Did Apple spend over $5 billion on acquiring intangible assets in 2012? 02 Nov 12
Yesterday Apple filed its Form 10-K for the financial year 2012 with the SEC. A couple of snippets caught my eye. First of all on R&D we are informed that:
R&D expense increased $952 million or 39% in 2012 compared to 2011 and $647 million or 36% in 2011 compared to 2010. The growth in R&D expense was driven by an increase in headcount and related expenses to support expanded R&D activities. Although total R&D expense increased 39% and 36% in 2012 and 2011, respectively, it remained fairly consistent as a percentage of net sales.
The amount spent on R&D in FY2012 is given as $3.381 billion. In 2011 it was $2.429 billion. Then moving onto the acquisition of intangible assets, it is stated that:
The Company’s acquired intangible assets with definite lives primarily consist of patents and licenses and are amortized over periods typically from three to seven years. The following table summarizes the components of gross and net intangible asset balances as of September 29, 2012 and September 24, 2011 (in millions).
The total allocated for acquired intangibles in FY 2012 is given as $5.266 billion. In 2011, the figure was $3.563 billion.
Not being an accountant I cannot tell you precisely what these figures mean, but on the face of it they seem to indicate that once again in 2012 Apple spent more on acquiring IP than it did on in-house R&D – even though spending on that rose significantly. Much of the 2011 acquisition figure might be explained away by the Nortel purchase, which cost Apple $2.6 billion; but off the top of my head I cannot remember any big announcements about IP-based transactions from Apple over this last year. Perhaps they have done quite a few big ones which they've managed to keep secret, or maybe I have missed some or, probably most likely, I do not know how to read a 10-K properly! But I thought I'd throw it out there anyway as $3.5 billion to $5,2 billion is quite a leap.
It was recently observed by the New York Times that in 2011 Apple and Google spent more on patents than R&D in 2011. Is it possible that Apple has done it again in 2012? Of course, as we observed, acquiring patents - either via straight purchase or licence - is investing in R&D, it's just R&D that has been done elsewhere.
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