Guest valueInv Posted January 25, 2012 Share Posted January 25, 2012 This says a lot about our society, sad: http://parislemon.com/post/16436735313/this-is-actually-the-craziest-chart-about-apple Link to comment Share on other sites More sharing options...
ERICOPOLY Posted January 25, 2012 Share Posted January 25, 2012 Imagine an independent Coca Cola bottler deciding to sell Pepsi adds on the Coke cans. That's like Compaq wanting to install Netscape links on the Windows desktop. Windows is a platform, it is mean to run other things and is useless if you don't run applications on it. A Coke can (filled with Coke) is a complete product in itself and is not a platform. Monopoly is decided by marketshare. What was Window's share of PC OSes during the antitrust suits? Well I'm not a lawyer and such. This is probably why I'm more driven by "spirit" of the law rather than letter of the law. So whether you define a monopoly by the term "marketshare" is your choice, or perhaps it's letter of the law. My "spirit" of the law is based around barrier to entry. Can a competitor create a competing personal computing platform. Of course! Apple. Google. Case closed (based on spirit of the law). Link to comment Share on other sites More sharing options...
alwaysinvert Posted January 25, 2012 Share Posted January 25, 2012 Imagine an independent Coca Cola bottler deciding to sell Pepsi adds on the Coke cans. That's like Compaq wanting to install Netscape links on the Windows desktop. I don't know if you are familiar with it, but the settlement in the EU antitrust case against Coke forced them, among other concessions, to make space for rival sodas in their own fridges in the supermarkets. That's actually a very fitting analogy :) Link to comment Share on other sites More sharing options...
BargainValueHunter Posted January 25, 2012 Share Posted January 25, 2012 Can someone explain why it is such a bad idea for Apple to take say $50 billion and start a "Berkshire-Style" holding company subsidiary that would invest in undervalued assets outside of the tech industry? Imagine its 2016 and like RIMM and NOK the personal tech world has moved on to another "must have" product from some other company. Sure AAPL is still a behemoth but the products aren't moving like they used to. But now the corporation controls huge stakes in the solar, homebuilding, shipping or banking industries that they invested in during the lows of 2011-2012 (assuming that what is depressed now will have made a comeback by then...) The diversification could help stem a RIMM and NOK like decline. If you ran Apple wouldn't it be something you would consider taking to the board? ??? Link to comment Share on other sites More sharing options...
rkbabang Posted January 25, 2012 Share Posted January 25, 2012 But in 1995 I got my first PC and it was out of a retail store (installed) that provided me a PC with dual boot Windows 95 and Linux! Yes! Right out of a retail store. Fully 3 years before the antitrust BS. So consumers who wanted Linux could find it. But they didn't want it! I sought it out and found it. To this day I've never purchased a PC from a retail store. I built my first PC (a 25MHz 386) in 1989 and I've built every PC I've owned since. I've run DOS, Windows, and Linux at various times and for the last 10 years or so I've been dual booting various versions of windows with various version of Linux. I've never (and I mean never) used Internet Explorer with the exception of using it right after installing windows to go to mozilla (netscape before that) and download a real browser. I've never considered Microsoft a monopoly. Government (any government) should just stay the hell out of technology. I don't like Microsoft or its products, but I don't think costing it millions in legal costs to defend itself from government parasites benefits anyone (other than said parasites). Link to comment Share on other sites More sharing options...
rranjan Posted January 25, 2012 Share Posted January 25, 2012 Can someone explain why it is such a bad idea for Apple to take say $50 billion and start a "Berkshire-Style" holding company subsidiary that would invest in undervalued assets outside of the tech industry? If you ran Apple wouldn't it be something you would consider taking to the board? ??? Apple should return the extra cash to shareholders. Apple is a technology company not an investment firm. In theory it might sound good but I have very little faith in a technology company buying bunch of unrelated companies. Most tech companies have bad record in buying companies even in their related field. Shareholder's can use the cash to invest themself but Apple should continue doing what they do best. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted January 25, 2012 Share Posted January 25, 2012 Can someone explain why it is such a bad idea for Apple to take say $50 billion and start a "Berkshire-Style" holding company subsidiary that would invest in undervalued assets outside of the tech industry? If you ran Apple wouldn't it be something you would consider taking to the board? ??? Apple should return the extra cash to shareholders. Apple is a technology company not an investment firm. In theory it might sound good but I have very little faith in a technology company buying bunch of unrelated companies. Most tech companies have bad record in buying companies even in their related field. Shareholder's can use the cash to invest themself but Apple should continue doing what they do best. The investment manager should allocate the excess produced by the operating company. In this case, the manager of the fund that owns the AAPL shares is the investment manager. Berkshire doesn't let it's railroad subsidiary allocate the excess into non-related businesses. It requires it to be returned to Buffett (the investment manager) who then makes the allocation decision. The structure of having an investment manager be the capital allocator works pretty well. Link to comment Share on other sites More sharing options...
racemize Posted January 25, 2012 Share Posted January 25, 2012 I think the key issue is whether they would/could get a good allocator--tech companies typically do not do their own allocations very well. Were I a shareholder, I'd rather they just buy back shares or pay a dividend so I could allocate rather than hope they find a competent allocator themselves. Link to comment Share on other sites More sharing options...
BargainValueHunter Posted January 25, 2012 Share Posted January 25, 2012 Can someone explain why it is such a bad idea for Apple to take say $50 billion and start a "Berkshire-Style" holding company subsidiary that would invest in undervalued assets outside of the tech industry? If you ran Apple wouldn't it be something you would consider taking to the board? ??? Apple should return the extra cash to shareholders. Apple is a technology company not an investment firm. In theory it might sound good but I have very little faith in a technology company buying bunch of unrelated companies. Most tech companies have bad record in buying companies even in their related field. Shareholder's can use the cash to invest themself but Apple should continue doing what they do best. I don't think it would be a tech CEO making the investment decisions. I can think of the subsidiary holding company hiring an outside management team (The Oracle or Prem and co., for example) to invest the money. The tech executives would have nothing to do with the investment decisions. The holding company could pay dividends to shareholders from capital gains. I don't know think the majority of AAPL shareholders have the investment prowess of WEB or Prem. Although they are owed the money, what are the chances that most shareholders just pile the money back into AAPL shares for the typical, crowded momentum play? Link to comment Share on other sites More sharing options...
Uccmal Posted January 25, 2012 Share Posted January 25, 2012 Sometimes wish I could bring myself to invest in momo stocks. huh? You'd classify Apple as a momentum stock? Dcg, Care to put an upside on the stock. 448 billion cap. right now, if I read that right. Worth more than XOM? Xom operates in an oligopoly. AAPL is in a rudely competitive market. I am guessing people are waiting for the cash payout. Link to comment Share on other sites More sharing options...
KFRCanuk Posted January 25, 2012 Share Posted January 25, 2012 This says a lot about our society, sad: http://parislemon.com/post/16436735313/this-is-actually-the-craziest-chart-about-apple http://en.wikipedia.org/wiki/List_of_largest_corporate_profits_and_losses#Largest_Corporate_Quarterly_Earnings_of_All_Time Link to comment Share on other sites More sharing options...
Guest Hester Posted January 25, 2012 Share Posted January 25, 2012 448 billion cap. right now, if I read that right. Worth more than XOM? Xom operates in an oligopoly. AAPL is in a rudely competitive market. I am guessing people are waiting for the cash payout. Right, and AAPL's biggest competitive advantage died last year. I think the 10 year returns for AAPL shareholders from here will be bad, but the two or three year returns will be very good. Multiples are irrelevant if we're thinking truly long term. This current amazingly popular product line they have will have to eventually be replaced just to keep earnings and revenue steady, for the multiples to mean anything, and that will be an almost impossible task. RIMM circa 2005 but with a better balance sheet. Link to comment Share on other sites More sharing options...
Guest Hester Posted January 25, 2012 Share Posted January 25, 2012 If I were Apple I would take the entire $100 billion and spend it immediately on political contributions and congressional lobbying. With that kind of cash they could probably get Congress to suspend all taxes for all Apple shareholders/employees. Link to comment Share on other sites More sharing options...
Kraven Posted January 25, 2012 Share Posted January 25, 2012 Can someone explain why it is such a bad idea for Apple to take say $50 billion and start a "Berkshire-Style" holding company subsidiary that would invest in undervalued assets outside of the tech industry? Imagine its 2016 and like RIMM and NOK the personal tech world has moved on to another "must have" product from some other company. Sure AAPL is still a behemoth but the products aren't moving like they used to. But now the corporation controls huge stakes in the solar, homebuilding, shipping or banking industries that they invested in during the lows of 2011-2012 (assuming that what is depressed now will have made a comeback by then...) The diversification could help stem a RIMM and NOK like decline. If you ran Apple wouldn't it be something you would consider taking to the board? ??? You need to bone up on your history. This has been done before. Read about the go-go years and the conglomerates of the 1960s. That worked out pretty well . . . at least for those involved in the M&A/LBO business which really got going in the 1970s as a result of tearing apart all of those conglomerates. Link to comment Share on other sites More sharing options...
Guest valueInv Posted January 25, 2012 Share Posted January 25, 2012 448 billion cap. right now, if I read that right. Worth more than XOM? Xom operates in an oligopoly. AAPL is in a rudely competitive market. I am guessing people are waiting for the cash payout. Right, and AAPL's biggest competitive advantage died last year. I think the 10 year returns for AAPL shareholders from here will be bad, but the two or three year returns will be very good. Multiples are irrelevant if we're thinking truly long term. This current amazingly popular product line they have will have to eventually be replaced just to keep earnings and revenue steady, for the multiples to mean anything, and that will be an almost impossible task. RIMM circa 2005 but with a better balance sheet. I have been hearing that for the last 10 years (and buying). If there is one lesson on Apple, it's that it is hard to predict even in the short term, much less in the long term. Look at all the analyst predictions from just 6 months ago: http://daringfireball.net/ All the theories like law of large numbers, loss of visionary founder, competition eroding margins, disruptive models, etc have gotten it wrong so far. But they're gonna to be right in the next 10 years? Link to comment Share on other sites More sharing options...
BargainValueHunter Posted January 25, 2012 Share Posted January 25, 2012 Can someone explain why it is such a bad idea for Apple to take say $50 billion and start a "Berkshire-Style" holding company subsidiary that would invest in undervalued assets outside of the tech industry? Imagine its 2016 and like RIMM and NOK the personal tech world has moved on to another "must have" product from some other company. Sure AAPL is still a behemoth but the products aren't moving like they used to. But now the corporation controls huge stakes in the solar, homebuilding, shipping or banking industries that they invested in during the lows of 2011-2012 (assuming that what is depressed now will have made a comeback by then...) The diversification could help stem a RIMM and NOK like decline. If you ran Apple wouldn't it be something you would consider taking to the board? ??? You need to bone up on your history. This has been done before. Read about the go-go years and the conglomerates of the 1960s. That worked out pretty well . . . at least for those involved in the M&A/LBO business which really got going in the 1970s as a result of tearing apart all of those conglomerates. I don't know if what I am proposing and the histories of Teledyne, Gulf+Western and Transamerica are the same thing. Apple, at the moment, is a giant cash machine with zero debt. Their coffers are absolutely stuffed with cash with no end in sight to the flood of free cash flow. They literally are having a time trying to figure out what to do with their mountain of dollars. Was this the situation in the late 1960's and early 1970's with Teledyne, Gulf+Western and Transamerica? ...Or was there a fair amount of financial manipulation and accounting innovation involved in an attempt to further grow those corporations? I wonder what people said to Warren in the 1970's during the bear market about diversifying. Link to comment Share on other sites More sharing options...
Ballinvarosig Investors Posted January 25, 2012 Share Posted January 25, 2012 I am not surprised that Apple have had such a stonking quarter. Over Christmas, the last of my friends who didn't already own iphones (excluding those who have no interest in smartphones at all), finally converted. I would not be at all surprised to see a further pop in the short-term as the iphone continues to gain ground in emerging economies. It's amusing to see optimism for RIMM based on this. As a consumer platform (in the UK at least) users are deserting in their droves and will continue to do so. Once India and other similar countries (where RIMM are big) finally get their next-gen telecoms infrastructure whipped into shape, the iphone is going to become viable and slaughter RIMM. Link to comment Share on other sites More sharing options...
Guest Hester Posted January 25, 2012 Share Posted January 25, 2012 448 billion cap. right now, if I read that right. Worth more than XOM? Xom operates in an oligopoly. AAPL is in a rudely competitive market. I am guessing people are waiting for the cash payout. Right, and AAPL's biggest competitive advantage died last year. I think the 10 year returns for AAPL shareholders from here will be bad, but the two or three year returns will be very good. Multiples are irrelevant if we're thinking truly long term. This current amazingly popular product line they have will have to eventually be replaced just to keep earnings and revenue steady, for the multiples to mean anything, and that will be an almost impossible task. RIMM circa 2005 but with a better balance sheet. I have been hearing that for the last 10 years (and buying). If there is one lesson on Apple, it's that it is hard to predict even in the short term, much less in the long term. Look at all the analyst predictions from just 6 months ago: http://daringfireball.net/ All the theories like law of large numbers, loss of visionary founder, competition eroding margins, disruptive models, etc have gotten it wrong so far. But they're gonna to be right in the next 10 years? So for 10 years you've been hearing that because Steve Jobs died Apple will eventually have trouble re-innovating? You're more of a prophet than an investor then. Link to comment Share on other sites More sharing options...
Uccmal Posted January 25, 2012 Share Posted January 25, 2012 448 billion cap. right now, if I read that right. Worth more than XOM? Xom operates in an oligopoly. AAPL is in a rudely competitive market. I am guessing people are waiting for the cash payout. Right, and AAPL's biggest competitive advantage died last year. I think the 10 year returns for AAPL shareholders from here will be bad, but the two or three year returns will be very good. Multiples are irrelevant if we're thinking truly long term. This current amazingly popular product line they have will have to eventually be replaced just to keep earnings and revenue steady, for the multiples to mean anything, and that will be an almost impossible task. RIMM circa 2005 but with a better balance sheet. I have been hearing that for the last 10 years (and buying). If there is one lesson on Apple, it's that it is hard to predict even in the short term, much less in the long term. Look at all the analyst predictions from just 6 months ago: http://daringfireball.net/ All the theories like law of large numbers, loss of visionary founder, competition eroding margins, disruptive models, etc have gotten it wrong so far. But they're gonna to be right in the next 10 years? So what would you say is the upside on the stock? GE peaked in late 1999 thereabouts at 600 b and was exceedingly overvalued. I will give you an ultimate upside somewhere between 500-600 b That's around a 25-30% upside from today. Not much of an investment return at this point. With present cash they could retire 25% of the float. So you could push reasonably predictable return up to maybe 40% - eliminating the cash load via buybacks wont do much for the share price since it's few times book at least right now. I am a sorry but I just cant see it. Link to comment Share on other sites More sharing options...
Guest valueInv Posted January 25, 2012 Share Posted January 25, 2012 448 billion cap. right now, if I read that right. Worth more than XOM? Xom operates in an oligopoly. AAPL is in a rudely competitive market. I am guessing people are waiting for the cash payout. Right, and AAPL's biggest competitive advantage died last year. I think the 10 year returns for AAPL shareholders from here will be bad, but the two or three year returns will be very good. Multiples are irrelevant if we're thinking truly long term. This current amazingly popular product line they have will have to eventually be replaced just to keep earnings and revenue steady, for the multiples to mean anything, and that will be an almost impossible task. RIMM circa 2005 but with a better balance sheet. I have been hearing that for the last 10 years (and buying). If there is one lesson on Apple, it's that it is hard to predict even in the short term, much less in the long term. Look at all the analyst predictions from just 6 months ago: http://daringfireball.net/ All the theories like law of large numbers, loss of visionary founder, competition eroding margins, disruptive models, etc have gotten it wrong so far. But they're gonna to be right in the next 10 years? So for 10 years you've been hearing that because Steve Jobs died Apple will eventually have trouble re-innovating? You're more of a prophet than an investor then. No, but I have been hearing about why Apple had peaked for some reason or the other for that time, about why they cannot keep producing hit after hit <insert your reason here>, etc Link to comment Share on other sites More sharing options...
Guest valueInv Posted January 25, 2012 Share Posted January 25, 2012 So what would you say is the upside on the stock? GE peaked in late 1999 thereabouts at 600 b and was exceedingly overvalued. I will give you an ultimate upside somewhere between 500-600 b That's around a 25-30% upside from today. Not much of an investment return at this point. With present cash they could retire 25% of the float. So you could push reasonably predictable return up to maybe 40% - eliminating the cash load via buybacks wont do much for the share price since it's few times book at least right now. I am a sorry but I just cant see it. How did you get the 500-600b number? Link to comment Share on other sites More sharing options...
Ross812 Posted January 25, 2012 Share Posted January 25, 2012 Apple designs very good products, and sells them for twice the price of similar hardware offerings. At some point their polished iOS software is not going to outshine android enough to justify the price of their inferior hardware and margins are going to contract. They may have the same market cap as XOM but their revenue is only 25% of XOM’s. Being first to the market allowed Apple to sell their products at a 24% profit margin, but it cannot last. Mathematics is working against them; for instance, in order to maintain their current profit level at a 15% profit margin (still a huge premium to their peers), they have to increase revenue by 60%. Link to comment Share on other sites More sharing options...
Parsad Posted January 25, 2012 Author Share Posted January 25, 2012 Apple designs very good products, and sells them for twice the price of similar hardware offerings. At some point their polished iOS software is not going to outshine android enough to justify the price of their inferior hardware and margins are going to contract. They may have the same market cap as XOM but their revenue is only 25% of XOM’s. Being first to the market allowed Apple to sell their products at a 24% profit margin, but it cannot last. Mathematics is working against them; for instance, in order to maintain their current profit level at a 15% profit margin (still a huge premium to their peers), they have to increase revenue by 60%. Yup! Exactly correct. At some point, the competition will start to eat away at their market share...always happens. Cheers! Link to comment Share on other sites More sharing options...
Uccmal Posted January 25, 2012 Share Posted January 25, 2012 So what would you say is the upside on the stock? GE peaked in late 1999 thereabouts at 600 b and was exceedingly overvalued. I will give you an ultimate upside somewhere between 500-600 b That's around a 25-30% upside from today. Not much of an investment return at this point. With present cash they could retire 25% of the float. So you could push reasonably predictable return up to maybe 40% - eliminating the cash load via buybacks wont do much for the share price since it's few times book at least right now. I am a sorry but I just cant see it. How did you get the 500-600b number? The largest market cap of all time for a publicly listed company was 600 b as I said above. I dont see how Apple can exceed that number. In fact I will go as far as too suggest that it is very close to a peak, and that is what Mr. Market is telling us. As others have mentioned competition will come on fiercer than ever. It is simply the way of things. Revenues will get squeezed from here on out, and the effect will be a stable stock price, if your lucky, such as WMT, or a drop in price such as GE. One Q this year they will start to report a squeeze in their profit margins and poof, there goes the stock price. Link to comment Share on other sites More sharing options...
oldye Posted January 25, 2012 Share Posted January 25, 2012 I think Petrochina was a trillion dollar company for a little while Link to comment Share on other sites More sharing options...
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