02-29-2012, 10:35 AM
Today aapl hit a market cap of half a trillion. And all I can think of is how hype has priced the stock.... I say this more by shaking my head at the market in general and what drives people and institutions to buy the stock at these levels, and not as a slam to appl. However when you look at the numbers they stll look good. So then I shake my head at the willingness for customers to continue to pay the premium they pay for smart phones in general. Im sorry did someone say there was a bad economy??
This is what i see.
Aapl numbers from a profit and revenue perspective is outstanding. But the stock has to stop trading like a growth stock at some point. But thats only going to happen if and when profit margins start to hit reality. I find it strange that competitive pressures have not impacted the smart phone and tablet markets. In this "bad economy", it makes no sense.
Lets compare a non growth stock at the same market cap area. Exon.
<!-- m --><a class="postlink" href="http://www.google.com/finance?q=NYSE:XOM&fstype=ii">http://www.google.com/finance?q=NYSE:XOM&fstype=ii</a><!-- m -->
475 billion in anual revenue.
42 billion in net income
410 billion mkt cap
8.42 eps
4.7 b shares
10.35 p/e
<!-- m --><a class="postlink" href="http://www.google.com/finance?q=NASDAQ:AAPL&fstype=ii">http://www.google.com/finance?q=NASDAQ:AAPL&fstype=ii</a><!-- m -->
126 billion in anual revenue.
33 billion in net income
500 billion mkt cap
35.11 eps
.933 b shares
15.25 p/e
In general these stock prices compare as long as you consider aapl a growth stock. Its the profit margin of 25% that makes aapl shares viable, as well the total shares at 1/4 of xom. But xom has a dividend yield of around 2%. Still aapl market cap is 90 billion more then xom and xom has 9 b more anual net income.
Understanding the differance in these companies is important. The main differance is appl profit margin and that its trading like a growth stock. Impact any one of those 2 things, and reality will hit aapl like a boat anchor. The real question is can appl continue growth at the same levels with the price point for phone and tablets at current levels. There is ho other question in my opinion.
In a way the hype reminds me of the telecomunications hype in the late 90s. We had revenue pictures of the future that were unreal, but justified. The concept was untapped global revenue. At that point it was estimated there was 2 trillion of untapped unrealized revenue in the world. What companies like mci failed to realize is many ofnthose people didnt care about a phone as much as we do.
We are looking for a bubble, and it might be the new tech bubble based on phones, tablets, and all the chip and service providers ssociated.
One false step and I could see the whole thing crash. If it happens, companies like samsung will fare better then apple because of diversity of product line. Apple revenue is very single threaded.
Random thoughts... Sorry for formating and spelling as im back on tablet, and lazy.
This is what i see.
Aapl numbers from a profit and revenue perspective is outstanding. But the stock has to stop trading like a growth stock at some point. But thats only going to happen if and when profit margins start to hit reality. I find it strange that competitive pressures have not impacted the smart phone and tablet markets. In this "bad economy", it makes no sense.
Lets compare a non growth stock at the same market cap area. Exon.
<!-- m --><a class="postlink" href="http://www.google.com/finance?q=NYSE:XOM&fstype=ii">http://www.google.com/finance?q=NYSE:XOM&fstype=ii</a><!-- m -->
475 billion in anual revenue.
42 billion in net income
410 billion mkt cap
8.42 eps
4.7 b shares
10.35 p/e
<!-- m --><a class="postlink" href="http://www.google.com/finance?q=NASDAQ:AAPL&fstype=ii">http://www.google.com/finance?q=NASDAQ:AAPL&fstype=ii</a><!-- m -->
126 billion in anual revenue.
33 billion in net income
500 billion mkt cap
35.11 eps
.933 b shares
15.25 p/e
In general these stock prices compare as long as you consider aapl a growth stock. Its the profit margin of 25% that makes aapl shares viable, as well the total shares at 1/4 of xom. But xom has a dividend yield of around 2%. Still aapl market cap is 90 billion more then xom and xom has 9 b more anual net income.
Understanding the differance in these companies is important. The main differance is appl profit margin and that its trading like a growth stock. Impact any one of those 2 things, and reality will hit aapl like a boat anchor. The real question is can appl continue growth at the same levels with the price point for phone and tablets at current levels. There is ho other question in my opinion.
In a way the hype reminds me of the telecomunications hype in the late 90s. We had revenue pictures of the future that were unreal, but justified. The concept was untapped global revenue. At that point it was estimated there was 2 trillion of untapped unrealized revenue in the world. What companies like mci failed to realize is many ofnthose people didnt care about a phone as much as we do.
We are looking for a bubble, and it might be the new tech bubble based on phones, tablets, and all the chip and service providers ssociated.
One false step and I could see the whole thing crash. If it happens, companies like samsung will fare better then apple because of diversity of product line. Apple revenue is very single threaded.
Random thoughts... Sorry for formating and spelling as im back on tablet, and lazy.
Maul, the Bashing Shamie
"If you want to change the world, be that change."
--Gandhi
![[Image: maull2.gif]](http://bengtel.com/maull2.gif)
"If you want to change the world, be that change."
--Gandhi