE: KO) have been advertising for years and to much success. In fact, both have become extremely proficient at evoking emotions through their spots. Even Budweiser -- of Anheuser-Busch InBev (NYSE: BUD) -- has seen success from its ads, which are mostly built on comedy and peppered with scantily clad co-eds.
Not to say that Apple doesn't spend on advertising; last quarter it reported a 37 percent increase in SG&A to $2.61 billion. Looking at that by itself, you'd have to ask yourself what Apple was thinking in increasing spending that much. Add to that about $758 million in R&D spending and the total for the period came in at $3.36 billion. But, then you look at another key metric: total operating expenses as a percentage of overall revenue dropped from 9.2 percent for Apple's first-quarter of 2011 to just 7.3 percent last quarter.
That's pretty huge and that means Apple could afford to spend much more on advertising. Who knows, maybe Apple will one day see their stock and sales become stagnant and turn to broader forms of advertisement.
Until then, analysts are continuing to be bullish on Apple, with recent 12-month price targets at or above $1000.
Here's the thing: Apple has done this all without sports advertising. From Citi Field in New York to AT&T (NYSE: T) Park in San Fran, from a broad Aon Corp. (NYSE: AON) logo across a Manchester United jersey to the highly decorated NASCAR get-ups, Apple has eschewed the urge. And its working.
Some companies like Nike (NYSE: NKE) and Coca-Cola (NYSE: KO) have been advertising for years and to much success. In fact, both have become extremely proficient at evoking emotions through their spots. Even Budweiser -- of Anheuser-Busch InBev (NYSE: BUD) -- has seen success from its ads, which are mostly built on comedy and peppered with scantily clad co-eds.
Not to say that Apple doesn't spend on advertising; last quarter it reported a 37 percent increase in SG&A to $2.61 billion. Looking at that by itself, you'd have to ask yourself what Apple was thinking in increasing spending that much. Add to that about $758 million in R&D spending and the total for the period came in at $3.36 billion. But, then you look at another key metric: total operating expenses as a percentage of overall revenue dropped from 9.2 percent for Apple's first-quarter of 2011 to just 7.3 percent last quarter.
That's pretty huge and that means Apple could afford to spend much more on advertising. Who knows, maybe Apple will one day see their stock and sales become stagnant and turn to broader forms of advertisement.
Until then, analysts are continuing to be bullish on Apple, with recent 12-month price targets at or above $1000.
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