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Summary:

Apple doesn’t willingly telegraph its plans, but thanks to the filing of its 10-K, we get a peek into where the company plans to invest. Based on the reported capital expenditures for 2012, it looks like it’s doubling down on its retail stores and cloud infrastructure.

Apple Store Sanlitun in Beijing, China.

Apple is doubling down on its retail and cloud operations. The company says it will spend about $8 billion in capital expenditures in 2012, which is almost twice as much as the $3.4 billion it spent during fiscal year 2011, which ended Sept. 30. Apple doesn’t willingly telegraph its plans, but thanks to its annual filing with the Securities and Exchange Commission, we get a peek into where the company plans to invest its money next year.

The increase was pointed out on Monday by Analyst Maynard Um of UBS in a research note.

A chunk of that new investment will, no surprise, go toward its retail operations. The company will spend $900 million on its stores in 2012, up from $614 million this past year.

Apple Stores have been growing rapidly, particularly outside the U.S., and especially in the greater China region. Apple opened 30 new stores in the  most recent quarter alone, to bring the total to 357. CFO Peter Oppenheimer noted on Apple’s earnings call two weeks ago that the company would be opening 40 new stores in 2012, and “75 percent of those will be outside the U.S.” He also noted that Apple would be “replacing” some of the company’s higher-volume stores here in the U.S.

The rest of the $7.1 billion in extra capital expenditures is listed as “other.” From the 10-K:

The Company anticipates utilizing approximately $8.0 billion for capital expenditures during 2012, including approximately $900 million for retail store facilities and approximately $7.1 billion for product tooling and manufacturing process equipment, and corporate facilities and infrastructure, including information systems hardware, software and enhancements.

So some of the money is going to be spent on building the company’s new “spaceship” headquarters in Cupertino, Calif. and equipment for its manufacturers, but IT systems hardware, software and “enhancements” is almost certainly pointing to the company’s ongoing data center project and, by definition, its cloud infrastructure. (See also Horace Dediu’s examination of the data and how capex can be used to foreshadow iOS device volume production.)

Apple is building out a gigantic data center in North Carolina, and perhaps even a solar farm to power it — if reports are correct. That data center will support its cloud operations, and could increase the capacity and eventually lower costs for the maintenance of Apple’s iCloud service. Apple would never be accused of  jumping on the cloud bandwagon early, but spending billions more underlines the fact that the company has much bigger plans for iCloud.

  1. Here’s a good analysis of that spending by Horace Dediu (Asymco) — The tipping hand of production: How Apple foreshadows iOS volumes – http://bit.ly/ueGirq

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    1. Thanks, I also linked to it in my story.

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      1. Was that always there? If it was, can’t believe I missed it :-(

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  2. Anyone else see a minor flaw in the math?

    “The company says it will spend about $8 billion in capital expenditures in 2012, which is almost twice as much as the $3.4 billion it spent during fiscal year 2011, which ended Sept. 30.”

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    1. This.

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    2. “about” “amost twice”

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  3. Isaac Borowiec Monday, October 31, 2011

    They will probably be ubiquitous to the every household in 10 years

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  4. Based on our (admittedly brief, but nonetheless disappointing) experience: if Apple has big plans for the cloud, then Apple should make significant effort toward cleaning up its infantile iCloud software architecture

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  5. Michael Herrinton Monday, October 31, 2011

    Erica, 3.4 x 2 = 6.8. 8 is larger than 6.8, and so 8 is MORE than two times 3.4
    -Mike Herrinton

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  6. Why assume the growth in capex outside retail is iCloud? It cloud be tooling for a major new product category – thr rumored TV perhaps.

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