Apple Inc (AAPL): Did It Post a $2B Bailout of Sharp?

Apple Inc. (NASDAQ:AAPL) may have provided some assistance to another company. It takes a little forensic accounting to figure it out, because it isn’t obvious in the company’s quarterly earnings report, but an analyst is coming to that conclusion after looking at the actual numbers on the earnings report that seemed to be off from the forecast numbers before the release. Investors in Apple Inc (AAPL) stock, like billionaire David Tepper of Appaloosa Management LP, might be interested in getting a clue as to where the discrepancy lies and how it might affect the company in the long term.

Apple Inc. (NASDAQ:AAPL)

Asymco analyst Horace Dediu looked over the numbers and found a discrepancy. He found that Apple Inc (NASDAQ:AAPL) posted expenses in 2012 that were $2.3 billion higher than what was forecast, and cash outlays for capital expenditures was $2 billion lower than the expenses, which signified that the expense did not come from cash. He postulated that this money went toward Sharp, which has been an important partner for Apple Inc (AAPL) display screens, and Sharp has been having some financial struggles of late.

Dediu wrote: “Circumstantial evidence points to the asset being production equipment (or even a whole plant) previously owned by Sharp. Sharp is a key supplier of screens to Apple but is also in financial distress. … My guess is that these attempts to shore up Sharp are directed by Apple to ensure both continuity of supply and a balanced supplier base (offsetting Samsung, another supplier.) If Sharp were to enter into some form of bankruptcy, the key plant(s) used in producing screens for Apple might be “up for grabs” by creditors and they might be taken off-line, jeopardizing Apple’s production capacity, irrespective of contractual obligations.”

He explained that he believes that Apple Inc (NASDAQ:AAPL) has worked a deal with Sharp to place the production plant on its own books as part of an asset swap in order to keep Sharp afloat. Whether this means Apple will invest more in Sharp and rely on the firm more than on Samsung for components will remain to be seen.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!