Morningstar Calls Buying AAPL a No-Brainer

by , 3:40 PM EDT, October 20th, 2000

Investors may rue the unit sales shortfall at Apple, but Wall Street can't punish the stock any worse than it already has. In fact, Morningstar.com calls buying Apple's stock at today's price of $19.50 a "no-brainer."

Fred Anderson, Apple's CFO, reported that Apple has $4 billion in cash and $800 million in liquid investments, which means the company's cash and investments, with the debt subtracted, is worth $12 per share alone. Thus, the market is valuing the rest of Apple's franchise — all the company's patents, software and hardware products and future potential at about a measly $7.50 a share.

Morningstar's Pat Dorsey claims, "So, the business is being valued in the neighborhood of $2.6 billion, which is 0.4 times next year's expected revenues and around 8 times expected earnings per share."

While, we don't agree that Apple's business is valued at 8 times next year's expected earnings per share (it's really closer to 5 times 2001's earnings) we do agree that AAPL is a no-brainer.

OK, let's do the math: that's a $1 per share for Mac OS X, another dollar for the QuickTime franchise, add another dollar for PowerMac G4s, one for Power Books, another buck per share for the iMac paradigm, throw in a buck for the iBook and $2 per share for the entire future earning potential of the company and all the hot new Mac products in the tube.

We'll throw in the G4 Cube, iMovie, the Apple Store, a couple of bona fide geniuses, 11,800 employees and all the company's physical assets for free. That's quite a deal, eh?

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