Is Apple’s Second Campus Really Necessary?

Apple Computer Chief Executive, Steve Jobs, said that Apple Computer is planning to build a new, 50-acre campus near its present headquarters in Cupertino, California. “What’s happened at Apple is that our business has basically tripled in the last five or six years,” Jobs said on Tuesday evening at a Cupertino city council meeting. The meeting was recorded and viewable as an archived Webcast, according to Reuters.

He said the company “has gone from $6 billion in sales to $20 billion in sales.” Analysts expect Apple to post $20.3 billion in revenue for its fiscal 2006 ending in September, according to Reuters Estimates.

Jobs said it would likely take three to four years to design and build the 50 acre campus that could accommodate 3,000 to 3,500 employees.
An Apple representative, who was present at the meeting, confirmed the company’s plans to build the second campus according to the Reuters report.
“We’re pretty thrilled,” Jobs told the city council members. “Since we’re your largest taxpayer, I thought you might be happy for us.”
Jobs said that, in addition to its current Cupertino headquarters, Apple employees are spread among 30 other buildings.

“We’ve rented every scrap of building we could find in Cupertino,” Jobs said, who noted that Apple had recently purchased the nine separate, contiguous parcels. 
Apple plans to raze the buildings now on the property and design and build new ones, Jobs said. The new campus will be about a mile away from its current headquarters. Jobs explained that Apple had gone ahead and acquired 9 separate properties located next to each other along Interstate 280 near Pruneridge Rd.—across the street from the 100-acre HP parcel.

“We’ll probably get larger still,” Jobs said, referring to the company’s overall business and work force.
According to a Vnunet report, the success of the company’s iPod is forcing the housing for 3,500 new employees.

“We’ve rented every scrap of building that we could find in Cupertino. They just keep getting further away from the campus. The whole situation is inefficient and frustrating to people,” Jobs said at the city council meeting Tuesday night.

“After looking at a lot of things, we found something in Cupertino that was a possibility… It was more expensive, a lot more expensive,” Jobs told council members.

Apple originally was looking to relocate to a different city. Land also is cheaper in other areas, but the company eventually decided against moving away, according to the vnunet.com report.

John Boudreau of Mercury News reported that Apple’s plans for growth became public just before the Q2 earnings were announced. “After a record-breaking holiday season, Apple settled in with a more modest quarter during which it recorded profits of 47 cents a share, or $410 million, on revenue of $4.36 billion. The Cupertino company said it sold 8.5 million iPods during the quarter that ended April 1, down from the 14 million it sold during the period that ended in December. It shipped more than one million Macintosh computers.”
According to Boudreau, Apple reported a profit of 34 cents a share, or $290 million, on revenue of $3.2 billion for the 2005 Q2.

“We’ve generated over $10 billion in revenue and almost $1 billion in earnings in the first half of fiscal 2006,” Apple Chief Executive Steve Jobs said in a statement. “Our transition to Intel processors is going very well, and our music business just experienced another quarter of outstanding growth.”
Analysts never tire of talking about the iPod and its potential to keep gains coming for Apple. Boudreau reported Apple gained a bit more share in the U.S. digital music player market in March, “climbing from 76.9 percent in February to 77.6… according to researcher NPD Group. In February, Apple unveiled a lower-cost, 1-gigabyte $149 iPod nano and slashed the price of its iPod shuffle to $69 for the 512-megabyte model and $99 for the 1 GB version.”

“The one thing that has impressed me more than anything else about how they have managed the iPod is how precise they have been in placing their products in a price-value range,” said Stephen Baker, NPD director of industry analysis. The company, he added, must be vigilant to price-sensitive consumers as the high-end market becomes completely tapped.