Apple R&D Beating The Young And The Mighty

Aug.13.12 | About: Apple Inc. (AAPL)

Apple (NASDAQ:AAPL) innovated circles around most other companies, transforming the handset with the iPhone, the computer business with the iPad, and the music industry with the iPod. With so many knock-out products, you'd think Apple spent a fortune on R&D. That's not the case. Witness how much less Apple spent on R&D budgets than Cisco (NASDAQ:CSCO), Intel (NASDAQ:INTC) and Microsoft (NASDAQ:MSFT).

AAPL R&D Expense Chart

Apple's money has been well-spent: Earnings growth exceeds that of Microsoft, Cisco, and Intel.

AAPL Earnings Per Share TTM Chart

Apple is ramping up its R&D. Anyone doubting Apple's intentions should look at the graph below. The iProduct company is making a much bigger bet on product development. Apple has increased its research funding over 655% over the last decade, far more quickly than Cisco, Intel or Microsoft.

AAPL R&D Expense Chart

Despite the dramatic increase, Apple spends only 2% of its revenue on R&D under Microsoft (13%), Cisco (12%), and Intel (17%).

Apple is increasing its R&D faster than most companies.

Even young companies don't accelerate their R&D that fast. Intuitive Surgical (NASDAQ:ISRG), Mako Surgical (NASDAQ:MAKO), ARM Holdings (NASDAQ:ARMH) and Riverbed Technology (NASDAQ:RVBD) have increased their R&D budgets much faster than most other companies - yet they don't come close to Apple's R&D push.

AAPL R&D Expense Chart

Apple's earnings outpaced those of Intuitive Surgical, Mako, ARM Holdings, and Riverbed.

AAPL Earnings Per Share TTM Chart

Apple has a very efficient R&D program. The strong R&D commitment suggests more blockbuster products are in the wings. Apple's roll-out of great products is nowhere near done.

Disclosure: I am long AAPL, INTC.

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