Originally Posted by Dr Millmoss
Yes, you can create short-term churn by any number of bogus means, but anyone who believes that splits increase shareholder value in any way, is gaga. I doubt very seriously that Steve or anyone on the board is interested in trying to "beat" GOOG's share price. That's a ludicrous exercise, and one I'd like to believe that the smart people running Apple would think likewise. The reason AAPL is not being split is that the current share price does not meaningfully impede even the smallest investors from buying in.
As for P/E, it is a reflection of investor sentiment about future earnings growth rates. Lower is by no means necessarily better.
As far as the future is concerned, I never guess.
You don't seem to be able to parse my words correctly, so let me elaborate:
No one splits a stock to cause churn (where did you infer this - not from me). You have neglected decades of known research that clearly shows a direct correlation - OVER TIME, not immediately, in shareholder value increases and stock splits (this makes sense, because only companies that have faith in their future earnings potential tend to be the ones that split shares, with the notable exception of recent years following the dot.com bust. I've been investing and trading for 52 years - yes 52 years, have traded in mutual funds since 1971, and actively traded on the internet since the mid to late 90's, and many spendid research houses (such as the "Right Line Split Report", "Market Logic", and others have seen this tendency. Don't wish to continue the debate, but it is real, quantifiable, and tangible.
As for PE ratios, much debate exists as to its proper use, and PE as it is usually connoted is the HISTORICAL PE (price/past earnings), not so called forward PE ratios. As a former accountant, I am well aware you can play around with the numbers on earnings from GAAP numbers, present value numbers, pro forma numbers, etc, etc, and remove anything you like if you rationalize it being non-recurring. Anyhow, the PE is only useful (in my opinion, and in the opinion of most investors) if you compare Apples to Apples (sorry bout that), ie. compare within like companies in like markets - difficult to do sometimes, particularly if there are few direct competitors. As you intimated, you may "award" a company with a higher PE if you think their future earnings will be better than a competitor.
In a listless market like this one (volatile but almost directionless as this is), and in an almost disinflationary market, PE's of most companies tend to go down, so my take on Apple's low PE makes me comfortable that they will have no problem sustaining the growth, compared to historical PE's for like companies. Since earnings in such an environment as now tend to go directly to the bottom line, low inflationary (borderline disinflatinary) markets tend to be markets better suited for investment (unless we go into true deflationary times - gad, hope not).
Ferchrissakes, the PE of Apple is little more than more staid companies, and would be much higher, if this market was on fire. I just believe that keeping Apple's stock price rising, without splits, is OK now, and, as you mentioned, not of much concern to the average Joe Investor (assuming he is logical - lots of folks don't know or care about PE, and will set an artificial price point, above which they have no intention of buying - even a share (my sister is this way, and no amount of education can make her consider a stock with such a "high" stock price, even though she intellectually knows full well about PE ratios. Stock splits usually appeal to this type of investor, even though it shouldn't matter.
I still think Steve Jobs would love to have a stock price higher than Google's (with comparable PE's, of course). If you don't think he got a kick out of the whole Apple vs Microsoft market valuation thingie, then you have a much different opinion of him than I. That little milestone must have felt good to him, don't you think, even though the party line made him pooh pooh the obvious implications. Lots of folks have pointed out the illogic of direct comparisons here, but the average investor lumps Apple in the same high tech arena as Microsoft, Google, IBM, Cisco, HP, etc., and thus these companies tend to get compared all the time.