A few days ago we wrote about Apple, Inc's massive size. How its market cap was bigger than the GDPs of all but seven countries! Now the site Chartr has a cool...chart (what else?!) showing just how Apple rakes in $81 billion of gross profits per quarter ($325 billion annualized)!!
The biggest source of Apple's revenue is, of course, iPhones. No surprise there. They have been the engine of Apple's money machine for over a decade:
All of Apple's products combined generate about $64 billion of sales per quarter with a healthy profit margin of 36%. At that scale, it's just amazing. But what surprised us and really excites investors is the company's Services Revenue (Apple Music, the App Store, Apple Pay, Apple TV, etc.). It's a lot bigger than we excepted--generating more revenue than Mac and iPad sales combined. Subscription revenues tend to be more predictable and stickier than product sales (have you ever cancelled anything once you sign-up?) and so are valued more highly by Wall Street, who apply a bigger multiple to such revenue streams. On top of that gross margins on Apple's services are a whopping 70%, nearly double its products margins...So why doesn't Apple buy a few studios or just Netflix?
Philip Morris International (PMI), is one of the world’s leading international tobacco companies and maker of the iconic Marlboro brand. So, it was a bit of a surprise this week to hear new CEO Jacek Olczak calling on the U.K. to ban the sale of all cigarettes within 10 years:
"Olczak said the company could “see the world without cigarettes … and actually, the sooner it happens, the better it is for everyone.” Cigarettes should be treated like petrol cars, the sale of which is due to be banned from 2030, he said."
Ooh, tell us more...According to Olczak, PMI plans to generate over half of its total net revenue from smoke-free products by 2025 and envisions a tobacco free world! Yay! This is some next-level ESG....or is it? Okay, so a few things. First, PMI is not entirely getting out of the tobacco business. It will offer vaping products, saying on its website that "smoke-free products" are not "risk free" but "are a far better choice than cigarette smoking." Second, it is good business. The economics of smoking is shifting away from developed markets, such as Western Europe, where the bulk of PMI's revenue are currently generated to more loosely regulated emerging markets. Moreover, the U.K. had already floated a plan to become a "smoke-free by 2030," noting smoking killed more people in Britain in 2020 than Covid-19. So, PMI is just being pragmatic in the face of changing to consumer habits.
But then there was also this: The company recently launched a £1bn takeover bid for Vectura, a British pharmacy company that makes respiratory inhalers and related medicines. Not surprisingly, this has upset anti-smoking campaigners who argue, not unreasonably, that "tobacco companies are positioning themselves as part of the solution to a smoke-free world, while continuing to aggressively sell and promote lethal cigarettes." Hmmm, so PMI plans to profit from selling inhalers to millions of patients who got (and are still getting) lung disease from using their products. That is good business, I guess?
You also have to say this about tobacco, despite attempts to shame it out of business in many Western countries, the industry has been remarkably resilient. Even though retail sales volume have declined, sales value has continued to grow (click to enlarge chart below).
To quote John Oliver "it's an aging product that's decreasing in popularity and yet somehow can't stop making money...the agricultural equivalent of U2!" Harsh, very harsh...U2 is great, John! But he does make an important point(s). Ultimately, all the regulations in the U.S. and Europe push tobacco companies to market their products even more aggressively in developing markets. According to tobaccofreekids.org, 80% of smokers today live in low and middle income countries (click charts to enlarge). At current trends they estimate approximately 1 billion people will die from tobacco use this century. That's grim...but let John, circa 2015, explain:
Apple is the biggest company in the world with a market capitalization with $2.4 trillion, as of yesterday. That's a lot of company. How much is a couple of trillion of dollars? This chart from the Visual Capitalist puts Apple's size into context:
In fact, Apple's market cap is bigger than the economies of all but seven countries, according to the IMF:
And it's not just the company's market cap that's hard to contextualize. The company just generates so much cash...it's a veritable money machine. As of Q1 2021, Apple was sitting on ~$200bn of cash and bonds!! Again, how big is that? How many companies can Apple buy?... Umm, Apple's cash pile can be used to buy 460 of the S&P 500 companies!
All the more reason this story about Elon demanding to be Apple CEO in return for receiving rescue financing to save Telsa is just so outrageous, but also just so "on brand" for Elon.
Everything seems to be a trade-off between the immediate and the long-term. Low interest rates? Necessary to keep the economy from falling into a recession today...but, on the other hand, long-term low rates mean growing (impossibly large?) liabilities in the future as today's savings can't compound as much. Now the same type of conundrum seems to apply to the pandemic. Masks are life-savers, and we need(ed) them in the billions...but cheap disposable masks are also pretty bad for the environment, each one taking 450 years to degrade as this chart from the always cool Visual Capitalist shows. And so far 1.6 billion of them ended up in the oceans, making "Mask Pollution" a thing.
Of course, if we don't save society today, there won't be a future to protect tomorrow...so it's not really a choice.
Forbes wants you remember how wonderful money is and who has the most of it, all the time. Famous for its annual Forbes 400 list of richest Americans, the business magazine now provides daily updates on the changes to the wealth of the 0.0001%. Yes, the "Real-Time Billionaire's List" is a real thing that is updated every day at 5p based on the prior trading day's action.
So, Jeff Bezos had a pretty, pretty, pretty good Wed up $2.7B, Elon Musk not so much, down $1.2B. Regardless, these numbers are mind-boggling...basically Monopoly money to the rest of us.
Was seeing space rival and the richest man in the world, Jeff Bezos, rocket into orbit hard on Elon Musk?...Is the Sahara dry?...Is Tom Brady competitive? Musk tried to keep it classy, tweeting "Congrats!" to the Blue Origin Tuesday afternoon after Bezos successfully returned from space.
But then again, the shape of the New Shepard rocket is "interesting," and an endless source of sophomoric humor. Let's face it, looks like a giant dick; pretty sure when Jeff first saw the model he thought the same.
So when a adult toy company tried to cash-in on the buzz by introducing a line of rocket-themed accoutrements, Elon was only happy to provide his measured thoughts...
Yup, this is how corporate rivalry now finds expression, with the world's third richest man trolling the richest over the shape of his rocket. Oh, Elon...
Even though many of us are still working from home and days of the week can sometimes meld into one another, the weekend still seems to (and perhaps more so, because of it) fly by.
Well science says there's a simple hack to slow down time or at least our perception of it: avoid a routine. According to this article from the Cut, if you want to make your days off to pass more slowly, the key "is to seek out newness— new settings, new activities." As Stanford neuroscientist David Eagleman explains, “when you go and experience something novel, it seems to have lasted longer...because you’re more focused on collecting the unfamiliar information into a memory. It’s why time seems to fly by so much faster as an adult then it did when you were young...[when] you’re a kid, everything is novel and you’re laying down new memories about it. So when you look back at the end of a childhood summer, it seems to have taken a long time because you remember this and that, this new thing, learning that, experiencing that.”
"The same thing holds when you consider a much smaller stretch of time...a weekend getaway, for example, will seem much longer than a weekend spent at home. A weekend spent at home, if you spend it exploring new neighborhoods or trying new restaurants, will seem longer than one where you hole up in your apartment with a book, [and so on]."
"A caveat, though...this is only true in hindsight...Come Monday, you’ll remember a novelty-packed weekend as feeling like more time. But in the present, you’ll feel like it’s going by too fast — time really does fly when you’re having fun, and it really does seem to crawl when you’re bored." Yup, we how that is; when you have nothing to distract your brain logs every tick of the clock.
So, try new things on the weekend and stick to schedules at the start of the week to make the Mondays and Tuesdays easier.
