Apple’s Capital Spending to Rise to $11 Billion for Fiscal 2014

Apple Inc. (AAPL) plans to increase spending on manufacturing equipment, product testing and retail stores by 57 percent in fiscal 2014 as it ramps up the output of iPhones, iPads and potential new products.

Capital expenditures will jump to $11 billion in the current year, which ends in September 2014, from $7 billion last year, Apple said yesterday in a regulatory filing. About $550 million of the spending will go toward retail operations, including the opening of 30 new stores and remodeling 20 others.

The higher spending suggests Apple may exceed some analysts’ sales estimates in 2014 amid strong demand for updated versions of the iPhone and iPad, according to Ben Reitzes, an analyst at Barclays Plc. Revenue growth may top 8 percent this year, he wrote in a note. That would indicate more than $184.6 billion in sales, compared with $170.9 billion last year.

Apple has been known to spend on customized equipment and tools needed to add new features to its products. In one example reported in Bloomberg Businessweek in 2011, Apple used lasers to make a green light illuminate through its Mac computers’ aluminum case to indicate when the camera is on.

In recent years, the company’s capital expenditures have provided a window into how many iPhones and iPads it will sell, according to Horace Dediu, who has studied the trend on his market-analysis website, Asymco.com. If the pattern holds, Apple will sell 250 million to 285 million iPhones, iPads and iPod Touches for the year, according to Dediu.

New equipment also may be used for unreleased products. Earlier this week, Apple Chief Executive Officer Tim Cook said the company is working on new releases in technology categories where it doesn’t yet compete.

Capital spending is separate from research and development costs, which Apple said were $4.5 billion last year, up from $3.4 billion in 2012 and $2.4 billion in 2011.

In the filing, Apple also said it had 80,300 full-time employees as of Sept. 28, with almost 43,000 of those in retail. The company had 72,800 full-time employees a year earlier.

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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