Right. But Apple is running out of product spaces that it can innovate in and still make boatlods of dough.
iTV? Sure, a nice new business. But it won't make the stock move that much unless Apple has a revolutionary way to bundle service. And a TV is something people replace every 5-10 years, not every 2 years with a subsidy from the telco.
iWatch? I could see how this could be the next iPod in a sense. But the problem here is that iWatch sales would be entirely limited to iPhone/iTouch owners. Profitable? Sure. A major line of business for Apple? Doubt it.
Now you can see why investors are cautious. For every argument on why Apple should shoot up, there's plenty of reason to be cautious.
Apple does not need to go to different spaces. Technology is advancing at an astounding pace -- for example, Samsung is starting to make plastic OLED (no glass), which makes devices much thinner and lighter, flexible screens are very close to production, speech recognition is improving quite quickly, etc, etc. I am sure that in five years we will be shocked by how primitive today's technology is. If Apple can show that it is at the forefront of this revolution, then it will do fine. For the moment, the jury is very much out.
If you compare Apple with Exxon, which is a company that earns more profit per year than Apple (although Apple has beat it in some quarters and has more cash) you can see that its market cap is $396b. Apple's market cap is currently around $380b. For Apple to be worth more than Exxon, it would have to show that it is capable of being a more profitable company than Exxon going forward and that will be indicated by profit growth compared to last year.
Estimates of $1000 are a bit crazy. Why would investors possibly value Apple at more than double a company that makes more profit per year than them? I'd say that $500 is a realistic valuation but that still requires indications of growth, which doesn't look likely. I think sales will still be strong so there's little reason to go down to $320 but it's still possible.
Keep in mind what $320 represents. That still only gives them the second highest market cap in the world behind Exxon.
Actually, Exxon has a fairly low market multiple because there is a lot of uncertainty in its business, and it is not perceived as having a lot of growth potential. Given that Apple's smartphone penetration is a lot less than 100%, it has a lot of upside, so if the management is not perceived as dropping the ball, it is quite reasonable for Apple to have a much higher multiple than XOM. (notice that the multiples of both are way below the S&P 500 average).
If you really bought the stock and not options its a good move. Volatility is very high right now so options premiums are huge. Options price are going down after earning regardless of stock direction, unless the move is big, both sides will lose.
So, if the poster believes that AAPL will go up post-earnings, he should write some covered calls.
Has there ever been a more undervalued big cap stock than AAPL in the history of the stock market?
AAPL's current price is a total joke, and Apple continues to lead the way in profits and has the best customer satisfaction in the entire industry.
Apple owns the entire tablet category. The iPad is so dominant that everybody else is just fighting for crumbs, which is not really that surprising, since the iPad is the only true original, and everybody else just makes inferior copies. The iPad is also a big reason why traditional PC sales are declining.
Apple's OS X desktop and laptop machines continue to do extremely well VS. the rest of the PC industry. They are the gold standard and nothing else comes close.
The iPhone 5 is the top selling phone in the US and Apple hold three positions out of five on the top five chart. iPhones continue to remain in extreme demand, and the most recent iPhone launch on T-Mobile was "Gangbusters", according to the CEO of T-Mobile.
AAPL should be at around $1000 now, IMO.
And it's also time to start investigating illegal activity by known criminal entities such as Samsung, which is intentionally attempting to manipulate the price of shares of Apple, by repeatedly planting false stories in the media (Hello Digitimes!), that is reprinted by other sites, including this site, AI. That is my theory.
As pointed out elsewhere in this thread, XOM makes more money than Apple, and has a similar market cap and multiple. Are people on ExxonMobileInsider bemoaning this fact?
Actually, Exxon has a fairly low market multiple because there is a lot of uncertainty in its business, and it is not perceived as having a lot of growth potential. Given that Apple's smartphone penetration is a lot less than 100%, it has a lot of upside, so if the management is not perceived as dropping the ball, it is quite reasonable for Apple to have a much higher multiple than XOM. (notice that the multiples of both are way below the S&P 500 average).
There's no reason to perceive the management as dropping the ball. In order to increase market volume, they have to lower prices, which isn't a guarantee of increasing profits. They already have 75% of the phone profits with 20% of the volume. 20% isn't that low either when Samsung only has 30%. I'd say that's pretty good management.
Volume growth and profit growth don't always come together as Q1 showed - 30% more phones, 50% more iPads, profit was the same. The iMac will have had a small impact and obviously the iPad mini has taken some of the iPad sales.
They really can't be doing a much better job than they are currently doing. People come out with suggestions that they should make a bigger/cheaper phone but don't address how that's going to grow their 75% profits. If it does grow profits, it can't be significantly.
Apple has very little profit growth potential except with the iPad and even there, they dominate the volume.
There's no reason to perceive the management as dropping the ball. In order to increase market volume, they have to lower prices, which isn't a guarantee of increasing profits. They already have 75% of the phone profits with 20% of the volume. 20% isn't that low either when Samsung only has 30%. I'd say that's pretty good management.
Volume growth and profit growth don't always come together as Q1 showed - 30% more phones, 50% more iPads, profit was the same. The iMac will have had a small impact and obviously the iPad mini has taken some of the iPad sales.
They really can't be doing a much better job than they are currently doing. People come out with suggestions that they should make a bigger/cheaper phone but don't address how that's going to grow their 75% profits. If it does grow profits, it can't be significantly.
Apple has very little profit growth potential except with the iPad and even there, they dominate the volume.
You have actually misinterpreted somewhat what I meant (probably my fault): when I was talking about penetration, the question I was asking was: what percentage of humans have Apple smartphones? The answer is (I am guessing): around 3% (assuming around 200MM iPhones have been produced/sold). Now, granted, about half the humans don't have enough money to eat, and some of them are too young to have phones, etc, I am still guessing that the 3% can be upped to around 25%. The penetration number of tablets is lower (since this is a much newer market). At full penetration (whatever it is), the market is mature, so the only sales are from replacing old hardware, but Apple (and the industry) is very far away from this. Now this will require dropping(average) profits per device some, but (from what I surmise from the Sri Lankan gentleman's numbers, and some other subcontinental comments), probably not as much as a factor of two.So, there is a lot of upside, in my opinion, but again, as one gathers from the Sri Lankan anecdotal evidence, Apple is not doing a great job going after that market. Plus, the penetration (in the sense I define above) even in first world countries is a lot less than it could be. So, I repeat: my contention is that there is a lot of upside, but it is not clear that the Apple management knows how to get it.
At full penetration (whatever it is), the market is mature, so the only sales are from replacing old hardware, but Apple (and the industry) is very far away from this.
They should stay far away from this too because of the fact that it requires very low prices.
There were 1.6 billion phones shipped in 2012 (up from 1.5b in 2011), 700m smartphones of which Apple shipped 135m. Eventually, the smartphones will overtake the remaining 9b but Android devices will wipe those out more quickly than Apple (it looks like a ratio of 2:1 at present).
80% of the world lives on less than $10/day so 0.2 x 7b = 1.4b is a pretty good representation of the phone market.
This year, Apple's shipments have grown 30% so far. This gives them ~175m units in 2013 but profit is flat. In 2013, smartphones should be ~900m.
There's clearly volume growth but the profit growth hasn't shown itself.
there is a lot of upside, but it is not clear that the Apple management knows how to get it.
You're talking about unit volume, not profits. Apple has 75% of the profits. You are suggesting they don't know how to ship another 560 million phones per year in order to get that last 25% profit. They know how to and they don't want to as they've said quite explicitly. Tim Cook specifically addressed this point in an interview by saying that if they wanted to they can ship the most units in any given category but that's not what they want to do. What's the point if you don't make significantly more profit?
Why not post a graph showing income vs profit over the last number of years instead of stock price. Gives the illusion they are loosing money while in reality, they keep making piles of profit...
Exactly. It's all perception. Public ownership is the playground of people that have no function in society but have managed to entrench themselves into a position of power and influence by being big mouthed opinion spouts. Impressions, opinions and claims are constantly swinging the stock voodoo up and down and none of it has anything to do with the actual performance of the company in question. It's a distortion for the interests of the analysts. Like news companies spouting the most obnoxious, meaningless but attention-getting stories, focusing on only the worst possible items of actual "news", just to get attention for viewership numbers and advertising.
So this means, that when they have the most wanted(if you want tech specs) on the market getting more sales(from my family and friends) helps them nowhere?
Comments
Quote:
Originally Posted by Jetz
Right. But Apple is running out of product spaces that it can innovate in and still make boatlods of dough.
iTV? Sure, a nice new business. But it won't make the stock move that much unless Apple has a revolutionary way to bundle service. And a TV is something people replace every 5-10 years, not every 2 years with a subsidy from the telco.
iWatch? I could see how this could be the next iPod in a sense. But the problem here is that iWatch sales would be entirely limited to iPhone/iTouch owners. Profitable? Sure. A major line of business for Apple? Doubt it.
Now you can see why investors are cautious. For every argument on why Apple should shoot up, there's plenty of reason to be cautious.
Apple does not need to go to different spaces. Technology is advancing at an astounding pace -- for example, Samsung is starting to make plastic OLED (no glass), which makes devices much thinner and lighter, flexible screens are very close to production, speech recognition is improving quite quickly, etc, etc. I am sure that in five years we will be shocked by how primitive today's technology is. If Apple can show that it is at the forefront of this revolution, then it will do fine. For the moment, the jury is very much out.
Quote:
Originally Posted by Marvin
If you compare Apple with Exxon, which is a company that earns more profit per year than Apple (although Apple has beat it in some quarters and has more cash) you can see that its market cap is $396b. Apple's market cap is currently around $380b. For Apple to be worth more than Exxon, it would have to show that it is capable of being a more profitable company than Exxon going forward and that will be indicated by profit growth compared to last year.
Estimates of $1000 are a bit crazy. Why would investors possibly value Apple at more than double a company that makes more profit per year than them? I'd say that $500 is a realistic valuation but that still requires indications of growth, which doesn't look likely. I think sales will still be strong so there's little reason to go down to $320 but it's still possible.
Keep in mind what $320 represents. That still only gives them the second highest market cap in the world behind Exxon.
Actually, Exxon has a fairly low market multiple because there is a lot of uncertainty in its business, and it is not perceived as having a lot of growth potential. Given that Apple's smartphone penetration is a lot less than 100%, it has a lot of upside, so if the management is not perceived as dropping the ball, it is quite reasonable for Apple to have a much higher multiple than XOM. (notice that the multiples of both are way below the S&P 500 average).
Quote:
Originally Posted by herbapou
If you really bought the stock and not options its a good move. Volatility is very high right now so options premiums are huge. Options price are going down after earning regardless of stock direction, unless the move is big, both sides will lose.
So, if the poster believes that AAPL will go up post-earnings, he should write some covered calls.
Quote:
Originally Posted by Apple ][
Has there ever been a more undervalued big cap stock than AAPL in the history of the stock market?
AAPL's current price is a total joke, and Apple continues to lead the way in profits and has the best customer satisfaction in the entire industry.
Apple owns the entire tablet category. The iPad is so dominant that everybody else is just fighting for crumbs, which is not really that surprising, since the iPad is the only true original, and everybody else just makes inferior copies. The iPad is also a big reason why traditional PC sales are declining.
Apple's OS X desktop and laptop machines continue to do extremely well VS. the rest of the PC industry. They are the gold standard and nothing else comes close.
The iPhone 5 is the top selling phone in the US and Apple hold three positions out of five on the top five chart. iPhones continue to remain in extreme demand, and the most recent iPhone launch on T-Mobile was "Gangbusters", according to the CEO of T-Mobile.
AAPL should be at around $1000 now, IMO.
And it's also time to start investigating illegal activity by known criminal entities such as Samsung, which is intentionally attempting to manipulate the price of shares of Apple, by repeatedly planting false stories in the media (Hello Digitimes!), that is reprinted by other sites, including this site, AI. That is my theory.
As pointed out elsewhere in this thread, XOM makes more money than Apple, and has a similar market cap and multiple. Are people on ExxonMobileInsider bemoaning this fact?
There's no reason to perceive the management as dropping the ball. In order to increase market volume, they have to lower prices, which isn't a guarantee of increasing profits. They already have 75% of the phone profits with 20% of the volume. 20% isn't that low either when Samsung only has 30%. I'd say that's pretty good management.
Volume growth and profit growth don't always come together as Q1 showed - 30% more phones, 50% more iPads, profit was the same. The iMac will have had a small impact and obviously the iPad mini has taken some of the iPad sales.
They really can't be doing a much better job than they are currently doing. People come out with suggestions that they should make a bigger/cheaper phone but don't address how that's going to grow their 75% profits. If it does grow profits, it can't be significantly.
Apple has very little profit growth potential except with the iPad and even there, they dominate the volume.
Quote:
Originally Posted by Marvin
There's no reason to perceive the management as dropping the ball. In order to increase market volume, they have to lower prices, which isn't a guarantee of increasing profits. They already have 75% of the phone profits with 20% of the volume. 20% isn't that low either when Samsung only has 30%. I'd say that's pretty good management.
Volume growth and profit growth don't always come together as Q1 showed - 30% more phones, 50% more iPads, profit was the same. The iMac will have had a small impact and obviously the iPad mini has taken some of the iPad sales.
They really can't be doing a much better job than they are currently doing. People come out with suggestions that they should make a bigger/cheaper phone but don't address how that's going to grow their 75% profits. If it does grow profits, it can't be significantly.
Apple has very little profit growth potential except with the iPad and even there, they dominate the volume.
You have actually misinterpreted somewhat what I meant (probably my fault): when I was talking about penetration, the question I was asking was: what percentage of humans have Apple smartphones? The answer is (I am guessing): around 3% (assuming around 200MM iPhones have been produced/sold). Now, granted, about half the humans don't have enough money to eat, and some of them are too young to have phones, etc, I am still guessing that the 3% can be upped to around 25%. The penetration number of tablets is lower (since this is a much newer market). At full penetration (whatever it is), the market is mature, so the only sales are from replacing old hardware, but Apple (and the industry) is very far away from this. Now this will require dropping(average) profits per device some, but (from what I surmise from the Sri Lankan gentleman's numbers, and some other subcontinental comments), probably not as much as a factor of two.So, there is a lot of upside, in my opinion, but again, as one gathers from the Sri Lankan anecdotal evidence, Apple is not doing a great job going after that market. Plus, the penetration (in the sense I define above) even in first world countries is a lot less than it could be. So, I repeat: my contention is that there is a lot of upside, but it is not clear that the Apple management knows how to get it.
They should stay far away from this too because of the fact that it requires very low prices.
There are ~7 billion people. 50% are in poverty:
http://www.statisticbrain.com/world-poverty-statistics/
There were 1.6 billion phones shipped in 2012 (up from 1.5b in 2011), 700m smartphones of which Apple shipped 135m. Eventually, the smartphones will overtake the remaining 9b but Android devices will wipe those out more quickly than Apple (it looks like a ratio of 2:1 at present).
80% of the world lives on less than $10/day so 0.2 x 7b = 1.4b is a pretty good representation of the phone market.
This year, Apple's shipments have grown 30% so far. This gives them ~175m units in 2013 but profit is flat. In 2013, smartphones should be ~900m.
There's clearly volume growth but the profit growth hasn't shown itself.
You're talking about unit volume, not profits. Apple has 75% of the profits. You are suggesting they don't know how to ship another 560 million phones per year in order to get that last 25% profit. They know how to and they don't want to as they've said quite explicitly. Tim Cook specifically addressed this point in an interview by saying that if they wanted to they can ship the most units in any given category but that's not what they want to do. What's the point if you don't make significantly more profit?
Exactly. It's all perception. Public ownership is the playground of people that have no function in society but have managed to entrench themselves into a position of power and influence by being big mouthed opinion spouts. Impressions, opinions and claims are constantly swinging the stock voodoo up and down and none of it has anything to do with the actual performance of the company in question. It's a distortion for the interests of the analysts. Like news companies spouting the most obnoxious, meaningless but attention-getting stories, focusing on only the worst possible items of actual "news", just to get attention for viewership numbers and advertising.
What a great model for a society.
Quote:
Originally Posted by piot
Why do people keep coming out with lame arguments like this? Not everyone you see is using a brand new phone
iPhone 5 has only been around for only 6 months.
iPhone 4S for nearly 18 months.
And the 4 for nearly 3 years!
Even if the iPhone 5 had been selling really well, you should expect to see four, or even five, times as many older iPhones.
If the iPhone 5 had been selling really well I would expect to see more people with them. Even with my anecdotal evidence.
Looks like the older models are still selling strongly.
Be interesting to know the breakdown of 5/4S/4 sales since the 5 launch, and how it compares with previous iPhone releases.
Quote:
Originally Posted by nw942
Be interesting to know the breakdown of 5/4S/4 sales since the 5 launch, and how it compares with previous iPhone releases.
http://allthingsd.com/20130422/legacy-iphones-are-helping-apple-hit-a-broader-market/