Originally Posted by jdnc123
Did I say market cap? I said the value of Apple. Do you know how to calculate the value of any company, including Apple? Its called enterprise value, which is market cap less net debt. Go look that up and tell me what you find. I'll repeat my statement as I know I am 100% correct that the value of Apple has decreased under Tim Cook. It is fact.
Maybe you simply don't understand company valuation. If someone wanted to buy Apple would they pay the market cap? Nope, they'd pay the enterprise value. Company A has mkt cap of $100 and debt of $0; Company B has market cap of $50 and debt of $60. No cash at either. Which company is worth more? In the real world its B, in your fantasy land its A. Go read a couple finance books before you respond and make yourself look even sillier.
You are confusing issues here. And being arrogant about it.
1) The market cap -- i.e., the value of a company's stock including its cash -- is a hugely relevant number. It is what the company is worth to its equity holders, and when people talk of 'value of a company' this is the number that they often mean. So it's quite reasonable that someone misunderstood that when you did not clarify or define it in your original post.
2) As an equity holder, assuming that I think that the company's cash is worth cash (i.e., the management won't waste it), the cash puts a floor on the market value of my equity. So it's a massively important asset to consider, especially in the case of a company such as Apple.
3) Your definition of 'enterprise value' (EV) is incorrect (see my highlighting above). However, your EV calculation happens to be correct in Apple's case. Let me explain. EV is NOT "market cap less net debt" as you defined it. It is market cap plus debt (plus the value of any other claims if any, e.g., preferreds) minus cash. In other words, EV market cap plus net debt. (You're the one that should look it up!).
Of course, in Apple's case, EV equals market cap minus cash, i.e., your numbers turn out correct, but that's only because Apple has no debt (or any other claimants). Therefore you are correct that EV under Tim Cook -- the non-cash value of Apple -- has fallen. However, that explicitly assumes that Cook deserves no credit for the cash build-up. That is a bit unfair, since, after all the cash on the balance sheet does belong to Apple's owners. He could, for instance, have thrown it away on wasteful acquisitions, but has/did not.
4) The correct conceptual definition of EV is that it is a measure of the discounted value of total cash flows from the operating assets of a business (i.e., free cash flow to the firm, reflecting its operating cash flow net of its investing cash flow), where the discount rate is risk-adjusted, and reflects a weighted blend of the expected returns of every type of capital supplier to the business (called the 'weighted average cost of capital' or WACC).