This is a bit of an exageration, but Apple doesn't need to give a damn about it's stock price. And I've often wondered if investors will ever catch on that Apple is not in business to make shareholders money.
Bingo. APPL is a safe heaven for large institutional investors, usually Mark to Market valuations of such funds benefit from stable tech stocks that don't give dividends. APPL is usually found swilling around in moderately large mutual fund portfolios - large cap funds may have up to 2 - 3% APPL in them. Around 70% of APPL stock is held by such funds, around 25% or more is going to be members of the Apple board, with probably only a couple of percent held by people like you and I.
Quote:
Apple's stock price could drop to $1/share and they could keep on operating as normal because no bank will be calling in their loans or denying new loans to keep things running (because they have no loans). And they could still be making $500 million deals for flash memory just using cash on hand.
Ok, this is a vast oversimplification, but moreso than most other companies, Apple doesn't need to worry about managing to stock holders expectations. And historically, they have not done so.
That's not quite true, if only because such a low price would make them vulnerable to a takeover. Apple would almost certainly start an aggressive buy-back scheme if the price dropped too low.
No, the Back To School selling season has already begun. Something that Apple needs to be taken to task over, IMO. There ARE retail selling seasons that they simply do not take advantage of, and that is simply bad business.
I really can't believe you stated the above. Think about it Apple has a back to school program promoting it's laptops by offering an iPod with the system. Then shortly there after Apple comes out with what might be the ideal student laptop and the keep the special offer in place. Then you sit here and imply they aren't doing enough!!!
Really I don't get it at all. Frankly out of all the vendors a student has to choose from nobody has been as agressive as Apple. Maybe I'm missing something if so point it out but other wise I think you need a perspective change.
You understand the difference between realized and unrealized PnL right? Until you sell, it's unrealized and (heaven forbid) if Apple were to get themselves into trouble for any bizzare reason, your investment might suddenly deliver nothing. Sure, with Apple that's exceptionally unlikely given the current market and their cash reserves, but not entirely unprecedented. You could have bought APPL in 1987 at $13, you' have only just broken even in 2004. An investment of $10,000 even with a 0.02 yield (reinvested) on the other hand, would have netted the investor $5,000 profit in the same period, meaning the share price would need to collapse to half its value to suffer an actual loss.
Many day traders are tying to ride APPL up and down, making buy-and-hold investments risky, because small time investors never know when they may actually need that cash and be forced to sell. A dividend always means you can ride a small price drop and still come out on top in the medium term.
Before telling someone out and out that they're wrong, you might want to find out what they do for a living. Drop me a PM and I'll tell you.
I understand quite well. I've been investing since 1963, when I was a kid.
I'll put my success in investing against yours any day. It doesn't matter what you do.
During the depression, there were also market rallies of up to 45% before further crashes. We're currently in a very low volume rally (meaning it's weak), so the parallels with 1929 may not yet be too soon to ignore.
My biggest concern is programmed trading, and unfair peeks at trades of others.
I understand quite well. I've been investing since 1963, when I was a kid.
I'll put my success in investing against yours any day. It doesn't matter what you do.
If you understood it, you would not have been so quick to shoot down what I said, unless you assumed I was just another internet idiot with nothing to say. Surely though someone of your age and experience would not assume something like that, would they?
Quote:
Originally Posted by melgross
My biggest concern is programmed trading, and unfair peeks at trades of others.
Agreed, it's concerning. Having said that, The last project I worked on involved a High Frequency Algo Trading platform and the interesting thing is, most of them trade fairly flat, making money on the tiny peaks and troughs intra-day whether the trend is up or down. The actual impact on long-term prices is usually negligible in these cases. Some platforms are different, but the ones I've worked on have a zero or near zero position at COB.
Apple analysts know the same and you or me, only they are paid to summarize the site for those who don't have the 10 seconds to read it. How do I get their job? Why do they get paid for the effort of the editors here?
Appleinsider this is starting to get really old an analysts report is not news and is not a rumor thus is not info we need to see here. I mean really a contract with another cell company might impact Apples stock - who would have thought of such a thing. A prostitute has more reason for being than these guys.
I don't know what the rest of Appleinsider thinks but these analyst reports are a waste of time. Maybe a poll is in order to see if the readership is even half interested in this stuff. It is just a shame that Appleinsider validates these idiots by printing this crap.
Dave
YES
where is all the meat to this slim tale of zero. Where is the verizon part ???
If you understood it, you would not have been so quick to shoot down what I said, unless you assumed I was just another internet idiot with nothing to say. Surely though someone of your age and experience would not assume something like that, would they?
You made some pretty quick and big assumptions about me, and you know noting about me. Why should I assume that what you say means anything to my well used methods?
Quote:
Agreed, it's concerning. Having said that, The last project I worked on involved a High Frequency Algo Trading platform and the interesting thing is, most of them trade fairly flat, making money on the tiny peaks and troughs intra-day whether the trend is up or down. The actual impact on long-term prices is usually negligible in these cases. Some platforms are different, but the ones I've worked on have a zero or near zero position at COB.
That's usually true. But there are at least two concerns right now. First is that the NASDAQ is building a vast computer center in NJ for this very reason, and inviting big companies to take part. That's a concern.
But it's not even the one that I'm most worried about. It's just being done as a result of the methods being used that are what I'm worried about.
One is the "peeks" that we're seeing in some of these operations. Those 30 millisecond looks at trades that are about to be made by others is a major worry. I don't like, and neither do others, that a privilaged few can get that advantage.
And now that programmed trades are 90% of the business, it's a problem. humans simply can't interact quickly enough when problems occur from this, and if you are in the business you know very well about the instances that have occured. This will happen more often, and the problems will escalate.
So while this programming works when matters are stable, when something happens that is not accounted for i the programs, and there are plenty of things that are not, problems occur at such high speeds, that the only thing that can be done is to try to clean up as much of the mess as is possible.
Long Term Capital claimed that their geniuses had everything programmed in, and that they were taking little risks. Well, we know what happened there.
What was the name of the airline that had it's entire market value wiped out in a few moments? Was it AA? That never got entirely fixed. And what about all the small investors whose stock was sold at large losses? Most of that was NEVER straightened out.
I'm not the only one concerned about this. There are many in the industry who are, and they've written about the dangers.
If someone has a spare $5,000 to throw at the market for a 5 year invest, APPL probably isn't the worst, but certainly not the best bet.
This kind of opinion is always amusing. I am always curious to hear how someone knows which bet is the "best bet," especially when they claim to be "certain." Does this advice come with a money-back guarantee?
Quote:
Originally Posted by Wiggin
Apple's stock price could drop to $1/share and they could keep on operating as normal because no bank will be calling in their loans or denying new loans to keep things running (because they have no loans). And they could still be making $500 million deals for flash memory just using cash on hand.
Not really. If the stock price was decimated, it would be because investors viewed Apple's business as being worthless, or less than worthless. You simply can't evaluate these things in such a complete vacuum. Apple's board doesn't worry about stock price on a daily, weekly or even monthly basis, but you can bet they are concerned about it over the long haul, if for no other reason than the number of stock options which they and the top executives in the company are granted as compensation.
My biggest concern is programmed trading, and unfair peeks at trades of others.
If you bought apple 7 yrs ago and can hold apple for 10 more years you will be very very happy . MANY OF US FAN BOYS DID .
There is a 2.5 to 4 billion person market that have not yet matured to be a part of the apple revolution .
india and china pakistan 1/2 of russia on and on.
So apples tired old ipods lines will still be selling in the scores of million multiples for years to come.
In china or india or singapore or indonesia or south africa. All great young under-served markets.
For example older brother buys a pod and then gives that to his younger bro and buys a new one . and if there are 4 to 6 kids in a family then you get my point about un-tapped markets growing up in 5 to 9 yrs. With incredible sales potential .
And apple can sell them much more than just iphone -nano's 5 yrs from now .
Apple in a 10 yr hold is very cheap at todays prices.
If you bought apple 7 yrs ago and can hold apple for 10 more years you will be very very happy . MANY OF US FAN BOYS DID .
There is a 2.5 to 4 billion person market that have not yet matured to be a part of the apple revolution .
india and china pakistan 1/2 of russia on and on.
So apples tired old ipods lines will still be selling in the scores of million multiples for years to come.
In china or india or singapore or indonesia or south africa. All great young under-served markets.
For example older brother buys a pod and then gives that to his younger bro and buys a new one . and if there are 4 to 6 kids in a family then you get my point about un-tapped markets growing up in 5 to 9 yrs. With incredible sales potential .
And apple can sell them much more than just iphone -nano's 5 yrs from now .
Apple in a 10 yr hold is very cheap at todays prices.
10 yr hold.
I'm actually not a fanboy. In previous years I held Apple until I did very well with it, and dropped it.
There's still that possibility. If they were to drop the capital gains tax I would likely sell most of it and wait the 30 days before deciding whether to buy it again. But I am heavily invested in it.
During the depression, there were also market rallies of up to 45% before further crashes. We're currently in a very low volume rally (meaning it's weak), so the parallels with 1929 may not yet be too soon to ignore.
True, there may yet be even more severe repercussions to come from the actions taken by the Fed and Treasury. One school of thought predicts hyper-inflation and a dollar crash. There are many scenarios, but only few people in charge of pushing through policies that have historically prolonged recessions.
the growth is down to 10% which is a dead money stock
MS introduced a lot of new products and gained market share in a lot of markets in the last 10 years and yet its stock went no where with it's 10% average growth
Mac's to Apple are like bastard step children. like windows and office is to MS. it's a source of cash you can't give up but there is no more innovation and the growth is low single digits at best. The cool stuff for Apple are the consumer devices and for MS the server business and X-Box
Apple's profit non-GAAP is growing at much more than 10%, and this in a market that is about to EXPLODE. Add in the fact that even Apple's higher-priced computers have kept their head above water during a wicked recession, and it doesn't take a rocket scientist to figure on insane growth once the recession ends.
Conclusion: Apple will not be dead money for long. Not by a long shot.
I know several others have challenged this statement, but if you think about it, if Apple never pays a dividend, then the only way to make money off Apple's stock is to buy and then sell it, correct? You may have held Apple's stock for 12 years, and it may be worth far more now than when you bought it; but unless you sell it you have not made a dime.
This is a bit of an exageration, but Apple doesn't need to give a damn about it's stock price. And I've often wondered if investors will ever catch on that Apple is not in business to make shareholders money. This is why they are recession proof. Contrast Apple with other companies who manage (manipulate?) their stock price. They do this in part because the more assets they have on their books, the more money they can borrow on favorable credit terms. And then they run their business on borrowed money and try to expand further, increase their worth, borrow more money, and the cycle goes on. But then when the stock market plunges and the value of their stock drops, they can't borrow any more money to keep their businesses running.
Apple, with its $30 billion (or whatever it's at now) in the bank, doesn't need to borrow money from anyone. So why would they care that their stock price was cut in half with the rest of the stock market last year? Why would they care to make owning Apple stock more attractive to shareholders, and thus driving up demand/price, by paying out a dividend?
Apple's stock price could drop to $1/share and they could keep on operating as normal because no bank will be calling in their loans or denying new loans to keep things running (because they have no loans). And they could still be making $500 million deals for flash memory just using cash on hand.
Ok, this is a vast oversimplification, but moreso than most other companies, Apple doesn't need to worry about managing to stock holders expectations. And historically, they have not done so.
Makes me wonder why Apple even needs the forces of the market to screw up the value of their company... they should buy their stock back and go private.
Apple's growth this year is down to 10% because we're in the middle of the biggest worldwide recession since the Great Depression. No doubt, over time, this will be known as the Great Recession.
Don't use numbers of a company during a major financial crisis as your new expected growth rate. Doing that shows you have no long term understanding of Apple and its markets.
Considering that Apple is doing much better than expected during this time, you should be taking that into account vs other comparable competitors.
It's the law of large numbers. Apple's market cap is so large that it is impossible to grow at past high rates. The tablet will probably be a big hit and iPhone will take more market share than sj dreamed of a few years ago but I think the stock will languish.
The desktop and laptop market is dead as a growth engine. Even Microsoft saw that years ago.
I really can't believe you stated the above. Think about it Apple has a back to school program promoting it's laptops by offering an iPod with the system. Then shortly there after Apple comes out with what might be the ideal student laptop and the keep the special offer in place. Then you sit here and imply they aren't doing enough!!!
Really I don't get it at all. Frankly out of all the vendors a student has to choose from nobody has been as agressive as Apple. Maybe I'm missing something if so point it out but other wise I think you need a perspective change.
Dave
To clarify, I meant that Apple typically has introduced new products AFTER the season has passed. And since the hummingbirds are all over the notion of some kind of iTablet about to make it's debut, it would be too late for back to school. That is all.
You made some pretty quick and big assumptions about me, and you know noting about me. Why should I assume that what you say means anything to my well used methods?
That's usually true. But there are at least two concerns right now. First is that the NASDAQ is building a vast computer center in NJ for this very reason, and inviting big companies to take part. That's a concern.
But it's not even the one that I'm most worried about. It's just being done as a result of the methods being used that are what I'm worried about.
One is the "peeks" that we're seeing in some of these operations. Those 30 millisecond looks at trades that are about to be made by others is a major worry. I don't like, and neither do others, that a privilaged few can get that advantage.
And now that programmed trades are 90% of the business, it's a problem. humans simply can't interact quickly enough when problems occur from this, and if you are in the business you know very well about the instances that have occured. This will happen more often, and the problems will escalate.
So while this programming works when matters are stable, when something happens that is not accounted for i the programs, and there are plenty of things that are not, problems occur at such high speeds, that the only thing that can be done is to try to clean up as much of the mess as is possible.
Long Term Capital claimed that their geniuses had everything programmed in, and that they were taking little risks. Well, we know what happened there.
What was the name of the airline that had it's entire market value wiped out in a few moments? Was it AA? That never got entirely fixed. And what about all the small investors whose stock was sold at large losses? Most of that was NEVER straightened out.
I'm not the only one concerned about this. There are many in the industry who are, and they've written about the dangers.
One thing I've wondered about Apple (and about Microsoft and Google, for that matter)... with the power of all of those brilliant engineers and programmers working for them, how is it that they have never managed to create their own stock trading programs to challenge the computing firepower of a Goldman Sachs, for example? It's like they are only using a tiny percentage of their brains!
It's the law of large numbers. Apple's market cap is so large that it is impossible to grow at past high rates. The tablet will probably be a big hit and iPhone will take more market share than sj dreamed of a few years ago but I think the stock will languish.
The logic makes my brain hurt.
What does "market cap" have to do with earnings growth potential?
What does "market cap" have to do with earnings growth potential?
Answer: Not one damned thing.
Uuh... he actually makes an excellent point.
It is really as simple as 'the larger you are, the harder it is to become larger by the same multiple.'
For example, it is far easier for a $1.65B market cap company, given a particular growth rate, to become a $3.3B company, than it is for a $165B company to become a $330B company, since it is difficult to achieve the same growth rate in the same time frame when the scale is so different.
At some point, your sheer size starts to work against you, and you start to revert to the mean.
It is really as simple as 'the larger you are, the harder it is to become larger by the same multiple.'
For example, it is far easier for a $1.65B market cap company, given a particular growth rate, to become a $3.3B company, than it is for a $165B company to become a $330B company, since it is difficult to achieve the same growth rate in the same time frame when the scale is so different.
At some point, your sheer size starts to work against you, and you start to revert to the mean.
The first problem is, you'd have an awfully difficult time predicting when this will occur, so it's fundamentally a predictor of nothing. Second, market cap isn't really a measure of anything but investor sentiment at any given moment in time. Not much more than six months ago, Apple's market cap was half of what it is today, so by that measurement, Apple has doubled in size in just the last few months. Of course we know that isn't really true -- market cap all about valuations, it has little directly to do with profits.
So even by this arbitrary rule, and a meaningful measurement, what Apple has accomplished in terms of EPS growth over the last ten years has to be considered something akin to a mathematical impossibility. But it happened.
What does tell you about the future? Absolutely nothing.
Comments
This is a bit of an exageration, but Apple doesn't need to give a damn about it's stock price. And I've often wondered if investors will ever catch on that Apple is not in business to make shareholders money.
Bingo. APPL is a safe heaven for large institutional investors, usually Mark to Market valuations of such funds benefit from stable tech stocks that don't give dividends. APPL is usually found swilling around in moderately large mutual fund portfolios - large cap funds may have up to 2 - 3% APPL in them. Around 70% of APPL stock is held by such funds, around 25% or more is going to be members of the Apple board, with probably only a couple of percent held by people like you and I.
Apple's stock price could drop to $1/share and they could keep on operating as normal because no bank will be calling in their loans or denying new loans to keep things running (because they have no loans). And they could still be making $500 million deals for flash memory just using cash on hand.
Ok, this is a vast oversimplification, but moreso than most other companies, Apple doesn't need to worry about managing to stock holders expectations. And historically, they have not done so.
That's not quite true, if only because such a low price would make them vulnerable to a takeover. Apple would almost certainly start an aggressive buy-back scheme if the price dropped too low.
No, the Back To School selling season has already begun. Something that Apple needs to be taken to task over, IMO. There ARE retail selling seasons that they simply do not take advantage of, and that is simply bad business.
I really can't believe you stated the above. Think about it Apple has a back to school program promoting it's laptops by offering an iPod with the system. Then shortly there after Apple comes out with what might be the ideal student laptop and the keep the special offer in place. Then you sit here and imply they aren't doing enough!!!
Really I don't get it at all. Frankly out of all the vendors a student has to choose from nobody has been as agressive as Apple. Maybe I'm missing something if so point it out but other wise I think you need a perspective change.
Dave
It is?
That's an additional reason they should, yes.
You understand the difference between realized and unrealized PnL right? Until you sell, it's unrealized and (heaven forbid) if Apple were to get themselves into trouble for any bizzare reason, your investment might suddenly deliver nothing. Sure, with Apple that's exceptionally unlikely given the current market and their cash reserves, but not entirely unprecedented. You could have bought APPL in 1987 at $13, you' have only just broken even in 2004. An investment of $10,000 even with a 0.02 yield (reinvested) on the other hand, would have netted the investor $5,000 profit in the same period, meaning the share price would need to collapse to half its value to suffer an actual loss.
Many day traders are tying to ride APPL up and down, making buy-and-hold investments risky, because small time investors never know when they may actually need that cash and be forced to sell. A dividend always means you can ride a small price drop and still come out on top in the medium term.
Before telling someone out and out that they're wrong, you might want to find out what they do for a living. Drop me a PM and I'll tell you.
I understand quite well. I've been investing since 1963, when I was a kid.
I'll put my success in investing against yours any day. It doesn't matter what you do.
During the depression, there were also market rallies of up to 45% before further crashes. We're currently in a very low volume rally (meaning it's weak), so the parallels with 1929 may not yet be too soon to ignore.
My biggest concern is programmed trading, and unfair peeks at trades of others.
I understand quite well. I've been investing since 1963, when I was a kid.
I'll put my success in investing against yours any day. It doesn't matter what you do.
My biggest concern is programmed trading, and unfair peeks at trades of others.
Agreed, it's concerning. Having said that, The last project I worked on involved a High Frequency Algo Trading platform and the interesting thing is, most of them trade fairly flat, making money on the tiny peaks and troughs intra-day whether the trend is up or down. The actual impact on long-term prices is usually negligible in these cases. Some platforms are different, but the ones I've worked on have a zero or near zero position at COB.
Appleinsider this is starting to get really old an analysts report is not news and is not a rumor thus is not info we need to see here. I mean really a contract with another cell company might impact Apples stock - who would have thought of such a thing. A prostitute has more reason for being than these guys.
I don't know what the rest of Appleinsider thinks but these analyst reports are a waste of time. Maybe a poll is in order to see if the readership is even half interested in this stuff. It is just a shame that Appleinsider validates these idiots by printing this crap.
Dave
YES
where is all the meat to this slim tale of zero. Where is the verizon part ???
You made some pretty quick and big assumptions about me, and you know noting about me. Why should I assume that what you say means anything to my well used methods?
Agreed, it's concerning. Having said that, The last project I worked on involved a High Frequency Algo Trading platform and the interesting thing is, most of them trade fairly flat, making money on the tiny peaks and troughs intra-day whether the trend is up or down. The actual impact on long-term prices is usually negligible in these cases. Some platforms are different, but the ones I've worked on have a zero or near zero position at COB.
That's usually true. But there are at least two concerns right now. First is that the NASDAQ is building a vast computer center in NJ for this very reason, and inviting big companies to take part. That's a concern.
But it's not even the one that I'm most worried about. It's just being done as a result of the methods being used that are what I'm worried about.
One is the "peeks" that we're seeing in some of these operations. Those 30 millisecond looks at trades that are about to be made by others is a major worry. I don't like, and neither do others, that a privilaged few can get that advantage.
And now that programmed trades are 90% of the business, it's a problem. humans simply can't interact quickly enough when problems occur from this, and if you are in the business you know very well about the instances that have occured. This will happen more often, and the problems will escalate.
So while this programming works when matters are stable, when something happens that is not accounted for i the programs, and there are plenty of things that are not, problems occur at such high speeds, that the only thing that can be done is to try to clean up as much of the mess as is possible.
Long Term Capital claimed that their geniuses had everything programmed in, and that they were taking little risks. Well, we know what happened there.
What was the name of the airline that had it's entire market value wiped out in a few moments? Was it AA? That never got entirely fixed. And what about all the small investors whose stock was sold at large losses? Most of that was NEVER straightened out.
I'm not the only one concerned about this. There are many in the industry who are, and they've written about the dangers.
If someone has a spare $5,000 to throw at the market for a 5 year invest, APPL probably isn't the worst, but certainly not the best bet.
This kind of opinion is always amusing. I am always curious to hear how someone knows which bet is the "best bet," especially when they claim to be "certain." Does this advice come with a money-back guarantee?
Apple's stock price could drop to $1/share and they could keep on operating as normal because no bank will be calling in their loans or denying new loans to keep things running (because they have no loans). And they could still be making $500 million deals for flash memory just using cash on hand.
Not really. If the stock price was decimated, it would be because investors viewed Apple's business as being worthless, or less than worthless. You simply can't evaluate these things in such a complete vacuum. Apple's board doesn't worry about stock price on a daily, weekly or even monthly basis, but you can bet they are concerned about it over the long haul, if for no other reason than the number of stock options which they and the top executives in the company are granted as compensation.
My biggest concern is programmed trading, and unfair peeks at trades of others.
If you bought apple 7 yrs ago and can hold apple for 10 more years you will be very very happy . MANY OF US FAN BOYS DID .
There is a 2.5 to 4 billion person market that have not yet matured to be a part of the apple revolution .
india and china pakistan 1/2 of russia on and on.
So apples tired old ipods lines will still be selling in the scores of million multiples for years to come.
In china or india or singapore or indonesia or south africa. All great young under-served markets.
For example older brother buys a pod and then gives that to his younger bro and buys a new one . and if there are 4 to 6 kids in a family then you get my point about un-tapped markets growing up in 5 to 9 yrs. With incredible sales potential .
And apple can sell them much more than just iphone -nano's 5 yrs from now .
Apple in a 10 yr hold is very cheap at todays prices.
10 yr hold.
If you bought apple 7 yrs ago and can hold apple for 10 more years you will be very very happy . MANY OF US FAN BOYS DID .
There is a 2.5 to 4 billion person market that have not yet matured to be a part of the apple revolution .
india and china pakistan 1/2 of russia on and on.
So apples tired old ipods lines will still be selling in the scores of million multiples for years to come.
In china or india or singapore or indonesia or south africa. All great young under-served markets.
For example older brother buys a pod and then gives that to his younger bro and buys a new one . and if there are 4 to 6 kids in a family then you get my point about un-tapped markets growing up in 5 to 9 yrs. With incredible sales potential .
And apple can sell them much more than just iphone -nano's 5 yrs from now .
Apple in a 10 yr hold is very cheap at todays prices.
10 yr hold.
I'm actually not a fanboy. In previous years I held Apple until I did very well with it, and dropped it.
There's still that possibility. If they were to drop the capital gains tax I would likely sell most of it and wait the 30 days before deciding whether to buy it again. But I am heavily invested in it.
During the depression, there were also market rallies of up to 45% before further crashes. We're currently in a very low volume rally (meaning it's weak), so the parallels with 1929 may not yet be too soon to ignore.
True, there may yet be even more severe repercussions to come from the actions taken by the Fed and Treasury. One school of thought predicts hyper-inflation and a dollar crash. There are many scenarios, but only few people in charge of pushing through policies that have historically prolonged recessions.
the growth is down to 10% which is a dead money stock
MS introduced a lot of new products and gained market share in a lot of markets in the last 10 years and yet its stock went no where with it's 10% average growth
Mac's to Apple are like bastard step children. like windows and office is to MS. it's a source of cash you can't give up but there is no more innovation and the growth is low single digits at best. The cool stuff for Apple are the consumer devices and for MS the server business and X-Box
Apple's profit non-GAAP is growing at much more than 10%, and this in a market that is about to EXPLODE. Add in the fact that even Apple's higher-priced computers have kept their head above water during a wicked recession, and it doesn't take a rocket scientist to figure on insane growth once the recession ends.
Conclusion: Apple will not be dead money for long. Not by a long shot.
Thompson
I know several others have challenged this statement, but if you think about it, if Apple never pays a dividend, then the only way to make money off Apple's stock is to buy and then sell it, correct? You may have held Apple's stock for 12 years, and it may be worth far more now than when you bought it; but unless you sell it you have not made a dime.
This is a bit of an exageration, but Apple doesn't need to give a damn about it's stock price. And I've often wondered if investors will ever catch on that Apple is not in business to make shareholders money. This is why they are recession proof. Contrast Apple with other companies who manage (manipulate?) their stock price. They do this in part because the more assets they have on their books, the more money they can borrow on favorable credit terms. And then they run their business on borrowed money and try to expand further, increase their worth, borrow more money, and the cycle goes on. But then when the stock market plunges and the value of their stock drops, they can't borrow any more money to keep their businesses running.
Apple, with its $30 billion (or whatever it's at now) in the bank, doesn't need to borrow money from anyone. So why would they care that their stock price was cut in half with the rest of the stock market last year? Why would they care to make owning Apple stock more attractive to shareholders, and thus driving up demand/price, by paying out a dividend?
Apple's stock price could drop to $1/share and they could keep on operating as normal because no bank will be calling in their loans or denying new loans to keep things running (because they have no loans). And they could still be making $500 million deals for flash memory just using cash on hand.
Ok, this is a vast oversimplification, but moreso than most other companies, Apple doesn't need to worry about managing to stock holders expectations. And historically, they have not done so.
Makes me wonder why Apple even needs the forces of the market to screw up the value of their company... they should buy their stock back and go private.
Apple's growth this year is down to 10% because we're in the middle of the biggest worldwide recession since the Great Depression. No doubt, over time, this will be known as the Great Recession.
Don't use numbers of a company during a major financial crisis as your new expected growth rate. Doing that shows you have no long term understanding of Apple and its markets.
Considering that Apple is doing much better than expected during this time, you should be taking that into account vs other comparable competitors.
It's the law of large numbers. Apple's market cap is so large that it is impossible to grow at past high rates. The tablet will probably be a big hit and iPhone will take more market share than sj dreamed of a few years ago but I think the stock will languish.
The desktop and laptop market is dead as a growth engine. Even Microsoft saw that years ago.
I really can't believe you stated the above. Think about it Apple has a back to school program promoting it's laptops by offering an iPod with the system. Then shortly there after Apple comes out with what might be the ideal student laptop and the keep the special offer in place. Then you sit here and imply they aren't doing enough!!!
Really I don't get it at all. Frankly out of all the vendors a student has to choose from nobody has been as agressive as Apple. Maybe I'm missing something if so point it out but other wise I think you need a perspective change.
Dave
To clarify, I meant that Apple typically has introduced new products AFTER the season has passed. And since the hummingbirds are all over the notion of some kind of iTablet about to make it's debut, it would be too late for back to school. That is all.
You made some pretty quick and big assumptions about me, and you know noting about me. Why should I assume that what you say means anything to my well used methods?
That's usually true. But there are at least two concerns right now. First is that the NASDAQ is building a vast computer center in NJ for this very reason, and inviting big companies to take part. That's a concern.
But it's not even the one that I'm most worried about. It's just being done as a result of the methods being used that are what I'm worried about.
One is the "peeks" that we're seeing in some of these operations. Those 30 millisecond looks at trades that are about to be made by others is a major worry. I don't like, and neither do others, that a privilaged few can get that advantage.
And now that programmed trades are 90% of the business, it's a problem. humans simply can't interact quickly enough when problems occur from this, and if you are in the business you know very well about the instances that have occured. This will happen more often, and the problems will escalate.
So while this programming works when matters are stable, when something happens that is not accounted for i the programs, and there are plenty of things that are not, problems occur at such high speeds, that the only thing that can be done is to try to clean up as much of the mess as is possible.
Long Term Capital claimed that their geniuses had everything programmed in, and that they were taking little risks. Well, we know what happened there.
What was the name of the airline that had it's entire market value wiped out in a few moments? Was it AA? That never got entirely fixed. And what about all the small investors whose stock was sold at large losses? Most of that was NEVER straightened out.
I'm not the only one concerned about this. There are many in the industry who are, and they've written about the dangers.
One thing I've wondered about Apple (and about Microsoft and Google, for that matter)... with the power of all of those brilliant engineers and programmers working for them, how is it that they have never managed to create their own stock trading programs to challenge the computing firepower of a Goldman Sachs, for example? It's like they are only using a tiny percentage of their brains!
It's the law of large numbers. Apple's market cap is so large that it is impossible to grow at past high rates. The tablet will probably be a big hit and iPhone will take more market share than sj dreamed of a few years ago but I think the stock will languish.
The logic makes my brain hurt.
What does "market cap" have to do with earnings growth potential?
Answer: Not one damned thing.
The logic makes my brain hurt.
What does "market cap" have to do with earnings growth potential?
Answer: Not one damned thing.
Uuh... he actually makes an excellent point.
It is really as simple as 'the larger you are, the harder it is to become larger by the same multiple.'
For example, it is far easier for a $1.65B market cap company, given a particular growth rate, to become a $3.3B company, than it is for a $165B company to become a $330B company, since it is difficult to achieve the same growth rate in the same time frame when the scale is so different.
At some point, your sheer size starts to work against you, and you start to revert to the mean.
Uuh... he actually makes an excellent point.
It is really as simple as 'the larger you are, the harder it is to become larger by the same multiple.'
For example, it is far easier for a $1.65B market cap company, given a particular growth rate, to become a $3.3B company, than it is for a $165B company to become a $330B company, since it is difficult to achieve the same growth rate in the same time frame when the scale is so different.
At some point, your sheer size starts to work against you, and you start to revert to the mean.
The first problem is, you'd have an awfully difficult time predicting when this will occur, so it's fundamentally a predictor of nothing. Second, market cap isn't really a measure of anything but investor sentiment at any given moment in time. Not much more than six months ago, Apple's market cap was half of what it is today, so by that measurement, Apple has doubled in size in just the last few months. Of course we know that isn't really true -- market cap all about valuations, it has little directly to do with profits.
So even by this arbitrary rule, and a meaningful measurement, what Apple has accomplished in terms of EPS growth over the last ten years has to be considered something akin to a mathematical impossibility. But it happened.
What does tell you about the future? Absolutely nothing.