You are absolutely correct regarding the debt. It only makes sense Apple is one of the largest US taxpayers as it is one of the largest beneficiaries of our system.
I think the whole debt thing is kind of funny since the amount of interest Apple makes in their long term investments after taxes, probably pays the interest on the debt and it was just an easier way to decrease their taxes a little and give more dividend.
How many people out there don't like paying taxes and try to find ways to reduce their tax liability? As long as it's legal, what the F? right?
15-20% EPS growth will easily get this to $700 a share.
Google's last report showed a 1% EPS growth. That's right 1%. Yet their PE is 28 vs Apple at 14. If Apple had the same PE as Google the stock would be $1100.
EPS growth is compounding. You don't need 30% EPS growth every quarter to make the stock go up 30%. You really only need 10% growth. You also need to factor in the dividends and buybacks and the huge cash balance. I can easily see Apple back to $700-$800 in the next 12 months.
So you expect a 30% stock price increase with only a 15 to 20% EPS growth? Hmm. Oh, OK. If you think so.
Google's stock price is TOTALLY different. Here's why? They are in a much earlier stage of development than Apple. Look at Amazon, look at their P/E ratio. A lot of these internet services companies, which is what Google is listed as, is much more like a startup than an established business that's paying a sizable dividend.
Personally I think Google is overvalued, just Facebook is overvalued, just like Amazon is overvalued. but obviously their investors see something different in THEIR business model to Apple's. Apple's more of a hardware mfg, if you will than an Internet Services company. Does that make sense? I'm not saying they won't hit $700 a share, but I highly doubt they can do that with only 15 to 20% EPS growth. that's why they aren't trading at $700 and they are trading at $535 instead. Just my observation.
As a company matures, pays dividends and is more seen as a Blue Chip type company, their P/E ratio get more in the low to mid teens than the 20's, 30's and beyond. It's just what I've been told a LONG time ago by some respected industry analyst and it wasn't directed towards Apple per se, it was directed more towards how it's just seen and done by these types of businesses as they develop from a startup to a mature company that's gone through their hyper growth stage. I think Apple can hit the equivelent of $700, but it's going to take a lot more than 15 to 20% EPS year to year growth rate. But that's just my opinion based on what I'm seeing and hearing and think that that rationale just makes a little more sense. That's all. We can certainly disagree and It's not going to hurt my feelings and it's not meant to hurt yours either, so please don't take it as such. It's just different viewpoints.
Oh, I forgot to mention, look at the shares outstanding, one is more diluted than the other. That can make a large difference on stock price. I think Google has only 660Million shares and pre stock split, Apple has just under 1 Billion, but post stock split, Apple will be a lot more diluted at around 7 Billion shares. Microsoft has 8.5 Billion shares outstanding and Microsoft's P/E is pretty low, they pay dividends, etc. That's why their stock movement isn't that great and hasn't been for a while.
I'm not saying they won't hit $700 a share, but I highly doubt they can do that with only 15 to 20% EPS growth. that's why they aren't trading at $700 and they are trading at $535 instead.
Yeah, that's after-hours trading right after the announcement. We'll see where the stock is at on the day they actually perform the split. It's common to have large increases right after the announcement and then see a normal price after people have come down off their cloud and more into REALITY.
Let's look at IPhone sales. I read last year that they finally reached a daily production of 500,000 phones a day. I don't know if that was TOTAL or just Foxconn. Now, if they are at 45 Mill phones a quarter, how can they get much higher in unit sales per year if they don't increase production? if you look at their quarterly units shipped they've been hovering between 31 Million to as high as 51 Million units shipped for a 12 month total of 159+ over the past 12 months. Obviously at the end of the quarter they have so much in inventory carrying over, but they are supposedly at 180 Million units a year which is less than a 20% increase if they actually hit 180 Million units over the next 12 months. Personally, I firmly believe they have to crank out the iPhone 6 in June, and then refresh the 5S, 5C, etc. in Sept and between all of these, if they don't have massive production issues, they MIGHT be able to actually hit 60 Million instead of only 51 Million they did last Christmas, which is only a 20% increase, but hopefully the slower quarters might start hitting in the 40+ Million range rather than low 30 Million range. To drop all of their new products at then of the year is dangerous for Apple and they need to spread out product introductions in the iPhones and maybe even the iPads so they don't always run into lots of spillover because of production problems. They've done this two years in a row and it's frustrating when they do it. I think 45 Million in a quarter needs to be their NEW low and 60 Million in a quarter, needs to be their new high and that will help them get to $700 a share much easier and then they need to raise that bar again and again. Due to bigger markets opening up, and more screen size choices, I think they can, but building more production and getting components is a key issue.
F-Apple, shareholder investor profits driven behemoth, leading a field of rubbish profiteering design choices, is not making the world a better place, god don't you hate pointless greed ? with a passion ? this 7 for 1 move is just to make investors and stockholders wet, steve would never have approved, their recent profits are mainly driven by china mobile sales, and a whole new market of 1 billion asian people eager for shiny walled garden - overpriced tech rubbish, who don't yet realise the bad things apple are doing to open standards tech and civility in general, underdog company - has so fully turned into investor class filth preserver. They're like a disgusting undemocratic law unto themselves.
I have a question concerning options. What if somebody owns a contract at the $410 strike price that doesn't expire until 2015, just to give an example. 7 does not go into 410 evenly. Will the market makers create a special $58.57 strike price and give the owner 7 of those contracts?
I have a question concerning options. What if somebody owns a contract at the $410 strike price that doesn't expire until 2015, just to give an example. 7 does not go into 410 evenly. Will the market makers create a special $58.57 strike price and give the owner 7 of those contracts?
I think when there is a stock split, everything gets adjusted accordingly on the date of the actual split. The split doesn't take place until June 1, but call your broker to get 100% confidence on that. This is a question for a licensed professional if you ask me, but my gut feeling is everything adjusts on the actual split date.
No, no, no. It’s a 6S to 1 split! Haven’t you been paying attention to Apple’s naming schemes?
But aren't they still on iOS 7.1? Oh....................... 7 to 1 stock split is better than a 10 to 9 stock split. So i think Apple decided to follow iOS version instead of OS X.
It's been years since my Apple stock was split...but even then it was just a 2:1, not 7:1. Nice.
I think Apple's making up for lost time when it should have split a few times every time it hovered around $100 a share like they NORMALLY split the stock.
You need to realize most analysis calculate earnings 2 or 3 years ahead. If Apple does 10% growth for 3 years the accumulated growth will be over 30% because of compounding.
The reason why Apple was trading at $535 is because of Wall Street BS. Period. Earnings growth at 10-15% justifies a PE in the high teens. A PE of 17.50 would put Apple at $700. Costco has a PE of 24 and only grew earnings at 18% last year.
Google is not even close to a startup. They already dominate internet advertising and are having trouble growing earnings. Their revenue was up 27% last quarter but profits were up only 1%. Problem is advertisers are not willing to spend the same amount of money on mobile ads in contrast to desktop ads. Thus their cost per click has gone down the last 9 quarters in a row. Also startups don't spend $20B acquiring companies like Motorolla.
Not all of them. I look at what periods of time they are talking about. They might calculate it that far ahead, but a lot their recommendations are 12 months. So you have to be VERY specific on the time period. I was looking at 12 months, I guess we have to be on the same page for this.
I see a LOT of analysts that make 6 month to 12 month predictions most often, even though they might calculate further than that. They usually like to give 6 to 12 month guidance more often than the 2 to 3 years. Most companies don't give enough guidance to go that far ahead, so it's not that reliable to go much past 12 months. Heck, some of these guys can't even do 12 months with decent levels of accuracy. A lot of companies give only more like 3 to sometimes 6 months guidance, so how can someone's 2 to 3 year guidance be as accurate?
Yeah, in 2 years from now, if they keep at this rate, I think it's very likely they'll hit $100 (post stock split) and stay there, if things go the way they are going, but they need to look into more market segments other than just selling iPhones and iPads into more countries. That's just creating more markets for existing products.
They need to look outside of the same slices in the pie chart for revenue.
HDTVs is a fast growing market and they COULD penetrate that to increase yet another entirely new market segment that would help solidify Apple users into sticking with Apple products. I think it's a very natural market for them, they just have to figure it out ahead of time so they don't make any major mistakes. The TV panel mfg have troubles making money because they all fall into the trap of hitting every price point from $200 on up and that's what kills their margins, they make entirely too many products where only some make a decent profit margin where the rest is basically dumping product at little to no money, even a loss just to move panels.
I know Google is not a startup, but for a company to go to $1000 a share without a stock split isn't common. They should have done a stock split a long time ago, but they have been trying to get away from being purely based on advertisement as their source of revenue into going into song/app downloads, selling phones and tablets, laptops, and the various services they offer, so they really are kind of confused as to who they REALLY are. They are kind of playing in to too many areas and just throwing crap out to see what sticks. At least that's my opinion, but they are FAR from a mature company that's paying dividends like a Microsoft, Apple, Intel, etc.
Well I can't help it if they wasted so much money on Motorola, look at Facebook, they waste BILLIONS on tiny nothing companies all of the time and they just recently went public. Also, Google paid $12.5 Billion, not $20 BIl, I don't know where you got the $20 Bil from. Some of these companies that fall into a lot of disposable cash make some of THE dumbest decisions. Look at the crap HP wasted Billions on. Palm, Autonomy, etc. boy, did they put themselves in a horrible position that will take decades to sift through before they can really recover. I think Microsoft wasted their money on Nokia, but time will tell if they can make a go of it.
A mature company is really solidified in what they do and paying dividends. That's how a lot of these analysts see them. I just saw one interview and this is basically what he was saying.
You need to realize most analysis calculate earnings 2 or 3 years ahead. If Apple does 10% growth for 3 years the accumulated growth will be over 30% because of compounding.
The reason why Apple was trading at $535 is because of Wall Street BS. Period. Earnings growth at 10-15% justifies a PE in the high teens. A PE of 17.50 would put Apple at $700. Costco has a PE of 24 and only grew earnings at 18% last year.
Google is not even close to a startup. They already dominate internet advertising and are having trouble growing earnings. Their revenue was up 27% last quarter but profits were up only 1%. Problem is advertisers are not willing to spend the same amount of money on mobile ads in contrast to desktop ads. Thus their cost per click has gone down the last 9 quarters in a row. Also startups don't spend $20B acquiring companies like Motorolla.
Here's what I don't get. There have been articles mentioning how Apple is starting production of the iPhone 6 and then journalist are now saying they are going to release it in Sept. What the heck would Apple start production of a product to fill up warehouses 5 months ahead of time sitting on inventory? That makes NO SENSE. That would look bad from an inventory perspective. If Apple is, in fact, starting production of these suckers, then it would make sense that they would have a release date within a couple of months as they got the final issues cleaned up. I think there is some confusion by the media. Surprise, surprise. I hate how they throw this crap out there like it's what's going to happen, when it sounds like they are grasping for straws. I really think a WWDC announcement would definitely kick ass and I don't think they need to wait until i0S8, do they? They can always spit out a specific model iOS update until the new version of iOS comes out. If Apple updates the 5S, releases a ~5 inch, and then switches the 5C for the polycarb 5S, Apple is going to have some MAJOR production issues trying to keep up with demand. I'm REALLY nervous of them playing that game. They've had two years of this and I know customers don't like waiting during Christmas so they can give someone a present. I just think that's stupid to play that game. They should have tons of inventory ready to hand out as people line up and they shouldn't make people wait until after Christmas.
You need to realize most analysis calculate earnings 2 or 3 years ahead. If Apple does 10% growth for 3 years the accumulated growth will be over 30% because of compounding.
The reason why Apple was trading at $535 is because of Wall Street BS. Period. Earnings growth at 10-15% justifies a PE in the high teens. A PE of 17.50 would put Apple at $700. Costco has a PE of 24 and only grew earnings at 18% last year.
Google is not even close to a startup. They already dominate internet advertising and are having trouble growing earnings. Their revenue was up 27% last quarter but profits were up only 1%. Problem is advertisers are not willing to spend the same amount of money on mobile ads in contrast to desktop ads. Thus their cost per click has gone down the last 9 quarters in a row. Also startups don't spend $20B acquiring companies like Motorolla.
PE is solely based on the current stock price divided by the last 12 months of earnings. Please, go take some courses in investments and once you get an A in it, then talk to me.
Analayst make all kinds of predictions in their spreadsheets, but they are using historical data, looking at trend lines, earnings from PAST history, all kinds of statistics and they also gather guidance from the company they are following, but it's VERY rare for even a company to know much more than 12 months ahead of time what they are going to do and they even revise their guidance right before earnings reports. So, one can extrapolate out as far as they want to, but they aren't going to be that accurate and there is not one single calculation that has anything to do with 2 to 3 years down the road. Market capitalization doesn't do that, P/E doesn't do that, Beta doesn't do that, etc, If you go to Yahoo! Finance, they even put the 1yr target with everything else. But that's a consensus of various analysts average. http://finance.yahoo.com/q?s=AAPL
I haven't heard the entire analyst call, but I ran into an Apple employee and he said something to the effect of increased dividends as well and that this was all going to start in June. I don't know what changes they are making to the dividends, but I think this is a welcome stock split, I just wish I had a bunch of shares to take advantage of this moving forward. For some reason, the new price is going to be around $76 a share instead of $535, and I think it's going to be a LOT easier for Apple to reach $100 a share and HOPEFULLY not go back down than it is for Apple to reach $700 a share and to have that as the new base line. Time will tell what happens, but I think what happens at WWDC and their announcements is going to make me feel either more or less comfortable.
One thing I must say, when I listened to part of the conference call and listen to some of the "positive" comments they were mentioning, some of them are fluff. I hate it when they make a comment, but there isn't much substance behind it. Having 800 Million iTunes account holders is FLUFF to me, but if they said they are seeing a 30% increase per user of money being spent, that's more substance. Having an account doesn't mean you are spending money. I haven't rented or bought any movies in a while and I"m a little upset they don't have a yearly subscription service. I have one with Amazon (bought it before the price increase) and I use it fairly regularly. For a while I was using it daily for several hours catching up on shows I've never seen before. There service is pretty decent quality and serves up the content pretty good, but I wish Apple had this service without having an AppleTV. Watching on a 27 inch iMac is good enough right now. But I would like to maybe see Apple have some sort of $9.95 a month for unlimited streaming, as long as they have enough decent content (TV and Movies) to watch on my iMac. I might be up for that.
The auto integration, I'm sorry, but I see it only as a way to make people feel more comfortable using an iPhone with a car and I so far don't see how Apple is making money from this. So, I think it would be better if they had some other NEW revenue stream from the auto industry. If they had some deal where cars came with a built in iPad on the dashboard instead of some other system, that might excite me if it was catching on. But I would like to see them have an actual new revenue stream to get hot and bothered about it.
The green stuff is fluff, it's cool they are doing it, but it's not going to effect the stock price, only what Greenpeace THINKS about Apple.
On a conference call, it is imperative to proudly exclaim your accomplishments. 700m+ c.c.'s on file is something no other company can come close to. What other company even has 100m? Who cares if it grows even 1% yoy? That's 8 million additional users. You have take consider that 800m relative to every other # in the history of the world. It's staggering, not fluff.
Ios in the car will be huge. You could write a book about why it's imperative for their business model to succeed. There is a reason why 100% of car mfgrs will offer it within 3 years. If they don't, their sales will be had by a competitor. Granted, they won't make huge numbers off iOS in the car, but they will make huge profits selling iPhones and iPads and Iwatches.
Apple's ecosystem exists to sell hardware, not to generate insane profits. The lion's share of profits come from hardware sales. I think payments will eventually account for 15% of Apple's profits...down the road.
I agree with your thoughts about the subscription service. But ultimately, I could care less. I go to my Netflix and Prime app if I want to stream old movies. I don't like spending the 20% Apple premium, compared to Amazon, on rentals and purchases of digital content, but I overcome that by buying $100 iTunes cards on sale for $75 on ebay once a year. Although, I've noticed recently their prices are more in line with Amazon's.
Comments
You are absolutely correct regarding the debt. It only makes sense Apple is one of the largest US taxpayers as it is one of the largest beneficiaries of our system.
I think the whole debt thing is kind of funny since the amount of interest Apple makes in their long term investments after taxes, probably pays the interest on the debt and it was just an easier way to decrease their taxes a little and give more dividend.
How many people out there don't like paying taxes and try to find ways to reduce their tax liability? As long as it's legal, what the F? right?
15-20% EPS growth will easily get this to $700 a share.
Google's last report showed a 1% EPS growth. That's right 1%. Yet their PE is 28 vs Apple at 14. If Apple had the same PE as Google the stock would be $1100.
EPS growth is compounding. You don't need 30% EPS growth every quarter to make the stock go up 30%. You really only need 10% growth. You also need to factor in the dividends and buybacks and the huge cash balance. I can easily see Apple back to $700-$800 in the next 12 months.
So you expect a 30% stock price increase with only a 15 to 20% EPS growth? Hmm. Oh, OK. If you think so.
Google's stock price is TOTALLY different. Here's why? They are in a much earlier stage of development than Apple. Look at Amazon, look at their P/E ratio. A lot of these internet services companies, which is what Google is listed as, is much more like a startup than an established business that's paying a sizable dividend.
Personally I think Google is overvalued, just Facebook is overvalued, just like Amazon is overvalued. but obviously their investors see something different in THEIR business model to Apple's. Apple's more of a hardware mfg, if you will than an Internet Services company. Does that make sense? I'm not saying they won't hit $700 a share, but I highly doubt they can do that with only 15 to 20% EPS growth. that's why they aren't trading at $700 and they are trading at $535 instead. Just my observation.
As a company matures, pays dividends and is more seen as a Blue Chip type company, their P/E ratio get more in the low to mid teens than the 20's, 30's and beyond. It's just what I've been told a LONG time ago by some respected industry analyst and it wasn't directed towards Apple per se, it was directed more towards how it's just seen and done by these types of businesses as they develop from a startup to a mature company that's gone through their hyper growth stage. I think Apple can hit the equivelent of $700, but it's going to take a lot more than 15 to 20% EPS year to year growth rate. But that's just my opinion based on what I'm seeing and hearing and think that that rationale just makes a little more sense. That's all. We can certainly disagree and It's not going to hurt my feelings and it's not meant to hurt yours either, so please don't take it as such. It's just different viewpoints.
Oh, I forgot to mention, look at the shares outstanding, one is more diluted than the other. That can make a large difference on stock price. I think Google has only 660Million shares and pre stock split, Apple has just under 1 Billion, but post stock split, Apple will be a lot more diluted at around 7 Billion shares. Microsoft has 8.5 Billion shares outstanding and Microsoft's P/E is pretty low, they pay dividends, etc. That's why their stock movement isn't that great and hasn't been for a while.
I'm not saying they won't hit $700 a share, but I highly doubt they can do that with only 15 to 20% EPS growth. that's why they aren't trading at $700 and they are trading at $535 instead.
$566
$566
Yeah, that's after-hours trading right after the announcement. We'll see where the stock is at on the day they actually perform the split. It's common to have large increases right after the announcement and then see a normal price after people have come down off their cloud and more into REALITY.
Let's look at IPhone sales. I read last year that they finally reached a daily production of 500,000 phones a day. I don't know if that was TOTAL or just Foxconn. Now, if they are at 45 Mill phones a quarter, how can they get much higher in unit sales per year if they don't increase production? if you look at their quarterly units shipped they've been hovering between 31 Million to as high as 51 Million units shipped for a 12 month total of 159+ over the past 12 months. Obviously at the end of the quarter they have so much in inventory carrying over, but they are supposedly at 180 Million units a year which is less than a 20% increase if they actually hit 180 Million units over the next 12 months. Personally, I firmly believe they have to crank out the iPhone 6 in June, and then refresh the 5S, 5C, etc. in Sept and between all of these, if they don't have massive production issues, they MIGHT be able to actually hit 60 Million instead of only 51 Million they did last Christmas, which is only a 20% increase, but hopefully the slower quarters might start hitting in the 40+ Million range rather than low 30 Million range. To drop all of their new products at then of the year is dangerous for Apple and they need to spread out product introductions in the iPhones and maybe even the iPads so they don't always run into lots of spillover because of production problems. They've done this two years in a row and it's frustrating when they do it. I think 45 Million in a quarter needs to be their NEW low and 60 Million in a quarter, needs to be their new high and that will help them get to $700 a share much easier and then they need to raise that bar again and again. Due to bigger markets opening up, and more screen size choices, I think they can, but building more production and getting components is a key issue.
I have a question concerning options. What if somebody owns a contract at the $410 strike price that doesn't expire until 2015, just to give an example. 7 does not go into 410 evenly. Will the market makers create a special $58.57 strike price and give the owner 7 of those contracts?
…if you and the others are going to be so dense as to not realize that 7 for 1 does not equal 6 for 1 then there is nothing I can do for you.
No, no, no. It’s a 6S to 1 split! Haven’t you been paying attention to Apple’s naming schemes?
I have a question concerning options. What if somebody owns a contract at the $410 strike price that doesn't expire until 2015, just to give an example. 7 does not go into 410 evenly. Will the market makers create a special $58.57 strike price and give the owner 7 of those contracts?
I think when there is a stock split, everything gets adjusted accordingly on the date of the actual split. The split doesn't take place until June 1, but call your broker to get 100% confidence on that. This is a question for a licensed professional if you ask me, but my gut feeling is everything adjusts on the actual split date.
No, no, no. It’s a 6S to 1 split! Haven’t you been paying attention to Apple’s naming schemes?
But aren't they still on iOS 7.1? Oh....................... 7 to 1 stock split is better than a 10 to 9 stock split. So i think Apple decided to follow iOS version instead of OS X.
No, no, no. It’s a 6S to 1 split! Haven’t you been paying attention to Apple’s naming schemes?
It's been years since my Apple stock was split...but even then it was just a 2:1, not 7:1. Nice.
It's been years since my Apple stock was split...but even then it was just a 2:1, not 7:1. Nice.
I think Apple's making up for lost time when it should have split a few times every time it hovered around $100 a share like they NORMALLY split the stock.
You need to realize most analysis calculate earnings 2 or 3 years ahead. If Apple does 10% growth for 3 years the accumulated growth will be over 30% because of compounding.
The reason why Apple was trading at $535 is because of Wall Street BS. Period. Earnings growth at 10-15% justifies a PE in the high teens. A PE of 17.50 would put Apple at $700. Costco has a PE of 24 and only grew earnings at 18% last year.
Google is not even close to a startup. They already dominate internet advertising and are having trouble growing earnings. Their revenue was up 27% last quarter but profits were up only 1%. Problem is advertisers are not willing to spend the same amount of money on mobile ads in contrast to desktop ads. Thus their cost per click has gone down the last 9 quarters in a row. Also startups don't spend $20B acquiring companies like Motorolla.
Not all of them. I look at what periods of time they are talking about. They might calculate it that far ahead, but a lot their recommendations are 12 months. So you have to be VERY specific on the time period. I was looking at 12 months, I guess we have to be on the same page for this.
I see a LOT of analysts that make 6 month to 12 month predictions most often, even though they might calculate further than that. They usually like to give 6 to 12 month guidance more often than the 2 to 3 years. Most companies don't give enough guidance to go that far ahead, so it's not that reliable to go much past 12 months. Heck, some of these guys can't even do 12 months with decent levels of accuracy. A lot of companies give only more like 3 to sometimes 6 months guidance, so how can someone's 2 to 3 year guidance be as accurate?
Yeah, in 2 years from now, if they keep at this rate, I think it's very likely they'll hit $100 (post stock split) and stay there, if things go the way they are going, but they need to look into more market segments other than just selling iPhones and iPads into more countries. That's just creating more markets for existing products.
They need to look outside of the same slices in the pie chart for revenue.
HDTVs is a fast growing market and they COULD penetrate that to increase yet another entirely new market segment that would help solidify Apple users into sticking with Apple products. I think it's a very natural market for them, they just have to figure it out ahead of time so they don't make any major mistakes. The TV panel mfg have troubles making money because they all fall into the trap of hitting every price point from $200 on up and that's what kills their margins, they make entirely too many products where only some make a decent profit margin where the rest is basically dumping product at little to no money, even a loss just to move panels.
I know Google is not a startup, but for a company to go to $1000 a share without a stock split isn't common. They should have done a stock split a long time ago, but they have been trying to get away from being purely based on advertisement as their source of revenue into going into song/app downloads, selling phones and tablets, laptops, and the various services they offer, so they really are kind of confused as to who they REALLY are. They are kind of playing in to too many areas and just throwing crap out to see what sticks. At least that's my opinion, but they are FAR from a mature company that's paying dividends like a Microsoft, Apple, Intel, etc.
Well I can't help it if they wasted so much money on Motorola, look at Facebook, they waste BILLIONS on tiny nothing companies all of the time and they just recently went public. Also, Google paid $12.5 Billion, not $20 BIl, I don't know where you got the $20 Bil from. Some of these companies that fall into a lot of disposable cash make some of THE dumbest decisions. Look at the crap HP wasted Billions on. Palm, Autonomy, etc. boy, did they put themselves in a horrible position that will take decades to sift through before they can really recover. I think Microsoft wasted their money on Nokia, but time will tell if they can make a go of it.
A mature company is really solidified in what they do and paying dividends. That's how a lot of these analysts see them. I just saw one interview and this is basically what he was saying.
You need to realize most analysis calculate earnings 2 or 3 years ahead. If Apple does 10% growth for 3 years the accumulated growth will be over 30% because of compounding.
The reason why Apple was trading at $535 is because of Wall Street BS. Period. Earnings growth at 10-15% justifies a PE in the high teens. A PE of 17.50 would put Apple at $700. Costco has a PE of 24 and only grew earnings at 18% last year.
Google is not even close to a startup. They already dominate internet advertising and are having trouble growing earnings. Their revenue was up 27% last quarter but profits were up only 1%. Problem is advertisers are not willing to spend the same amount of money on mobile ads in contrast to desktop ads. Thus their cost per click has gone down the last 9 quarters in a row. Also startups don't spend $20B acquiring companies like Motorolla.
Here's what I don't get. There have been articles mentioning how Apple is starting production of the iPhone 6 and then journalist are now saying they are going to release it in Sept. What the heck would Apple start production of a product to fill up warehouses 5 months ahead of time sitting on inventory? That makes NO SENSE. That would look bad from an inventory perspective. If Apple is, in fact, starting production of these suckers, then it would make sense that they would have a release date within a couple of months as they got the final issues cleaned up. I think there is some confusion by the media. Surprise, surprise. I hate how they throw this crap out there like it's what's going to happen, when it sounds like they are grasping for straws. I really think a WWDC announcement would definitely kick ass and I don't think they need to wait until i0S8, do they? They can always spit out a specific model iOS update until the new version of iOS comes out. If Apple updates the 5S, releases a ~5 inch, and then switches the 5C for the polycarb 5S, Apple is going to have some MAJOR production issues trying to keep up with demand. I'm REALLY nervous of them playing that game. They've had two years of this and I know customers don't like waiting during Christmas so they can give someone a present. I just think that's stupid to play that game. They should have tons of inventory ready to hand out as people line up and they shouldn't make people wait until after Christmas.
You don't get it.
The PE Ratio is based on 2 or 3 years earnings in the future.
If not than analysis are expecting Google to DOUBLE their profits in 12 months with a PE of 28.
http://www.investopedia.com/terms/p/price-earningsratio.asp
Where do you get informed about P/E ratio? It's based on CURRENT stock price and the combination of the last 12 months of earnings. PERIOD.
You don't get it.
The PE Ratio is based on 2 or 3 years earnings in the future.
If not than analysis are expecting Google to DOUBLE their profits in 12 months with a PE of 28.
Where did you come up with stuff? Seriously. Where did you READ this? Please cite your source.
You need to realize most analysis calculate earnings 2 or 3 years ahead. If Apple does 10% growth for 3 years the accumulated growth will be over 30% because of compounding.
The reason why Apple was trading at $535 is because of Wall Street BS. Period. Earnings growth at 10-15% justifies a PE in the high teens. A PE of 17.50 would put Apple at $700. Costco has a PE of 24 and only grew earnings at 18% last year.
Google is not even close to a startup. They already dominate internet advertising and are having trouble growing earnings. Their revenue was up 27% last quarter but profits were up only 1%. Problem is advertisers are not willing to spend the same amount of money on mobile ads in contrast to desktop ads. Thus their cost per click has gone down the last 9 quarters in a row. Also startups don't spend $20B acquiring companies like Motorolla.
PE is solely based on the current stock price divided by the last 12 months of earnings. Please, go take some courses in investments and once you get an A in it, then talk to me.
Analayst make all kinds of predictions in their spreadsheets, but they are using historical data, looking at trend lines, earnings from PAST history, all kinds of statistics and they also gather guidance from the company they are following, but it's VERY rare for even a company to know much more than 12 months ahead of time what they are going to do and they even revise their guidance right before earnings reports. So, one can extrapolate out as far as they want to, but they aren't going to be that accurate and there is not one single calculation that has anything to do with 2 to 3 years down the road. Market capitalization doesn't do that, P/E doesn't do that, Beta doesn't do that, etc, If you go to Yahoo! Finance, they even put the 1yr target with everything else. But that's a consensus of various analysts average. http://finance.yahoo.com/q?s=AAPL
On a conference call, it is imperative to proudly exclaim your accomplishments. 700m+ c.c.'s on file is something no other company can come close to. What other company even has 100m? Who cares if it grows even 1% yoy? That's 8 million additional users. You have take consider that 800m relative to every other # in the history of the world. It's staggering, not fluff.
Ios in the car will be huge. You could write a book about why it's imperative for their business model to succeed. There is a reason why 100% of car mfgrs will offer it within 3 years. If they don't, their sales will be had by a competitor. Granted, they won't make huge numbers off iOS in the car, but they will make huge profits selling iPhones and iPads and Iwatches.
Apple's ecosystem exists to sell hardware, not to generate insane profits. The lion's share of profits come from hardware sales. I think payments will eventually account for 15% of Apple's profits...down the road.
I agree with your thoughts about the subscription service. But ultimately, I could care less. I go to my Netflix and Prime app if I want to stream old movies. I don't like spending the 20% Apple premium, compared to Amazon, on rentals and purchases of digital content, but I overcome that by buying $100 iTunes cards on sale for $75 on ebay once a year. Although, I've noticed recently their prices are more in line with Amazon's.