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Analysts: 'Stay the course with Apple,' $450 price target set

post #1 of 42
Thread Starter 
While traders on the Frankfurt DAX sent Apple shares sliding 6 percent today, similar to the drop that occurred in the US the last time Apple announced that its chief executive Steve Jobs was taking a leave of absence, US analysts expressed more confidence in Apple's market strength.

Brian White, the senior research analyst at Ticonderoga, noted in a report today that "With Steve Jobs as arguably the most iconic CEO in the world and widely recognized as the 'heart and soul' of Apple, we expect the stock to come under heavy selling pressure on Tuesday." US markets were closed today in observation of the Martin Luther King Jr holiday.

"If the stock goes into a significant downturn in the coming weeks on this news and/or further developments in the future," White added, "we believe Apple would be wise to tap into its $51 billion net cash position (as of the end of FY10; we estimate $70.8 billion by the end of FY11) for a significant stock repurchase or a generous cash dividend."

At the same time, White added, "Steve Jobs's health issues have long been a risk to the Apple story (e.g., and listed as a risk to our price target), and we believe one of the reasons the stock still only trades at just 15x (ex-cash) our CY11 EPS estimate, despite rapid growth and arguably the best product cycle in the tech world.

"Additionally, Steve Jobs deeply cares about his employees and the future of Apple; thus ,we believe he has been building a strong team that is able to successfully lead Apple into the future. Finally, Tim Cook's performance during Steve Jobs's medical leave in 2009 was excellent, highlighting Apple's strong bench.

"We believe 2011 will prove to be a great year for the fundamentals at Apple as the iPhone gains continued momentum and starts to tap into CDMA networks around the world. Also, we expect the iPad to start gaining mass adoption, while we anticipate the Mac product line to remain strong."

Ticonderoga maintained a buy rating, setting a price target of $450. Apple stock is currently at $348.

Tangible impact unlikely, perception may be a problem

A report by Reuters offered similar perspectives from other analysts, with Kaufman Bros. analyst Shaw Wu suggesting "a buying opportunity for investors." Wu was cited as saying, "Obviously the stock is going to get hit tomorrow. But I see no reason why this stock won't continue to work."

The report also cited Alexander Peterc, an equity analyst at Exane, as noting, "this will come as a surprise to Apple investors and definitely take some shine off the Apple stock. But even if Steve Jobs never returns to Apple, I would not expect a visible, tangible impact on how Apple is executing over the next couple of years."

Also cited was Richard Windsor, of Nomura Securities, who "agreed that Jobs' absence should not have a fundamental effect, but added: 'Perception of the company is another matter."

Windsor is particularly aware of the power of perception, having drafted reports in 2007 that claimed the original iPhone would likely suffer problems due to a faulty industrial design using a chemical deposition to provide touch sensitivity based on heat, predicting that Apple might have to recall millions of faulty units.

The iPhone did not ever employ "touch sensitivity based on heat," instead being capacitive sensitive. That didn't stop Windsor from repeating the same prediction a year later with the iPhone 3G, this time referencing imagined problems in the phones Infineon chips.
post #2 of 42
Wow. One of the first times I've seen analysts do something with thought behind it.

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I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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post #3 of 42
Finally, some reasoned commentary on the current issue with Jobs' health.
post #4 of 42
Is Steve's cause for medical leave the reason the iOS subscription model didn't get done?
post #5 of 42
Quote:
Originally Posted by Cpsro View Post

Is Steve's cause for medical leave the reason the iOS subscription model didn't get done?

I'd imagine so, Steve approves just about everything before it goes out. Apple needs to transition that process to other VPs.
post #6 of 42
Quote:
Originally Posted by Cpsro View Post

Is Steve's cause for medical leave the reason the iOS subscription model didn't get done?

I doubt it. If anything, it is more likely the joint announcement was pushed out due to Jobs' unavailability. That could bode well since they said the delay would be "weeks, not months".
post #7 of 42
Quote:
Originally Posted by iLoveStuff View Post

I'd imagine so, Steve approves just about everything before it goes out. Apple needs to transition that process to other VPs.

So what you're essentially saying is "I don't know, therefore I will guess?"

SJ is taking a leave of absence. He's not out of the game and does not mean everything is halted. He's also still going to handle key decisions. So for whatever reason, the subscription method still needed some ironing out.
post #8 of 42
I'll be holding on to my shares. With earnings due tomorrow after market close, a new iPad and iPhone in the works, plus some surprises, only a fool would bail.
post #9 of 42
Perception is tuff to get by. However reality is that APPLE is well positioned going forward.
Apple has over 50 billion sitting in cash, some of the best minds in the tech world, some of the greatest tech products on the planet as well as one of the best management teams in the world. Yes, Steve Jobs is the brains behind Apple, and yes we all wish Steve Jobs to get well soon and return! However lets all keep in mind that Steve has positioned Apple for a period under Tim Cook, Apple is ready for new products (ipad 2, Iphone5, etc) also Apple is ready to embark on CDMA around the world.
Lets give Steve Jobs some peace of mind and face reality..........While the stock may initially sell off it will be back to $348 before you know it.

GET WELL STEVE
post #10 of 42
Quote:
Originally Posted by Cpsro View Post

Is Steve's cause for medical leave the reason the iOS subscription model didn't get done?

Most likey, yes.
They are also holding up production of all other products.
post #11 of 42
Quote:
Originally Posted by Chris_CA View Post

Most likey, yes.
They are also holding up production of all other products.

Let me second that

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post #12 of 42
Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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post #13 of 42
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Originally Posted by solipsism View Post

[IMG][/IMG]

A barfing smiley... wow.

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post #14 of 42
If only the barf smileys were also barfing smileys...
When will the governments realize it's got to be funky, sexy ladies?
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post #15 of 42
Quote:
Originally Posted by AppleInsider View Post


"Additionally, Steve Jobs deeply cares about his employees and the future of Apple; thus ,we believe he has been building a strong team that is able to successfully lead Apple into the future. Finally, Tim Cook's performance during Steve Jobs's medical leave in 2009 was excellent, highlighting Apple's strong bench.

I have no doubt that Jobs has put his heart and soul into building a strong bench.

But.......

I am still a bit worried about Tim Cook's decision-making abilities: two -- perhaps three -- decisions of his stand out, in particular, a couple of those made during Jobs's absence. One was the disastrous initial iPhone intro in China (remember the one with no wi-fi?) -- I'll bet Apple had to swallow a huge loss on that and had to basically destroy millions of handsets. The second was the guy he put in charge of the iPhone 4 intro, who so badly fumbled the production and implementation of launch -- including the as-yet absent iPhone white -- that he was subsequently let go (I am forgetting his name). The third one may have been the Papermaster decision (recall the IBM guy that had to be be let go as well?).

I am in the wait-and-see mode with Cook.
post #16 of 42
Quote:
Originally Posted by anantksundaram View Post

I have no doubt that Jobs has put his heart and soul into building a strong bench.

But.......

I am still a bit worried about Tim Cook's decision-making abilities: two -- perhaps three -- decisions of his stand out, in particular, a couple of those made during Jobs's absence. One was the disastrous initial iPhone intro in China (remember the one with no wi-fi?) -- I'll bet Apple had to swallow a huge loss on that and had to basically destroy millions of handsets. The second was the guy he put in charge of the iPhone 4 intro, who so badly fumbled the production and implementation of launch -- including the as-yet absent iPhone white -- that he was subsequently let go (I am forgetting his name). The third one may have been the Papermaster decision (recall the IBM guy that had to be be let go as well?).

I am in the wait-and-see mode with Cook.

So.... you think Steve didn't have anything to do with these decisions? You must believe that the sitting President gets all the credit, or ire, of the land, depending on current conditions, as if they happened in a vacuum?

Moving on from unfortunate circumstances is the hallmark of excellent management.

When was the last time you saw Google or Microsoft fire anyone for poor performance or decisions, when the myriad of poor decisionmaking at each company cried out for Dr. Kevorkian?
post #17 of 42
Quote:
Originally Posted by anantksundaram View Post

I have no doubt that Jobs has put his heart and soul into building a strong bench.

But.......

I am still a bit worried about Tim Cook's decision-making abilities: two -- perhaps three -- decisions of his stand out, in particular, a couple of those made during Jobs's absence. One was the disastrous initial iPhone intro in China (remember the one with no wi-fi?) -- I'll bet Apple had to swallow a huge loss on that and had to basically destroy millions of handsets. The second was the guy he put in charge of the iPhone 4 intro, who so badly fumbled the production and implementation of launch -- including the as-yet absent iPhone white -- that he was subsequently let go (I am forgetting his name). The third one may have been the Papermaster decision (recall the IBM guy that had to be be let go as well?).

I am in the wait-and-see mode with Cook.

Papermaster was responsible for iPhone decisions so it appears he he might be the commonality to all three items. I doubt Tim Cook hired Papermaster; I think Jobs (and, maybe even, the BOD) made the hire.
post #18 of 42
The problem is that AAPL is a leading stock. A trophy stock. Priced for perfection. The current price reflects the belief that nothing can go wrong. The price reflects a rich PE multiple.

I believe that it doesnt matter how many iPhones or iPads Apple reports tomorrow.

It is now about risk. And the PE multiple will contract. And the stock price will go down.

But they do make great products.
post #19 of 42
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Originally Posted by solipsism View Post

[IMG]barf[/IMG]

This is the best reply in the history of ever.
post #20 of 42
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Originally Posted by sticknick View Post

This is the best reply in the history of ever.

Which is obviously a very long time.

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post #21 of 42
Quote:
Originally Posted by muckdog View Post

The problem is that AAPL is a leading stock. A trophy stock. Priced for perfection. The current price reflects the belief that nothing can go wrong. The price reflects a rich PE multiple.

I believe that it doesnt matter how many iPhones or iPads Apple reports tomorrow.

It is now about risk. And the PE multiple will contract. And the stock price will go down.

But they do make great products.

Can you list down the PE ratios of Apple, Amazon, Google, Microsoft, HP, and other major tech players then make a sound, reasoned analysis of why the PE ratios of these companies are the way they are?

And the current price of AAPL reflects the belief that nothing can go wrong? Really now, how do you know that? Did you talk to a lot of stockholders and they told you that they believe that nothing can go wrong? Or is that just your opinion? A lot of analyst talk are all ex-post narratives made up to fit the observed numbers. But if you look at the b.s. they say ex-ante, they're really not that good at predicting things. And that's really no surprise. Because if you're really good at predicting stock prices, then you'll keep your predictions to yourself and just make tremendous sums of money playing the stock market.

"It's now about risk." When the hell has investing in the stock market not been about risk?

"And the stock price will go down." No shit Sherlock. Probably the most hands-on CEO in America takes a leave because of serious illness and we need the Oracle of Delphi to tell us that his company's stock will probably take a hit?

Amazing the gobbledygook that people come up with to explain stock prices.
post #22 of 42
Quote:
Originally Posted by tundraboy View Post

Can you list down the PE ratios of Apple, Amazon, Google, Microsoft, HP, and other major tech players then make a sound, reasoned analysis of why the PE ratios of these companies are the way they are?

And the current price of AAPL reflects the belief that nothing can go wrong? Really now, how do you know that? Did you talk to a lot of stockholders and they told you that they believe that nothing can go wrong? Or is that just your opinion? A lot of analyst talk are all ex-post narratives made up to fit the observed numbers. But if you look at the b.s. they say ex-ante, they're really not that good at predicting things. And that's really no surprise. Because if you're really good at predicting stock prices, then you'll keep your predictions to yourself and just make tremendous sums of money playing the stock market.

"It's now about risk." When the hell has investing in the stock market not been about risk?

"And the stock price will god down." No shit Sherlock. Probably the most hands-on CEO in America takes a leave because of serious illness and we need the Oracle of Delphi to tell us that his company's stock will probably take a hit?

Amazing the gobbledygook that people come up with to explain stock prices.

So very true. Excellent post!
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post #23 of 42
Your stock price is falling, quick use your cash to buy back stock or pay out a dividend to prop up your stock price. That is about the stupidest thing I've heard come out of an analyst's mouth. And I've heard a lot of stupid things from analysts.

If the stock price is falling because investors are correctly assessing that your company is starting to perform badly, then burning your cash to artificially prop up the stock price doesn't fix the source of the bad performance. You've just wasted your cash for a short term fix that disappears as soon as you run out of cash.

If the stock price is falling because investors are incorrectly underestimating your company's performance, then burning your cash to artificially prop up the stock price is rewarding the very people who are depressing the price because of their inaccurate valuation. You're just inviting more stock manipulation.

There is no good reason why any CEO should prop up their stock price by bribing the stock market with buy backs or a dividend bump. The only reason is if the CEO or his cronies own a lot of stocks or options and are planning to cash out.

Corporate governance in the US is rife with self-dealing and conflict of interest. It's the last bastion of legalized corruption.

CEOs who truly care about the companies they run do not do buy backs or dividend bumps. And that's one reason why I like Apple a lot. The day Apple whispers buy back or short-term dividend bump is the day I unload all my AAPL holdings.
post #24 of 42
Quote:
Originally Posted by muckdog View Post

The problem is that AAPL is a leading stock. A trophy stock. Priced for perfection. The current price reflects the belief that nothing can go wrong. The price reflects a rich PE multiple.

I believe that it doesnt matter how many iPhones or iPads Apple reports tomorrow.

It is now about risk. And the PE multiple will contract. And the stock price will go down.

But they do make great products.

Aapl has a PE according to yahoo finance of 23, but if one takes out cash on hand then the PE is closer to 15, yet PE is not the only thing investors look at. Check out the PEG ratio, any stock with a PEG less than 1 is a buy. Aapl's PEG is .87 (based on an absurdly low estimated growth of 22%-when earnings growth is actually 75%) , msft 1.02, goog 1.18, amzn 2.71.

So where do you want to put your money?? And who is overvalued??
post #25 of 42
(1) Why would Apple buy back its shares at $350.. they could eat up all their cash that way, achieving nothing.

(2) Why would Apple issue a cash dividend... that would incur a huge tax penalty (35% of the money, basically) reducing the shareholders' wealth. Also, definitionally, just stupid.

This is a bit like saying Apple should just contract out its products, to cut costs. Let Dell built everything. To a "tard," that might make sense. Just ignore the fact that Apple's strategy is sound, and advocate a so-called "businesslike" change. Long live Steve.
post #26 of 42
Quote:
Originally Posted by AppleInsider View Post

While traders on the Frankfurt DAX sent Apple shares sliding 6 percent today

There is no 'trading on the Frankfurt DAX'. The DAX is a stock market index, similar to the Dow Jones index (eg, both include 30 blue chip companies). Trading takes place on the Frankfurt Stock Exchange.

Just because NASDAQ is the name of an index and a stock exchange (and the name of the company owning the stock exchange) does not mean that in other countries, the name of the stock exchange is identical to that its leading index.
post #27 of 42
Quote:
Originally Posted by anantksundaram View Post

I am still a bit worried about Tim Cook's decision-making abilities: two -- perhaps three -- decisions of his stand out, in particular, a couple of those made during Jobs's absence. One was the disastrous initial iPhone intro in China (remember the one with no wi-fi?) -- I'll bet Apple had to swallow a huge loss on that and had to basically destroy millions of handsets. The second was the guy he put in charge of the iPhone 4 intro, who so badly fumbled the production and implementation of launch -- including the as-yet absent iPhone white -- that he was subsequently let go (I am forgetting his name). The third one may have been the Papermaster decision (recall the IBM guy that had to be be let go as well?).

I am in the wait-and-see mode with Cook.

And we mustn't forget that godawful iPod shuffle.

Back to topic- of course most analysts will say stay the course, they fear a potential domino effect. Apple after all is the driving force of the US economy right now for the last 2 years. Any Apple meltdown today could have a potential disastrous effect on the market in total.
post #28 of 42
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post #29 of 42
Quote:
Originally Posted by MacRulez View Post

FWIW, I believe Dell and Apple both outsource to Foxconn.

The cash reserves will likely become one of the biggest stories with investors in the coming months, and not entirely without reason. At the current rate of return, the company is effectively losing money by holding all that cash rather than putting at least some of it to work for them in higher-earning investments.

There is only one thing which would justify the the opportunity cost of such unusually large reserves: Apple is planning on buying something big, something REALLY big.

That, of course, can't be disclosed just yet, so if such a plan is actually the driver behind the reserves they'll still have a tough time combating the rising tide of shareholder questions about this until then plan becomes evident.

Difficult straits to navigate, but Apple's done well so far so I suspect they can skate through this okay.

And I'm quite anxious to find out what it is they'll be buying. Adobe? Foxconn? Sony? As large as those targets are, nothing's off the table; there's hardly an entity on the planet the company couldn't acquire with their cash and a little well-timed moxie.

The cash reserves story has been a big one for a couple of years now, and continues to grow along with the size of the cash mountain. You're correct, this money does little for the company if it's not reinvested in growth. The very fact that it has built up to the level it's at today is evidence that Apple can't spend their profits on growth. This is one investor who doesn't want to see them make a large acquisition. Big mergers seldom work out. Apple could declare a very generous dividend and the cash hoard would still grow by $8-10 billion a year (at continually accelerating rate). The incredible volume of their free cash flow is not fully appreciated. It is simply staggering. The argument for giving none of it back to the stockholders is difficult to understand.
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post #30 of 42
Quote:
Originally Posted by MacRulez View Post

FWIW, I believe Dell and Apple both outsource to Foxconn.

The cash reserves will likely become one of the biggest stories with investors in the coming months, and not entirely without reason. At the current rate of return, the company is effectively losing money by holding all that cash rather than putting at least some of it to work for them in higher-earning investments.

There is only one thing which would justify the the opportunity cost of such unusually large reserves: Apple is planning on buying something big, something REALLY big.

I'm betting Apple has its sights aimed at either Comcast, Verizon, or AT&T. Perhaps not even for outright acquisition but as a threat of acquisition should some of them try to squeeze Apple by demanding premiums for carrying the iDevices' internet/cloud throughput.

Furthermore, some time in the future, wireless bandwidth will be large enough, reliable enough and cheap enough that customers decide to throw away their wired internet service and just rely on wireless to connect their mobile and fixed devices. When this day comes, Apple again will be in the best position to reconfigure the tech industry by introducing a slew of products that reflect this merging of fixed and mobile devices. This would also be the opportune moment, when internet data transmission is undergoing a (yes, I hate using this term) paradigm shift, for Apple, if it so desires, to build their own wireless network and finally offer the holy grail of a completely seamless product. Buy one package from Apple and it's all there: the devices, the apps, the media, the cloud service, and the wireless connection. And AAPL will be sitting pretty at $2K.

Well, one can always dream, yes?
post #31 of 42
Quote:
Originally Posted by Dr Millmoss View Post

The cash reserves story has been a big one for a couple of years now, and continues to grow along with the size of the cash mountain. You're correct, this money does little for the company if it's not reinvested in growth. The very fact that it has built up to the level it's at today is evidence that Apple can't spend their profits on growth. This is one investor who doesn't want to see them make a large acquisition. Big mergers seldom work out. Apple could declare a very generous dividend and the cash hoard would still grow by $8-10 billion a year (at continually accelerating rate). The incredible volume of their free cash flow is not fully appreciated. It is simply staggering. The argument for giving none of it back to the stockholders is difficult to understand.

I realize that from an investor's perspective the penchants of one man don't count for much, but I don't think you can discount the bone-deep need for autonomy that Jobs has instilled in Apple.

He's seen the result of being reliant on investors, on hardware partners, on software not under Apple's control, etc., and in every instance has taken decisive steps to eliminate the dependency (as in deprecating Flash, bringing iOS silicon development in house, making long term deals with suppliers to lock up components, etc.).

Those cash reserves are the ultimate hedge against reliance on outside entities. If Apple sees an opportunity to acquire IP that furthers their autonomy, they can move quickly. If they see two or three opportunities, they can move quickly. If they decide to build a server farm, or two, or three, so as not to have to rely on leased space, they can do it, with a minimum of fuss.

Of course, at some point the cash mountain becomes untenable, even for Apple, but I suspect what Apple considers to be a prudent reserve looks more like "what it takes to keep operating at a loss for 10 years while we do whatever we have to do without compromise" than what it looks like to most companies.

Steve Jobs may be more like Howard Hughes than we realize, and money is his antiseptic hotel room-- a place of safety and control.
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post #32 of 42
Quote:
Originally Posted by MacRulez View Post

FWIW, I believe Dell and Apple both outsource to Foxconn.

The cash reserves will likely become one of the biggest stories with investors in the coming months, and not entirely without reason. At the current rate of return, the company is effectively losing money by holding all that cash rather than putting at least some of it to work for them in higher-earning investments.

There is only one thing which would justify the the opportunity cost of such unusually large reserves: Apple is planning on buying something big, something REALLY big.

That, of course, can't be disclosed just yet, so if such a plan is actually the driver behind the reserves they'll still have a tough time combating the rising tide of shareholder questions about this until then plan becomes evident.

Difficult straits to navigate, but Apple's done well so far so I suspect they can skate through this okay.

And I'm quite anxious to find out what it is they'll be buying. Adobe? Foxconn? Sony? As large as those targets are, nothing's off the table; there's hardly an entity on the planet the company couldn't acquire with their cash and a little well-timed moxie.


While I agree that Apple could invest its cash in something better, I DISAGREE that owning a lot of cash presents an "opportunity cost." Dividends, an instant hack of 35% of the $50B, is a hell of a cost. AAPL should be earning at least inflation on the money. They could turn it into an endowment.

Bear with me here. Since shareholders own Apple, why should they want a liquidation of its endowment... they already OWN THE MONEY. It's theirs already. This is built into the stock price, in a most tax-advantageous way.

I am all for prudent investment. But cash is FAR from an evil thing. That is just very poorly thought out MBA orthodoxy... IMHO. Apple wants to be a 100 year tech company. For that, you need large assets. And BTW, for such a crazily expanding company, $50B isn't all that.

The one vulnerability I see there is some type of cancer-causing legal liability. Trial lawyers are on the lookout to take the money.
post #33 of 42
Quote:
Originally Posted by addabox View Post

I realize that from an investor's perspective the penchants of one man don't count for much, but I don't think you can discount the bone-deep need for autonomy that Jobs has instilled in Apple.

He's seen the result of being reliant on investors, on hardware partners, on software not under Apple's control, etc., and in every instance has taken decisive steps to eliminate the dependency (as in deprecating Flash, bringing iOS silicon development in house, making long term deals with suppliers to lock up components, etc.).

Those cash reserves are the ultimate hedge against reliance on outside entities. If Apple sees an opportunity to acquire IP that furthers their autonomy, they can move quickly. If they see two or three opportunities, they can move quickly. If they decide to build a server farm, or two, or three, so as not to have to rely on leased space, they can do it, with a minimum of fuss.

Of course, at some point the cash mountain becomes untenable, even for Apple, but I suspect what Apple considers to be a prudent reserve looks more like "what it takes to keep operating at a loss for 10 years while we do whatever we have to do without compromise" than what it looks like to most companies.

Steve Jobs may be more like Howard Hughes than we realize, and money is his antiseptic hotel room-- a place of safety and control.

That's a scary explanation, especially the Howard Hughes comparison. Hughes was as mad as the proverbial hatter.

I get the reliance part, but I think the cash mountain provided that kind of security years ago, before it tripled in size (and will probably double again before the end of next year). Now it's starting to read as obsessive behavior, which at some point also begins to look like a lack of confidence in the company's future. No investor likes to think of a company hedging against ten years of losses -- they want to invest in companies that grow profits. That's the name of the game.
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post #34 of 42
Quote:
Originally Posted by Dr Millmoss View Post

That's a scary explanation, especially the Howard Hughes comparison. Hughes was as mad as the proverbial hatter.

I get the reliance part, but I think the cash mountain provided that kind of security years ago, before it tripled in size (and will probably double again before the end of next year). Now it's starting to read as obsessive behavior, which at some point also begins to look like a lack of confidence in the company's future. No investor likes to think of a company hedging against ten years of losses -- they want to invest in companies that grow profits. That's the name of the game.

Hopefully Jobs' obsessions are less crippling than Hughes', or at least can be marshaled (as they seem to have been to date) towards more or less sound business practices.

You're quite right, though, that while the origin of Apple's cash mountain might have been a reasonable congruence between Jobsian mania and actual prudence, it's reached the point of hoarding. Apple should either make a pretty splashy, big dollar acquisition or expansion of some sort (something that makes sense, of course, not just to be doing it) or pay out some dividends.
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post #35 of 42
Quote:
Originally Posted by Dr Millmoss View Post

I get the reliance part, but I think the cash mountain provided that kind of security years ago, before it tripled in size (and will probably double again before the end of next year). Now it's starting to read as obsessive behavior, which at some point also begins to look like a lack of confidence in the company's future. No investor likes to think of a company hedging against ten years of losses -- they want to invest in companies that grow profits. That's the name of the game.

Quote:
Originally Posted by addabox View Post

]You're quite right, though, that while the origin of Apple's cash mountain might have been a reasonable congruence between Jobsian mania and actual prudence, it's reached the point of hoarding. Apple should either make a pretty splashy, big dollar acquisition or expansion of some sort (something that makes sense, of course, not just to be doing it) or pay out some dividends.

I can see how 50B in cash could be considered hoarding but with the volatility of this market I dont think it is. I think Apple cash insulates them from recessions and unforeseen changes in the CE market.

The paid LG ½ billion just for displays. Dont they pay a few billion just for NAND, and invested into that new multi-billion dollar Foxconn plant? How much was invested into that new data center in NC?

Intel is apparently investing 9 billion to create the 22nm process. As they grow faster than the rest of the market they will need to pay larger and larger lump sums, and likely need to invest in more factories to ensure this growth.

Personally, I dont want buybacks or dividends from CE companies. The playing field can change too rapidly and those holding not only allow them to invest in the future at will, but also insulate their stock price. Id rather they just keep earning profits and only use the money if it will benefit their growth.
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post #36 of 42
Quote:
Originally Posted by addabox View Post

Hopefully Jobs' obsessions are less crippling than Hughes', or at least can be marshaled (as they seem to have been to date) towards more or less sound business practices.

You're quite right, though, that while the origin of Apple's cash mountain might have been a reasonable congruence between Jobsian mania and actual prudence, it's reached the point of hoarding. Apple should either make a pretty splashy, big dollar acquisition or expansion of some sort (something that makes sense, of course, not just to be doing it) or pay out some dividends.

Agreed.

Quote:
Originally Posted by solipsism View Post

I can see how 50B in cash could be considered hoarding but with the volatility of this market I dont think it is. I think Apple cash insulates them from recessions and unforeseen changes in the CE market.

The paid LG ½ billion just for displays. Dont they pay a few billion just for NAND, and invested into that new multi-billion dollar Foxconn plant? How much was invested into that new data center in NC?

Intel is apparently investing 9 billion to create the 22nm process. As they grow faster than the rest of the market they will need to pay larger and larger lump sums, and likely need to invest in more factories to ensure this growth.

Personally, I dont want buybacks or dividends from CE companies. The playing field can change too rapidly and those holding not only allow them to invest in the future at will, but also insulate their stock price. Id rather they just keep earning profits and only use the money if it will benefit their growth.

We just got through the worst economic conditions since the Great Depression. So how much of their cash reserves did need to Apple tap? You mean the cash just kept flowing in? So what are they banking on now, armageddon?

Sure it's great to have cash to invest in growing a business, but you have to actually do it. So far we haven't seen investments within even hailing distance of $50b, let alone the $90b they'll have in the bank at the end of next year.

As for your distinction between CE companies and everyone else, I don't get it.
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post #37 of 42
Quote:
Originally Posted by Dr Millmoss View Post

We just got through the worst economic conditions since the Great Depression. So how much of their cash reserves did need to Apple tap? You mean the cash just kept flowing in? So what are they banking on now, armageddon?

Sure it's great to have cash to invest in growing a business, but you have to actually do it. So far we haven't seen investments within even hailing distance of $50b, let alone the $90b they'll have in the bank at the end of next year.

That backs up my point. If even in the worst economic conditions since the Great Depression Apple is paying huge sums that can be calaculated in billions and they are growing much faster than the industry average doesnt that imply that Apple will have even more growth now that were past that depression and therefore will have to supply more and more components to main more and more growth, thus using more and more of their cash holdings?

Quote:
As for your distinction between CE companies and everyone else, I don't get it.

Ive already stated my reasons for the distinction many times so well just have to acquiesce to dissension*.



* Trying really hard not to use the clichéd term.
Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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post #38 of 42
Quote:
Originally Posted by solipsism View Post

That backs up my point. If even in the worst economic conditions since the Great Depression Apple is paying huge sums that can be calaculated in billions and they are growing much faster than the industry average doesnt that imply that Apple will have even more growth now that were past that depression and therefore will have to supply more and more components to main more and more growth, thus using more and more of their cash holdings?

They didn't use any of it! Now we're evidently looking at a cash accumulation rate of nearly $3b a month. Maybe Apple should put up a neon sign outside the corporate offices "Over $60 Billion Saved!" You know, just like McDonald's?

Quote:
Ive already stated my reasons for the distinction many times so well just have to acquiesce to dissension*.

* Trying really hard not to use the clichéd term.

You mean we can't resuscitate Trigger?
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post #39 of 42
Quote:
Originally Posted by Dr Millmoss View Post

They didn't use any of it! Now we're evidently looking at a cash accumulation rate of nearly $3b a month. Maybe Apple should put up a neon sign outside the corporate offices "Over $60 Billion Saved!" You know, just like McDonald's?

1) I like your idea about the McDonalds sign.

2) They have made huge longterm investments with that cash.

3) A very current and relevant example of that
http://www.appleinsider.com/articles...contracts.html
Quote:
You mean we can't resuscitate Trigger?

I dont get the reference.
Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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post #40 of 42
Quote:
Originally Posted by solipsism View Post

1) I like your idea about the McDonalds sign.

2) They have made huge longterm investments with that cash

3) A very current and relevant example of that
http://www.appleinsider.com/articles...contracts.html

About 5% of their current cash position, or roughly five weeks of current free cash flow. You prove my point.

Quote:
I dont get the reference.

Trigger is a dead horse. A very dead and stuffed one. Now do you get it?
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