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Apple now worth more than Google and Microsoft combined [u] - Page 3

post #81 of 191
Ireland, if you're reading this, I hope you kept the faith!
post #82 of 191
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.
post #83 of 191
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.
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post #84 of 191
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
post #85 of 191
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.
post #86 of 191
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.
post #87 of 191
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?
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post #88 of 191
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
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post #89 of 191
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
post #90 of 191
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?
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post #91 of 191
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.
post #92 of 191
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.
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post #93 of 191
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.
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post #94 of 191
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.
post #95 of 191
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.
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post #96 of 191
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.

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post #97 of 191
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.
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post #98 of 191
So, Apple is now the largest company in existence?
post #99 of 191
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.

Proud AAPL stock owner.

 

GOA

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post #100 of 191
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.
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post #101 of 191
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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GOA

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post #102 of 191
Quote:
Originally Posted by I am a Zither Zather Zuzz View Post

Wait...Where's Slappy to tell us that Android is Winning?

Where's the haters to tell us how "innovative" Microsoft is with its Windows Phones?

Funny, I don't seem to hear anything...

Same place all the people who claim that AAPL plunges after earnings are hiding. Oh wait, they're not hiding, they're still complaining on this thread
post #103 of 191
Quote:
Originally Posted by mateo999 View Post

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.

I (largely) agree. One should always value the operating assets first and then add back the (excess) cash. Apple is likely even more undervalued in that basis.

It is just that one should then do the same in coming up with peer P/E ratios as well. I was using the 'raw' P/E ratio for the S&P500 and WMT, and hence the same for Apple (even though, I agree, Apple's level of cash is at a qualitatively different level - say, as % Revenue or Assets -than anyone else's).
post #104 of 191
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 asset and having cash on hand looks like a liability.

I think he meant the cash is IN the market cap but I'm not sure why having more debts is a good thing.
post #105 of 191
Quote:
Originally Posted by OllieWallieWhiskers View Post

Apple is about to unveil the "Sell a share, get an iPad" program.

That's Apple's new stock buyback program.
post #106 of 191
Quote:
Originally Posted by Dr Millmoss View Post

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.

Why do people buy stock in a company? Unless you're a lunatic you are betting that the stock will rise due to increased performance over a set or open time frame.

Now you say that having cash is not an asset for a tech company but that means they can buy supplies at cheaper prices, not have to borrow and pay interest, can invest more in R&D, and wait out dips in the market. Why you don't think this is a good thing sounds absolutely crazy!

I get mateo999's general point but claiming that having cash on hand is not of value is ridiculous as it clearly points to the company's future health, assuming they use it wisely.

I'd love to hear your argument why Apple should take on debt instead of profit.

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post #107 of 191
Quote:
Originally Posted by SpamSandwich View Post

Sure, but the jump in price today is still mind-blowing.

Oh, absolutely.
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post #108 of 191
Quote:
Originally Posted by Dr Millmoss View Post

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.

True, if you've already bought a stock and you believe in it then the Dow aint going to be useful at all.

If you are ready to buy a stock, though, it can be useful. If the Dow is oversold and the stock you are thinking about buying is oversold then the risk is lower and it's probably a good time to buy... the opposite is true if both seem to be overbought. Of course, there is a lot more to it than that but, hopefully, you've done a lot more dd in the first place before thinking of buying a certain stock.
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post #109 of 191
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.

Persecution issue? Nice try.

You wrote ... "Yeah, somebody always has a prediction that never fails. Millions of stopped clocks can't be wrong." .. to my joke about AAPL never fails to drop after a major success. Which is a common response to large AAPL stock gains here on AI, kind of like 'Safari is snappier' is to a new OS update ...

I joked about the put down ... I could have simply pointed out it was snarky ... but I passed
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post #110 of 191
Quote:
Originally Posted by SolipsismX View Post

Why do people buy stock in a company? Unless you're a lunatic you are betting that the stock will rise due to increased performance over a set or open time frame.

Now you say that having cash is not an asset for a tech company but that means they can buy supplies at cheaper prices, not have to borrow and pay interest, can invest more in R&D, and wait out dips in the market. Why you don't think this is a good thing sounds absolutely crazy!

I get mateo999's general point but claiming that having cash on hand is not of value is ridiculous as it clearly points to the company's future health, assuming they use it wisely.

I'd love to hear your argument why Apple should take on debt instead of profit.

I'm glad I'm not the only one baffled by the cash element.
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post #111 of 191
Quote:
Originally Posted by SolipsismX View Post

WP7 is innovative but being innovative doesn't make a product popular. Even being better tech doesn't mean a product wins over inferior tech as there are many other aspects to be considered. I think MS's biggest problem with WP7 is that they decided to keep the Windows name. If they had only rebranded it they could have shed a lot of what people dislike about MS. I also think they could have taken a solid hold of the tablet industry had they focused on that with the WP7 UI instead of focusing on a phone that they clearly are very late to market. Does that really make an Apple hater?

I disagree. Microsoft needs to change it's name period. People don't like Microsoft.

I never used one, but people have said that the Zune was a far superior product to the iPod. But it crashed and burned to the point of disintegration. Why? Certainly not because it was a Windows Music Player. Because it was perpetuated by Microsoft, I think. That and their lame marketing strategy and that name!! Zune.

Microsoft is identified as the big behemoth that had to crap on people on its way to the top, and then just sat there, thinking they could continually come up with incremental progress with no real innovation, until it was too late.
post #112 of 191
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 asset and having cash on hand looks like a liability.

As used in "Enterprise Value", the word 'value' doesn't have the same meaning that us regular folks attach to it. I don't really understand the purpose of the number and I have an advanced degree in economics.

It's similar to Net Worth + Liabilities - Cash. (But you use market cap, the market's estimate of 'true' net worth, instead of accounting net worth, which is a suit's estimate of 'true' net worth.)

So EV is in effect similar to Assets-Cash. (Because Net Worth = Assets - Liabilities) Which is taken to be some measure of the value of the company's productive assets. But not 'value' as in how much it is worth to you and me but more like 'value in dollars' as a measure of quantity of productive assets.

But the "value of a company's productive assets" is not the same as the company's overall value, i.e. net worth. And comparing the value of different companies' productive assets is useful only if you also know their profitability.

Exxon might have 'more' productive assets than Apple, but how much profit is Exxon drawing from those productive assets? Instead, I would use EV/Profits and the lower is this ratio, the more 'efficient' is the company in employing its productive assets.

On the other hand, net worth by itself is a meaningful number and comparing net worth across companies is a meaningful exercise.

Furthermore with EV, you use market cap, not accounting net worth, so you're injecting even more uncertainty on your measure of the company's stock of productive assets.

Bottomline if you want to use EV to evaluate a company's performance, use EV over Profits, not plain old EV. Notice, all other things equal, a lower EV is actually desirable! --Which answers the conundrum about EV: Why would larger debt raise the 'value' of a company? The answer is it doesn't, because a higher EV makes the company look less efficient, i.e. worse.

Have I muddied the waters sufficiently now?
post #113 of 191
Quote:
Originally Posted by Psych_guy View Post

I disagree. Microsoft needs to change it's name period. People don't like Microsoft.

I never used one, but people have said that the Zune was a far superior product to the iPod. But it crashed and burned to the point of disintegration. Why? Certainly not because it was a Windows Music Player. Because it was perpetuated by Microsoft, I think. That and their lame marketing strategy and that name!! Zune.

Microsoft is identified as the big behemoth that had to crap on people on its way to the top, and then just sat there, thinking they could continually come up with incremental progress with no real innovation, until it was too late.

The line 'A rose by any other name ... ' ... only in reverse ... springs to mind
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post #114 of 191
Quote:
Originally Posted by Psych_guy View Post

I never used one, but people have said that the Zune was a far superior product to the iPod. But it crashed and burned to the point of disintegration. Why? Certainly not because it was a Windows Music Player. Because it was perpetuated by Microsoft, I think. That and their lame marketing strategy and that name!! Zune.

I agree that Zune is a dumb name, but I also think iPod and iPad are also dumb names. I think the Zune's failure — outside of coming to market so late compared to the iPod — is that the first generation was bad. It wasn't until later that the OS was very good. By that point the damage was done and the iPhone was already sucking all the oxygen out of the handheld market. Not just for phones but for the iPod, too.

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post #115 of 191
Quote:
Originally Posted by focher View Post

I be luvin me my's Apple stock. I moved my previous employer 401k over to a Rollover IRA last year, then promptly bought all AAPL with it. I'm long on Apple.

Please buy a put at 350 or so Jan 2013 expiration and pay 2% to protect your retirement from losing more than 1/3 of its value (or so).
post #116 of 191
Quote:
Originally Posted by matrix07 View Post

I think he meant the cash is IN the market cap but I'm not sure why having more debts is a good thing.

You are misinterpreting what's been explained. It isn't a good thing, and nobody said it was.

Quote:
Originally Posted by SolipsismX View Post

Why do people buy stock in a company? Unless you're a lunatic you are betting that the stock will rise due to increased performance over a set or open time frame.

Now you say that having cash is not an asset for a tech company but that means they can buy supplies at cheaper prices, not have to borrow and pay interest, can invest more in R&D, and wait out dips in the market. Why you don't think this is a good thing sounds absolutely crazy!

I get mateo999's general point but claiming that having cash on hand is not of value is ridiculous as it clearly points to the company's future health, assuming they use it wisely.

I'd love to hear your argument why Apple should take on debt instead of profit.

You are confusing several concepts here.

I am saying that carrying large amounts of cash on a balance sheet is not relevant to investors, because investors never see a single penny of it unless the company either pays some of it out as a dividend or buys back shares. The money might as well be on the moon, as far as investors are concerned. Please note the emphasis. For this reason, I am saying that doing ex-cash calculations to lower a stock's PE is a pointless exercise.

I have not in any way, shape or form said that debt is good. Please, please re-read my explanation of ex-cash calculations, and under what (very limited) circumstances they are relevant.
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post #117 of 191
Quote:
Originally Posted by SolipsismX View Post

I agree that Zune is a dumb name, but I also think iPod and iPad are also dumb names. I think the Zune's failure outside of coming to market so late compared to the iPod is that the first generation was bad. It wasn't until later that the OS was very good. By that point the damage was done and the iPhone was already sucking all the oxygen out of the handheld market. Not just for phones but for the iPod, too.

And IMHO you just summed up the iPad market dominance too. Even if they ever make a wonderful tablet the opposition is too late.
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post #118 of 191
Quote:
Originally Posted by digitalclips View Post

Persecution issue? Nice try.

You wrote ... "Yeah, somebody always has a prediction that never fails. Millions of stopped clocks can't be wrong." .. to my joke about AAPL never fails to drop after a major success. Which is a common response to large AAPL stock gains here on AI, kind of like 'Safari is snappier' is to a new OS update ...

I joked about the put down ... I could have simply pointed out it was snarky ... but I passed

Bizarre hardly covers it.
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post #119 of 191
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Originally Posted by Dr Millmoss View Post

Bizarre hardly covers it.

I'd agree there, but don't fret, you can fix it .. you simply need to learn to respond without the snarky tone, which may not be intentional but is never the less, coming over that way time and time again.

It's a happy day, let's all sing Kumbaya and move on
From Apple ][ - to new Mac Pro I've used them all.
Long on AAPL so biased
"Google doesn't sell you anything, they just sell you!"
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From Apple ][ - to new Mac Pro I've used them all.
Long on AAPL so biased
"Google doesn't sell you anything, they just sell you!"
Reply
post #120 of 191
Quote:
Originally Posted by Dr Millmoss View Post

I am saying that carrying large amounts of cash on a balance sheet is not relevant to investors, because investors never see a single penny of it unless the company either pays some of it out as a dividend or buys back shares. The money might as well be on the moon, as far as investors are concerned.

You are ignoring that Apple is spending their cash, they are just making more than they are spending. There a numerous reports of Apple investing billions in lump sum investments to other companies. This is not a bad thing for investors and you can look at today's stock price to see that Apple's actions have increased share holder value since they went from red to black.

This bot has been removed from circulation due to a malfunctioning morality chip.

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This bot has been removed from circulation due to a malfunctioning morality chip.

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