if you wanted to buy the entire company it would
cost you about $240 billion.
To put that in context, for the same amount of money
you could own Newmont Mining Corp. (NYSE: NEM - News),
the world's largest gold-mining company,
And E.I. Du Pont de Nemours & Co. And Kellogg Co.,
And Shrek studio DreamWorks Animation SKG Inc,
And H&R Block Inc. (NYSE: HRB - News),
And The New York Times Co. And Molson Coors Brewing,
And the Estee Lauder Cos Inc. And Tiffany & Co.,
the Hershey Co., Harley-Davidson Inc., Expedia Inc.,
Abercrombie & Fitch Co., American Eagle Outfitters,
Burger King Holdings Inc., CBS Corp., Chipotle
Mexican Grill Inc., Whole Foods Market Inc.,
Starbucks Corp., Netflix Inc., JetBlue Airways Corp.,
NStar, and Dr Pepper Snapple Group Inc.
Not even the most ardent Apple fan, I would assume, could believe this is a fair valuation.
[Edited to add list of names that didn't make my original cut and paste.]
I think is that Apple is doing something which no-one else may have done in recent past.
1. Apple is in software business where it has championed the model of fixed engineering cost and variable revenue streams.
2. They execute well and their products are neat. (That is a understatement)
3. They are market makers. There products are not just stealing customers but also creating new customer base for these products
4. Their marketing model is un-parrelled. And no-one in industry has any chance to replicate that in near future
Compare that to other companies. Most of them are not innovative but profitable because they are big, have low cost products. Some are in utility/F&B domain where its tough to increase the price. And others don't have much competative advantage.
Software is still the most profitable business (by a big margin), if done right. Apple is just demonstrating that.
More importantly I think is, these old economy businesses being compared are valuable to a large degree just because they are essential. Now, the iPhone isn't essential, but if you have some extra cash, it is one of the first things a lot of people buy, the sales figures prove this.
If Apple can avoid any anti-trust suits, I think they have clear sailing for the next 2 to 3 years. I dislike Apple, but I LOVE my iPhone (but only compared to everything else).
Apple is very profitable. It made 3 billion last quarter, about twice Jet Blue's market cap. Apple has no debt and a lot of cash. Apple could essentially buy Starbucks with cash. Apple's current assets is more than 30B and Starbucks market cap is less than 20B.
I'm not saying that Apple isn't overvalued, but let's get some perspective here:
With $40 billion in the bank, Apple could buy, in cash, today, all of the following:
- New York Times (1.4 billion)
- Jet Blue (1.6)
- Burger King (2.8)
- Dreamworks (3.4)
- Abercrombie and Fitch (3.9)
- NStar (3.9)
- Chipotle (4.2)
- Netflix (5.1)
- H&R Block (6)
- Whole Foods (6.8)
Now, assuming the 3 billion dollars someone else here said they made last quarter is accurate. And assuming it holds true for a few years:
- they can buy Dupont by November.
- they can buy CBS by June 2011
- they can buy Hershey by April 2012
- they can buy Estee Lauder by April 2013
- they can buy Starbucks by November 2014
- etc. Kellogs and Newmont would take about twenty months each.
Keep in mind that this is all straight cash. A lot of companies operate in debt, Apple doesn't have any and wouldn't have to take any on to do these hypothetical purchases.
And naturally, this is all based on what they are doing today. If you put your money into the stock, you're assuming they are going to do at least as well. But even if they don't, that's still a lot of money the company is generating.
Some of those companies are failing (e.g, NYT), some are commodity suppliers highly subject to market fluctuations (e.g., Du Pont), and others are locked in eternal marketing struggle in a highly-competitive and arguably saturated marketplace (e.g., Burger King, Abercrombie & Fitch).
Not saying that Apple's valuation is correct, but there is a certain attraction to the company: it sells premium, high-margin products that have proven their ability to withstand general economic malaise, are non-commoditized, not easily substitutable goods, and have few realistic competitors (the MacBook Pro sits almost unchallenged in the premium laptop market, the iPhone is - for now - at the top of the smartphone game, etc).
Apple's P/E is just under 22, which is not terribly expensive for a company that just launched a new, multibillion dollar product line (the iPad) and who has the dominant product in a rapidly expanding market (smartphones).
The writer puts it as "Would you rather own Apple or [long list of companies]?" That's a little misleading, because any of those companies could be overvalued or undervalued by the market, and because betting all your money on one company is almost always less attractive than spreading your risk over a dozen different ones.
Disagree. Depending on the specific market, Asian markets are predominantly brand based, not value based. The crowd gravitates to the trendy brand more than anything, and Apple has been effective in building their brand in asian markets.
I'm just saying monthly salary/income doesn't always serve as a barrier to an iPhone or iPad acquisition. I can see the 3G iPad dominating the market in certain countries.
This type of writing: "That new iPhone? What a total meh. So what if it has new volume controls? Or a metal strip around the side? Apple needs people to line up round the block for its next product. Will this really be enough?" shows that this author isn't so much as writing an opinion piece as he is sensationalizing and capitalizing on a trend of articles hearkening the fall of Apple for reasons I cannot truly fathom.
I can't help but remember the article posted yesterday IIRC which made the point: Why are we worried about Apple? Isn't it Wall Street that truly has the power to make everything get fubar'ed?
Why? Just ask Jason Chen - the editor at tech blog Gizmodo who got his hands on the next iPhone. Apple's response? They sent in the police, who smashed down Chen's front door, ransacked his house -- while he was out -- and carted off computers and files. When Chen returned home from dinner with his wife, they frisked him too."
This is the kind of argument they are making to support the point????
This also raised my eyebrow... Chen bought stolen property as defined under California law. Then published evidence of his doing so in a very public manner. Apple may have called the police, but they hardly "sent them in". I was with the article until that point.
Well, I might be wrong, but it's probably not the first time a gadget site gets a gadget before it's released. In many cases, that gadget should have been returned to the original owner, not to a journalist. But, again, as far as I know, no company has actually "sent the police in" (or even asked for any investigation) over such a matter. Apple did, it wasn't wrong of them (I mean, it's still a crime), but they were (one of) the first (only?) to do so.
Can you provide other examples where a gadget site pays money to a 3rd party who happens to have an unreleased development model of a future product? I can't think of any...
Don't be disingenuous. The exchange of money here is the least of the transgressions. I would think that someone sending Gizmodo a 'lost' iPhone prototype without the exchange of money would have gotten them into hot water too if they didn't try to return it first (before publishing the internals).
In the past, most leaks have been information (specs,photos,etc) not the actual device.
Right. But the bit where they don't give it to Apple immediately makes it theft.
Which is worse, buying stolen property, or stealing property? If they couldn't be accused of the former, they would be accused of the latter.
You seem to forget the very basis on which this was declared buying stolen property: the theft itself. The theft itself would have occurred no matter whether it was bought or not, and both parties would be guilty if it was just handed over.
Since when is finding something in a bar "theft"? There was a good article about this topic somewhere, about where journalists used to have balls, and the corporate victims were unhappy, but never before did they call the police and bust the door down.
Apple lost a phone. And the police busted someone's door down. I've read many stories of lost phones where the original owner, via software, has given the exact address of where the phone is, and what did the police do?? Nothing.
Since when is it the JOB OF THE POLICE to enforce self-inflicted violations of an individual corporations IP? This is not the role of the police in our society, it is as simple as that. It doesn't matter what is right or wrong, legal or illegal, they are not supposed to be prosecuting this type of thing.
"One who finds lost property under circumstances which give him knowledge of or means of inquiry as to the true owner, and who appropriates such property to his own use, or to the use of another person not entitled thereto, without first making reasonable and just efforts to find the owner and to restore the property to him, is guilty of theft."
It's hyberbole, but on the other hand, it's ridiculous to think that Apple had nothing to do with it. If Apple remains silent, doesn't file any sort of police report, nothing would have happened.
That said, Apple has been a litigious, heavy-handed company for it's entire history so their actions aren't surprising.
R.E.A.C.T. is an outrage. Most police departments don’t put a ton of effort into resolving nonviolent theft cases. Obviously big rich Silicon Valley companies like Apple are going to have a lot of political clout in Santa Clara county come what may, but that’s a reality that should be pushed against not formalized. Apple can afford its own lawyers, it doesn’t need the cops working for it.
It really doesn't matter how much political clout Apple has. The Gizmodo people made the police officers' jobs too easy by publishing all the evidence necessary to convict them. They were low-hanging fruit.
Gotta post this somewhere to get it off my chest, so might as well be here -
...as someone who was using OS9 when Apple had a death watch on it there's a certain amount of schadenfreude, mixed with wonder, at this situation of Apple as the 800lb gorilla. I get a giant kick out of the whole thing. :-)
I'd get a kick out of Apple if it were showing microsoft how you can be successful without pulling all kinds of (dirty) tricks.
Unfortunately it looks like they are at least as bad as microsoft ever was and that the gospel according to Jobs is not that far removed from the gospel according to Gates. The one thing they've got going for them is that stuff appears to look better and works better, otherwise the new boss is the same as the old boss.
It is the dilemma of the righteous dictator. We have a dictator who is good to use, but he is still a dictator. And you are constantly afraid of the next one that you don't know.
Every time someone sells short someone is buying. So how is short ratio useful to measure "negative sentiment"?
Short selling might be used for technical reasons. For instance, an option trader might sell put options and at the same time sell the stock short for hedging. If the stock price goes down he loses money on the options but gains when he covers the short sell. That is, he might be betting on variables other than the stock price.
I think it's very challenging for Apple. Apple is making a skyrocketing revenue because iPad and iPhone sales has boomed. But iPad won't sell for 300K piece everyday, that only happened the first day... actually it can sell! Yes, but there is an interesting point (so that it sells at such high rate): Apple "must" dominate the market.
For the iPhone, the competition is now fierce: Android, BlackBerry, Palm, Windows mobile and Nokia! Nokia is already a major player, they won't let Apple take the market easily and cheaply. They'll do marketing, new phones and crazy things to preserve their position.
That said, as competition is getting though, Apple has got to spend more on marketing and improving their products (taking down their profit, even if their sales are up, because they are spending more). Only if they dominate the market, then your investment will pay back.
My advice is: don't get in this stock. It's very risky; unless you believe that the iPhone and iPad will become standards ;)
After using the Mac for the first time ( bought it just for iPhone development ) I was impressed .
Forget iPhone and iPad , what if Mac becomes the standard.
Read 'Mac is back' by Paul Graham.
Many of my friends who do not do any programming bought Mac recently.
Windows PC now feels like a waste of time to me.
Maybe the masses will catch up later.
The only way that can happen is if OS X can be licensed to third-party computer manufacturers.
Most computer users just browse the net or read/write documents and spreadsheets. Why would they want an overpriced Mac for doing that?
That's partly the reason why I once thought that Linux will overtake the market, because of its price. But apparently there are other forces that keep Windows dominating, like familiarity and compatibility with existing apps (your free or shiny OS doesn't mean shit if I can't run my apps on it).
> 'Mac is back' by Paul Graham
I'm pretty sure Paul Graham got disappointing with Apple by now. Read "Apple's mistake".
Why in the world would you substitute a control freak for another (even worse in some cases) control freak?
> Most computer users just browse the net or read/write documents and spreadsheets.
Which is what the iPad was created to target.
> your free or shiny OS doesn't mean shit if I can't run my apps on it
The only application I know of where I prefer the Windows implementation to what is available for my Mac is Quickbooks. There might be other narrow verticals (CAD?) where you don't have best of breed software available for Apple's OS, but by and large in 2010 worrying about software availability for a Mac is a moot point.
Numbers on the iPad (or on the Mac for that matter) will never be as powerful as Excel, if for no other reason than 99% of users don't use 99% of features.
The parent poster mentioned users that just 'browse the net or read/write documents and spreadsheets', and those types of people generally don't use most of what Excel offers. What they do use (formulas, charts, sheets, styles, etc.) Numbers does offer, and it does quite well.
> For the iPhone, the competition is now fierce: Android, BlackBerry, Palm, Windows mobile and Nokia! Nokia is already a major player, they won't let Apple take the market easily and cheaply
Have you seen how much market share Palm, Microsoft and Nokia have lost to RIM and Apple over the last three years?!
He is giving Apple way too much credit. It's not like Apple did shady business deals/practices to get in their current position, it's because people genuinely like their products for whatever reason (interface/ease of use/design). And because a niche group of people (tech geeks) don't like apple products doesn't mean the general public won't find those products appealing.
Something faster, and with zero (or very close to zero) transaction fees. Also, something that people aren't afraid to lose (like a credit card), and which is pointless to steal, and where fraud is reduced. Something with a screen to show balances and other info.
The numbers that have been floating around for inclusion into the iAds are in the millions. You don't get to be part of iAds unless you have serious money, so I think we can assume Apple's going to at least cover their costs.
As for seeing iAds elsewhere - perhaps, but it seems unlikely. Still, Apple's take on ads is that they want to make ads people like. The example he demonstrated, the Toy Story 3 ad, is something I can honestly see myself playing around with for a while. It's entertaining, it's involving. It's not going to be boring, garish text ads like Google ads, uglying up the page.
There's something to be said for the idea of adding taste and style back into online advertising.
Apple is fundamentally a different kind of company than almost all other software or hardware companies. The prospect of J. Average Computer Company competing against J. Other Average Computer Company is straightforward, all that it takes to win against them is to keep doing what you're doing, only better, or more. The prospect of competing against Apple might be a bit more daunting, because potential it requires completely remaking your entire company to be more Apple-like, which is something most companies are utterly incapable of doing.
This is despite the fact that Apple isn't even especially dominant in any area, not to the same degree that Microsoft, Google, or Amazon are dominant.
I don't think it's necessary to be exactly like Apple to compete successfully against them. However, there are so few companies in the software industry that manage to demonstrate Apple's rare combination of talents that there really is no other model for how to do it.
Also, the perception of Apple as being exceptional and unique is greatly aided by the generally dysfunctional state of the entire industry in general.
I find it's rather that they take care of every detail. I refuse to buy an iPhone but I'm still not satisfied with the state of Android phones.
There's the phones with the great cameras (but are underpowered).
There's the phones with the great cpus (but wasted because of low ram)
There's the phones with the good extra UI (wasted because they're underpowered)
There's the good middle ground handicapped by a really old version of Android and no multi-touch.
To an extent. Most companies seem to aim for a product that does well on a feature-grid of checkboxes more than in actual use. Apple would (apparently) rather that they had half the checkboxes but that those things worked very, very well (or intuitively, or smoothly, or in a magical way, etc).
In other words, it's not as if an iPhone friendly multitasking setup was available and they just ripped it out so they could have a big reveal two years later. In their eyes at least, the "innovation" is that they did it in an "Apple way".
I think the point is that Apple poo-poos the idea that a phone even needs a background API, then releases a background API to great fanfare as if they were the first ones to have such an idea, all the while patting themselves on the back. (i.e. "We weren't the first ones to do multi-tasking, but we were the first ones to do multi-tasking on the iPhone! Yay us!")
Pretty sure that's more marketing than anything to do with their product strategy. They release the best products they can, but implementing features better than their competitors means it takes them longer, so they talk down any feature they don't offer yet, and then hype it up once they offer it.
That's starting to change. The Nexus One is very nice, the Droid Incredible (which is basically the same thing with a better camera) is even better, HTC Sense is a very nice interface, and in June, Sprint's going to get the Evo, which is basically an Incredible with an even better camera (takes 720p video), a front-facing camera, 4G, a 4.3" screen, and the ability to act as a wifi router.
And one day someone outside of the Apple campus is going to wake up and realize that a big bag of features is no longer enough; you have to combine them all into a seamless environment so that people[1] can actually take advantage of the cute bits of electronics you stuff into ever smaller packages.
[1] By "people" I mean the 99.999% of the world who do not bother to read instruction manuals, would never use a command-line interface, and once had vcrs whose clocks always read 12:00...
With an iPhone or iPad, you can have it activated when you purchase it, buy music or apps wirelessly, add contacts, sync to MobileMe/Google/exchange, and do pretty much whatever you like.
I only connect my phone to my computer to do backups (because I don't want to lose my text messages), or to update apps >20MB (because I'm never on WiFi). You don't have to have a computer at all to use an iPhone. In fact, I have a friend who'd never sync'ed or backed up her iPhone once (and didn't know how to do it), and she used it without issues for well over a year before needing to do a backup.
I've never used Android, so I'm not sure what music store is available on the phone by default. Is it any good?
Microsoft "saw to" that? What about IBM, Netscape, the bundling deals with hardware manufacturers... Microsoft has screwed at least as many small companies as Apple.
But that's not OP's point. You know when people say "I've forgot more about X than you'll ever know!"?
MS has screwed more companies than Apple has on its entire ecosystem. But it has made possible the existence of so many more. While, with Apple, it's either their way or none at all.
And I am not saying this makes Apple's products bad, the iPad sucks or the market hasn't made a decision. Just that doing business on Apple's ecosystem is way harder and more riskier.
For all intents and purposes, a consumer, for a very very long time couldn't buy a machine without windows bundled with it (I.e. Someone paid), unless you bought a Mac. Microsoft saw to that.
[Edited to add list of names that didn't make my original cut and paste.]