FORTUNE — There was a frisson of excitement among Apple (AAPL) analysts Wednesday when they discovered in the company’s annual 10-K report that capital expenditures for fiscal 2014 are forecast to be $11 billion, $4 billion more than than the $7 billion Apple spent in fiscal 2013.
Apple’s CapEx — its spending on product tooling, manufacturing process equipment, corporate facilities, infrastructure and retail stores — has been closely watched ever since Asymco‘s Horace Dediu showed that a bump in Apple’s CapEx in one quarter corresponded quite nicely to a bump in iOS device sales the next quarter. (See, for example, Apple’s next quantum leap.)
That’s why in her report to clients Thursday, Morgan Stanley’s Katy Huberty described the “robust” CapEx guidance for 2014 as an “investment in growth.” (See her Exhibit 1, attached.) The CapEx increase is even more robust, she points out, when you subtract the portion that Apple has earmarked for building new Apple stores.
“Non-cash capital expenditure forecast for FY14 is $11.0B, up 57% from $7B capital expenditure in FY13. $10.5B of the total capital expenditure guidance is for non-retail store facilities, up 62% from $6.5B [in FY13].”
If a 62% increase in CapEx in one year sounds too good to be true — especially for investors who expect it to lead to a comparable increase in iOS device sales — that’s because it is too good to be true.
- Apple’s CapEx spending has been bouncing around from year to year, but its CapEx forecasts have been growing fairly steadily, as the attached Asymco chart shows. Spending was higher than expected in fiscal 2012 and lower in 2013. In Huberty’s chart she’s comparing 2014’s forecast with 2013’s spending — apples with oranges. The increase in CapEx guidance was 10%, not $57%.
- The $3 billion shortfall in CapEx spending in 2013 is easily explained: Apple had originally planned to break ground on its new $5 billion headquarters — the one that looks like a spaceship — in 2013. Delays have pushed construction into 2014.
Working from the increase in Apple’s CapEx forecasts, rather than its spending, Asymco’s Dediu took a crack at estimating the number of iOS devices Apple might sell in 2014.
“If the relationship holds into next year,” he wrote in Wednesday’s post, “then the iOS unit shipments [iPhones, iPads and iPod touches] should be between 250 million and 285 million.”
See Asymco: How many iOS devices will be produced in the next 12 months?
UPDATE: I asked Dediu whether the delayed spaceship could account for the entire $3 billion CapEx shortfall in fiscal 2013. His reply:
“I don’t think so. The cost of the building will be around $1 billion/yr though I don’t think that will be completely capitalized. Bear in mind that the entire building cost is less than the spending for the tooling ramp up of one iPhone model. Even without a campus Apple spends the equivalent of one Nimitz-class aircraft carrier every six months (which the Navy takes four years to build).” (emphasis mine)
