Green Apple all Part of the Profit Pie
Richard is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Apple’s (NASDAQ: AAPL) products are flying off the shelves, stylish, innovative, simple, and most importantly, COOL.
After a year abroad, I came back to meet an old and supremely tech illiterate friend, a man whom I basically taught from scratch how to use a computer a couple years ago. He approaches me as I'm typing away on my PC, “I see you still don’t own a real computer,” he states, like a physician breaking news to a patient that he has cancer.
If an Apple a day keeps the doctor away, my friend would be immortal. After starting out on PCs, Apple Man owns every product they've produced in the last few years, and thinks himself a tech guru ever since he figured out how to share a picture on Facebook from his iPhone.
First, my hat is off to Apple's design and marketing departments. They've been able to cultivate a well deserved best in show reputation, and with it command the upper end of the market, and the swollen profit margins that accompany.
How are they going to protect that market, its fanatical fan base, and add to it?
Well, first and foremost, the quality and ingenuity of their products must continue to impress. Steve Jobs was the tech version of Albert Pujols, except Jobs hit a home run nearly every at bat. As long as Apple has a few more of Steve's bullets in their chamber, I think this is a reasonably safe bet for the next couple years.
So, what could possibly be a drag on the world's most valuable brand? Color, specifically the lack of a green hue.
Apple has historically scored extremely low with environmental groups such as Greenpeace, based both on suppliers, primarily in China, who dirty the world in the name of maximizing their profits, as well as Apple's own use of coal and nuclear based utilities for energy here in the United States to power energy sucking data centers.
A couple years ago, Steve Jobs actually wrote about the world's perception that Apple wasn't considered green promising that they were ahead of the curve, and headed even further in this direction.
I learned to never doubt the man in the black turtleneck, but nevertheless, the perception of environmental disregard hangs like deep haze over the company, and coupled with their recent labor issues in China (exposed by The New York Times,) makes the brand a little less lustrous to the Whole Foods crowd, who have the money to buy organic.
So recently Apple has announced that they are building the largest private solar farm in the world to provide energy for a massive data center to be used for the iCloud in North Carolina. Greenpeace has stated that Apple is merely green-washing their image, as they estimate only 10% of the energy the iCloud will consume will be generated from renewable sources.
Nevertheless, when we are talking about the world's biggest solar farm, that doesn't come cheap. That wins points with this Whole Fooder. It makes me look at the company in a green light -- as in opening my wallet to go start buying their products.
As the price of solar and other green technologies continue to drop, other companies will realize the additional cost of using a greater percentage of their energy consumption from renewable sources is more than offset by the goodwill and free press (such as this column) that it engenders.
Greenwash or not, Apple is changing my perception of it, and once again playing leader. This is the type of company you want to buy. Apple's not even an expensive stock, trading at 15 times earnings with a boat load of cash, (with $100 billion, it's actually more like an aircraft carrier).
I've held off on purchasing the majority of Apple's products, but if they keep-up such efforts, they'll gain many new customers, protecting and adding value to their brand by greening it. Heck, I might even be forced to buy "a real computer."
Recommendation: Spruce up your portfolio by adding a few shares of Apple.
Please feel free to look at more of my columns at Rich Makes You Rich. com and enjoy.
Added info below on environmental reports to provide a look at how Apple compares on the green front
Greenpeace Clean Power Report Card
Note- here some of the highlights of Greenpeace's environmental ratings for three large cloud players, including Apple.
- The $1 Billion Apple iData Center in North Carolina, expected to open this spring, will consume as much as 100 MW of electricity, equivalent to the electricity usage of approximately 80,000 homes in the U.S. or over a quarter million in the E.U. The surrounding energy grid has less than 5 percent clean energy, with the remaining 95 percent coming from dirty, dangerous sources like coal and nuclear.
- Both Yahoo! (NASDAQ: YHOO) and Google (NASDAQ: GOOG) seem to understand the importance of a renewable energy supply, with Yahoo! siting most of its data centers near sources of renewable energy, and Google is directly signing power purchasing agreements for renewable energy and investing in solar and wind energy projects in many US states as well as Germany. Their models should be employed and improved upon by other Internet ("cloud computing") companies.
Motley Fool newsletter services recommend Apple, Amazon.com, Google and Yahoo!. The Motley Fool owns shares of Apple, Amazon.com, Google and Yahoo!. funspirit has no positions in the stocks mentioned above but intends to go long AAPL. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.