Apple now worth more than Google and Microsoft combined [u]

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  • poochpooch Posts: 768member
    more telling is that since they released earnings on 24-jan (15 trading days) the stock has increased ~17% from 420 to the 490s where it is today. an increase of 70 Billion in market cap.
  • digitalclipsdigitalclips Posts: 15,311member
    Quote:
    Originally Posted by tundraboy View Post


    P/E earnings is still low.



    We're just seeing the tip of the iPad iceberg. Post-PC era is true, it's real, it's going to happen, it is happening. And the post-PC era isn't a tablet era, it's an iPad era.



    Enterprise smartphone and tablet market might have reached an inflection point with Halli announcement (even though I hate the guts of that company, but that's immaterial), and today NOAA.



    Macs at 5% (8%?) worldwide share and rising but still a long way to go.



    Throw away all your rules of thumb about investing. Especially those along the lines of "it can't possibly get higher than this". Look at the numbers, look at the market potential out there, then make your best informed estimate.



    The general investing public might have finally capitulated and said yeah, this Apple thing --doesn't look like it's just a fluke.



    And remember, this recession will not go on forever and there will be a recovery eventually.



    Totally concur.
  • mateo999mateo999 Posts: 9member
    Quote:
    Originally Posted by digitalclips View Post


    Why not simply use cash to offset debt in the calculation and add what's left back? In this model had Apple had 400,00B in cash it would be worthless. Or am I missing something lol



    I'm not claiming that the company's cash is worthless. I'm stating that the implied market value of Apple's *operating* assets (excess cash is a non operating asset) is less than that of XOM.



    Obviously if there were two identical companies, except one had $105 per share in cash, you'd value a share of the cash-rich company at a $105 premium to otherwise identical company.



    On a vaguely related note, of the 97B Apple has in cash and investments , $64 remains offshore, and thus cannot be repatriated to the US without paying taxes. So not all of the 97 is available to distribute to shareholders free and clear.



    I hope no one is construing my comments as negative toward the company. Full disclosure, i'm long AAPL and have been since ~85$/share
  • anantksundaramanantksundaram Posts: 16,916member
    Quote:
    Originally Posted by Dr Millmoss View Post


    http://www.npr.org/blogs/money/2012/...-mean-not-much



    Something to consider.



    Nonsense. If I were to sell today, I'd have a lot of extra cash in the bank. As in real money.
  • anantksundaramanantksundaram Posts: 16,916member
    Quote:
    Originally Posted by digitalclips View Post


    2nd condescending put down today......



    Pretty much most of his posts sound like that. Don't take it personally.
  • digitalclipsdigitalclips Posts: 15,311member
    Quote:
    Originally Posted by mateo999 View Post


    I'm not claiming that the company's cash is worthless. I'm stating that the implied market value of Apple's *operating* assets (excess cash is a non operating asset) is less than that of XOM.



    Obviously if there were two identical companies, except one had $105 per share in cash, you'd value a share of the cash-rich company at a $105 premium to otherwise identical company.



    On a vaguely related note, of the 97B Apple has in cash and investments , $64 remains offshore, and thus cannot be repatriated to the US without paying taxes. So not all of the 97 is available to distribute to shareholders free and clear.



    I hope no one is construing my comments as negative toward the company. Full disclosure, i'm long AAPL and have been since ~85$/share



    Ok I see, thanks for clarification.



    Accounting is a kind of 'what would you like the answer to be' game at the end of the day really isn't it?
  • digitalclipsdigitalclips Posts: 15,311member
    Quote:
    Originally Posted by anantksundaram View Post


    Pretty much most of his posts sound like that. Don't take it personally.



    OK thanks



    Seriously, I wasn't upset ... too happy with Apple
  • mateo999mateo999 Posts: 9member
    Quote:
    Originally Posted by anantksundaram View Post


    The most remarkable thing is, Apple's trailing P/E is still only 14x, even at this price. Essentially, the same as that of Walmart! The average for the S&P500 during the last 100 years is 16x!!



    Let's not even talk about Apple's forward P/E.....



    I think it's actually lower, because you should adjust the share price down by the $105 per share it holds in cash and investments. On a cash adjusted PE, its more like 10x p/e
  • digitalclipsdigitalclips Posts: 15,311member
    Quote:
    Originally Posted by mateo999 View Post


    I think it's actually lower, because you should adjust the share price down by the $105 per share it holds in cash and investments. On a cash adjusted PE, its more like 10x p/e



    So if Apple sent all of us that bough AAPL under $100 a very large check to say thanks, on paper they would improve their position?
  • mateo999mateo999 Posts: 9member
    Quote:
    Originally Posted by digitalclips View Post


    So if Apple sent all of us that bough AAPL under $100 a very large check to say thanks, on paper they would improve their position?



    The earnings are generated from the operating assets of the company, not its cash. So by including the value of cash (which should be valued 1:1 to its face value) in the numberator of the P/E ratio, you're wrongfully pushing up the calculated P/E. This is punishing apple's valuation by making it look more expensive than it really is.



    Put it this way... Apple's operating assets earn $40 in EPS, to which you apply a ~10x P/E multiple = $400. Then you add on the $105 in cash, which gets you to around today's stock price. I'm saying the company is currently valued at under 10x p/e, not 14x.
  • dr millmossdr millmoss Posts: 5,403member
    Quote:
    Originally Posted by anantksundaram View Post


    Nonsense. If I were to sell today, I'd have a lot of extra cash in the bank. As in real money.



    Quote:
    Originally Posted by digitalclips View Post


    2nd condescending put down today, I must be doing something right. LOL There is a historical track record of profit taking after a successful launch BTW.



    I never see looking at the DOW or NASDAQ is being all that relevant to AAPL. Of course if the swing is a major catastrophe then yes, but not the day to day swings. Apple even defied the recent recession.



    Did either of you actually read that story? (Too much to ask, I know -- the insults flow so much easier if you don't.)



    The point is, momentary or daily moves even in the broader indexes of the market are not really important. This is also true, if not more so, for individual stocks. You could only read this as a "put down" if you have some kind of persecution issue.
  • island hermitisland hermit Posts: 6,217member
    Quote:
    Originally Posted by digitalclips View Post


    2nd condescending put down today, I must be doing something right. LOL There is a historical track record of profit taking after a successful launch BTW.



    I never see looking at the DOW or NASDAQ is being all that relevant to AAPL. Of course if the swing is a major catastrophe then yes, but not the day to day swings. Apple even defied the recent recession.



    Actually, there is a lot of profit taking happening today.
  • tundraboytundraboy Posts: 1,437member
    Quote:
    Originally Posted by mateo999 View Post


    I'm not claiming that the company's cash is worthless. I'm stating that the implied market value of Apple's *operating* assets (excess cash is a non operating asset) is less than that of XOM.



    Obviously if there were two identical companies, except one had $105 per share in cash, you'd value a share of the cash-rich company at a $105 premium to otherwise identical company.



    On a vaguely related note, of the 97B Apple has in cash and investments , $64 remains offshore, and thus cannot be repatriated to the US without paying taxes. So not all of the 97 is available to distribute to shareholders free and clear.



    I hope no one is construing my comments as negative toward the company. Full disclosure, i'm long AAPL and have been since ~85$/share



    Ha ha, I've been long since $37. I envy the people who got in at $10 about a year before me. But I was still a sorry ass Windows user back then.
  • island hermitisland hermit Posts: 6,217member
    Quote:
    Originally Posted by Dr Millmoss View Post


    Did either of you actually read that story? (Too much to ask, I know -- the insults flow so much easier if you don't.)



    The point is, momentary or daily moves even in the broader indexes of the market are not really important. This is also true, if not more so, for individual stocks. You could only read this as a "put down" if you have some kind of persecution issue.



    I read the DOW only to see if the market is ready for an upswing or a downswing based on a "at least 1 year" chart. It helps to better gauge the movement of individual stocks.



    On a day to day basis, though, watching the DOW would just drive me crazy.
  • solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by mateo999 View Post


    Sure.



    The market capitalization is simply (Price per Share * # shares outstanding). Market caps for AAPL, XOM, MSFT, WMT, and GOOG are: 461.4B, 406.6B, 257.0B, 212.7B, and 198.4B respectively. Thus all the articles that state Apple is the most valuable company are basing their "analyses" on market capitalization. Where this falls short is that it misses the entire debt portion of a company's capital structure. As a rule debt has absolute priority over equity in a bankruptcy, and interest payments have priority over any cash flows given to equity holders.



    If a company has 100B in debt outstanding, and it *also* has a market capitalization of $100B, then the market is saying this company has an equity "cushion" of $100B beyond the $100B in debt outstanding. Thus the implied value of the company is $200. If a company was only worth it's market cap (as this article seems to imply), then said company should have a stock price of $0 because all its value is owed contractually to bondholders. Note: that the above analysis assumes the company doesn't have significant excess cash on hand beyond what's required to run the business.



    Enterprise value is calculated as Market Cap + Market Value of Debt Oustanding - Excess Cash. EV gets to the heart of what the operating assets of a company are being valued at. It's also how most M&A transactions get valued at, as you'll often read: "the deal was valued at 8x trailing EBITDA" where value is not market cap, but EV.



    Onto the calculations:



    AAPL: Market cap ($461.4) + debt ($0) - excess cash ($97B) = 363.8B EV

    XOM: 406.6B + 16.8B - 46.3B = 377B EV



    and so forth. MSFT has an EV of 211.5B and GOOG has an EV of 159.2B



    As an aside, the reason you subtract out excess cash (of which Apple has some 97B) is because this can be considered a direct offset of debt (as the cash can be immediately used to pay down debt). Often times you'll hear EV being calculated as Market Cap + Net Debt (debt, net of cash) which is the same analysis as above. Hope this helps.



    I appreciate the detailed post but I can't say I understand it. In fact I'm quite confused on how debt looks like an asset and having cash on hand looks like a liability.
  • dr millmossdr millmoss Posts: 5,403member
    Quote:
    Originally Posted by mateo999 View Post


    I think it's actually lower, because you should adjust the share price down by the $105 per share it holds in cash and investments. On a cash adjusted PE, its more like 10x p/e



    Yes, that would be an ex-cash valuation, but this is really just a back-of-the-envelope exercise sometimes performed as a way of illustrating the magnitude of Apple's cash holdings. It doesn't have any real bearing on the market value of the company, at least not for one like Apple.
  • marcusj0015marcusj0015 Posts: 198member
    So, Apple is now the largest company in existence?
  • SpamSandwichSpamSandwich Posts: 24,475member
    Quote:
    Originally Posted by island hermit View Post


    Actually, there is a lot of profit taking happening today.



    Sure, but the jump in price today is still mind-blowing.
  • dr millmossdr millmoss Posts: 5,403member
    Quote:
    Originally Posted by island hermit View Post


    I read the DOW only to see if the market is ready for an upswing or a downswing based on a "at least 1 year" chart. It helps to better gauge the movement of individual stocks.



    On a day to day basis, though, watching the DOW would just drive me crazy.



    I pretty much ignore the DJI, it's just too arbitrary. But the larger point is, we tend to fixate on momentary stock movements because that information is so readily available today. I wasn't very long ago that only traders on the exchange floors had access to this information. Everyone else found out what their stocks did when they opened their morning paper the next day. I go for weeks sometimes without looking at my portfolio at all. If I have any belief in my investment strategy then it's not necessary to check it all the time. It's a good discipline. I recommend it. For an investor. For a trader, your mindset is totally different. Decide which one you want to be.



    Quote:
    Originally Posted by SolipsismX View Post


    I appreciate the detailed post but I can't say I understand it. In fact I'm quite confused on how debt looks like an assets and having cash on hand looks like a liability.



    It may seem counterintuitive, but it's right. Think of market cap as the cost of buying the entire company. If you did buy all the common stock of the company, you'd get ownership of the cash. So that cash is subtracted from your takeover cost. The opposite is true of the company's debt. You'd inherit that, so add it to your takeover costs.



    So this really points out the absurdity of dwelling on Apple's cash assets as something of value to stockholders. Unless you are planning to buy the entire company, it's a complete abstraction to you.
  • SpamSandwichSpamSandwich Posts: 24,475member
    Quote:
    Originally Posted by marcusj0015 View Post


    So, Apple is now the largest company in existence?



    They're just getting started. Remember the book "Outliers"? So-called 'tablet computing' and wearable computing is the next wave and Apple has a huge head start on everyone.
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