Long term investor now getting nervous

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    Posted: 15 October 2009 01:35 PM #31

    Francisco Geraci - 15 October 2009 03:10 PM

    ... A long time ago I worked for a very big innovative companies (JNJ, BDK) with good profit margins and good growth prospects. I know what that feels like. Somehow, Apple just doesn’t feel as big as it’s current valuation says it is. That’s just my gut talking but that’s also what makes me cautious about increases in Apple’s future valuation ( right or wrong) ...

    Please search your feeling and tell us more.  I’ve the same feeling too.  After searching, I think is because the physical size of consumer products sold by those companies are larger in volume and are used by more people, hence more visible, which should mean higher valuation.  What is your feeling?

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  • Posted: 15 October 2009 02:32 PM #32

    mbeauch - 15 October 2009 03:16 PM

    As for the market cap, I don’t believe AAPL will ever pass Exxon, not in my lifetime anyway.

    Exxon/Mobil is an old economy enterprise that sells commodity products in a highly regulated and highly taxed environment. I see Apple surpassing Exxon/Mobil’s market cap within a three to five year time frame.

         
  • Posted: 15 October 2009 02:35 PM #33

    Mace - 15 October 2009 04:35 PM
    Francisco Geraci - 15 October 2009 03:10 PM

    ... A long time ago I worked for a very big innovative companies (JNJ, BDK) with good profit margins and good growth prospects. I know what that feels like. Somehow, Apple just doesn’t feel as big as it’s current valuation says it is. That’s just my gut talking but that’s also what makes me cautious about increases in Apple’s future valuation ( right or wrong) ...

    Please search your feeling and tell us more.  I’ve the same feeling too.  After searching, I think is because the physical size of consumer products sold by those companies are larger in volume and are used by more people, hence more visible, which should mean higher valuation.  What is your feeling?

    Apple should report next week record Mac sales, sales of 7.5 million iPhones, and over 100k of low or no cost apps available to owners of iPhone OS devices. The company still isn’t meeting iPhone demand with ample supply due to overwhelming global demand.

    The EU rollout of Apple retail stores has only begun and market share remains low despite record Mac shipments meaning there’s plenty of growth potential for the Mac for the next several years.

    Why all the worry?

         
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    Posted: 15 October 2009 02:45 PM #34

    DawnTreader - 15 October 2009 05:35 PM

    ... Why all the worry?

    People’s sentiments drive AAPL price.  What people worry is our worry.  We need to know what they are worrying about.  The following worries always recur:

    - SJ’s health.
    - As Apple grows bigger, its growth rate would slow down.  Market cap is of similar theme.
    - Next new product category.

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  • Posted: 15 October 2009 05:23 PM #35

    The market climbs a wall of worry.

         
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    Posted: 15 October 2009 08:22 PM #36

    DawnTreader - 15 October 2009 05:32 PM
    mbeauch - 15 October 2009 03:16 PM

    As for the market cap, I don’t believe AAPL will ever pass Exxon, not in my lifetime anyway.

    Exxon/Mobil is an old economy enterprise that sells commodity products in a highly regulated and highly taxed environment. I see Apple surpassing Exxon/Mobil’s market cap within a three to five year time frame.


    LOL, wanna bet?  That would assume Apple would sell 6 mil macs, 20 mil ipods and 15 mil iphones / qtr. Good luck with that. The trend line probably works out to around 5 mil macs (big boy) the ipod total number has been stagnant for 2 years and the iphone number may peak in 2 years (2011). Considering the price of the iphones is going down, hard climb.

    I drank this forums Apple Kool-aid in 2007.  Never again.  :innocent:  :apple:

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    Posted: 15 October 2009 11:32 PM #37

    Talking without seeing the numbers are difficult.

    Today’s market caps extracted from Yahoo!Finance:
    XOM=$350B
    MSFT=$238B
    HPQ=$113B
    DELL=$30B
    NOK=$50B
    MOT=$18B
    RIMM=$38B
    AAPL=$170B

    At $300, market cap of Apple would be $268B, a net gain of $98B from today’s.
    At $230, market cap of Apple would be $205B, a net gain of $35B from today’s.

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  • Posted: 16 October 2009 12:11 AM #38

    mbeauch - 15 October 2009 11:22 PM


    LOL, wanna bet?  That would assume Apple would sell 6 mil macs, 20 mil ipods and 15 mil iphones / qtr. Good luck with that. The trend line probably works out to around 5 mil macs (big boy) the ipod total number has been stagnant for 2 years and the iphone number may peak in 2 years (2011). Considering the price of the iphones is going down, hard climb.

    I drank this forums Apple Kool-aid in 2007.  Never again.

    OK. You keep your old economy, environment destroying, global warning causing oil stock and I’ll keep my future focused, environmentally responsible personal electronics stock and we can compare notes (and stock prices) in three years.  grin

         
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    Posted: 16 October 2009 02:39 AM #39

    DawnTreader - 16 October 2009 03:11 AM
    mbeauch - 15 October 2009 11:22 PM


    LOL, wanna bet?  That would assume Apple would sell 6 mil macs, 20 mil ipods and 15 mil iphones / qtr. Good luck with that. The trend line probably works out to around 5 mil macs (big boy) the ipod total number has been stagnant for 2 years and the iphone number may peak in 2 years (2011). Considering the price of the iphones is going down, hard climb.

    I drank this forums Apple Kool-aid in 2007.  Never again.

    OK. You keep your old economy, environment destroying, global warning causing oil stock and I’ll keep my future focused, environmentally responsible personal electronics stock and we can compare notes (and stock prices) in three years.  grin


    I never said I owned Exxon, (I own AAPL, JCP, GS, CSCO, BAC, F, & C at the moment) that was not the statement. I just said AAPL will not overtake it in market cap in my lifetime. All I was pointing out was that AAPL would have to double just to get close to Exxon, my guess is that Exxon will grow in the next 5 years also, not at the rate of AAPL though. This is why I left before, I express an opinion without any bad intent and a moderator who decides to get on their holy than thou attitude and comes down on me. There is nothing political in my quote, yet you decide to not reply to anything I stated above and decide to make a stand with your politics. I remember us having this same type of discussion over ipods when I was making a case for their growth coming to an end and you ripped into me then, even though it turned out I was right.  It is no wonder there are not many members here anymore, the thought police will chastise you. In most all of my post I usually try to inject some kind of humor and like to banter back and forth with some members, you have never really shown that you even have a sense of humor. You don’t have to respond to me anymore Robert, I made my way in life without this forum and did OK. Good luck to the rest of you. :innocent:  :apple:  :-?

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  • Posted: 16 October 2009 03:18 AM #40

    mbeauch - 16 October 2009 05:39 AM

    In most all of my post I usually try to inject some kind of humor and like to banter back and forth with some members, you have never really shown that you even have a sense of humor.

    Relax. I was being funny. Sorry you can’t see the humor. I do disagree about the market cap issue. I see AAPL blowing past MSFT and XOM. I see the move past XOM within three to five years. XOM’s market cap came via of acquisition, not organic growth. Apple has yet to even begin a major acquisition spree and the EU awaits.

    I expect Mac unit sales to double over the next three to five years and iPhone unit sales to more than double (perhaps triple) over three years.

    Revenue from music, movie and app sales will only grow and a well-positioned tablet will propel revenue and earnings even higher.

         
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    Posted: 16 October 2009 04:22 AM #41

    DT,

    Humor is a cultural thing.  Despite your American name and calling yourself a Hawaiian, your humor is very Japanese :-D.

    On the subject of AAPL’s market cap, I believe AAPL would catch up with MSFT.  Many moons ago, I predicted that sale of iPod + similar would approach 100 million units per year.  In 2008, Apple sold 65 million units of iPod/iPhone.  In 2009, sale so far is 57 million units.  I also think Mac sale can eventually double.  Hence, overtaking MSFT’s market cap is doable.

    As for XOM, it would be difficult for AAPL to catch up because of:
    - depreciating US dollar
    - since 2000, asset trading business (such as XOM) is valued more than value-added business (such as AAPL).  There is no evidence that this would change soon.  Asset trading and value-added are not accurate description, forgot what are the right economic terms.

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  • Posted: 16 October 2009 12:34 PM #42

    Mace - 16 October 2009 07:22 AM

    On the subject of AAPL’s market cap, I believe AAPL would catch up with MSFT.  Many moons ago, I predicted that sale of iPod + similar would approach 100 million units per year.  In 2008, Apple sold 65 million units of iPod/iPhone.  In 2009, sale so far is 57 million units.  I also think Mac sale can eventually double.  Hence, overtaking MSFT’s market cap is doable.

    As for XOM, it would be difficult for AAPL to catch up because of:
    - depreciating US dollar
    - since 2000, asset trading business (such as XOM) is valued more than value-added business (such as AAPL).  There is no evidence that this would change soon.  Asset trading and value-added are not accurate description, forgot what are the right economic terms.

    XOM is in a slow growth phase as a global giant in a maturing market. Oil is a commodity that is heavily taxed and has reduced margin potential absent spikes in oil prices.

    Apple is smartly controlling the growth of fixed costs relative to revenue so as unit sales (and thus aggregate gross margins) expand eps will continue to expand at an exaggerated rate. Further, OpEx is currently exaggerated for AAPL due to the impact of deferred revenue accounting for the iPhone. As the accounting method for the iPhone is modified sometime in the next few quarters a more accurate view of Apple’s eps growth potential will be seen.

    There are virtually no costs per unit sold on the sale of music, movies and apps through iTunes. The only costs are infrastructure to handle volume (data centers, merchant processing costs, etc.). Staffing costs will not scale with volume.

    Developer interest in the OS X platform (Mac OS X, iPhone OS) is rising by the day, expanding the global eco-system for Apple products.  Apple will continue to leverage the 3rd party investment in its OS platform through increasing product sales. The more people dependent on your company’s product sales for success the more people directly and indirectly selling your products.

    The Apple retail stores are an amazing success, earning the company the distinction of having had the fastest growing retail chain in history. Although domestic store openings have slowed and sales per square foot have moderated during the economic downturn, EU store expansion awaits and the domestic stores should return to sales growth as the economy recovers. No matter the current economy, retail store sales per square foot are the envy of the retail industry and store costs are covered by the retail margin on products sold.

    Currently Apple does not pay a dividend, allowing the company to grow its cash position at an accelerated rate. Growth through acquisition may be on the horizon. XOM increased its market cap considerably following the merger of Exxon and Mobil.

    I see AAPL surpassing XOM’s market cap within three to five years as Mac unit sales double in that time frame and iPhone unit sales double (and perhaps triple) on a global basis over the next three years. Apple’s growing presence in the EU will buttress Mac sales and in the domestic market there is significant Mac sales potential in both the consumer and enterprise markets.

    Apple is well on its way to designing and contracting for the product of its own chips, providing yet another competitive advantage in the PC and digital device markets.

         
  • Posted: 19 October 2009 10:18 PM #43

    OK everyone I am now not nervous after a fantastic earnings call.
    A big thanks to everyone for there input.

    It looks like I will be in for at least the next 4+ years…..

         
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    Posted: 19 October 2009 10:41 PM #44

    Downunder - 20 October 2009 01:18 AM

    OK everyone I am now not nervous after a fantastic earnings call.
    A big thanks to everyone for there input.

    It looks like I will be in for at least the next 4+ years…..

    4 years?  Try 10 or 15 years.  None of us saw the success of Apple 10 years ago.  I owned aapl in 1998 at $20 a share and like fool sold at $35.  That is when I only had $1500 to invest.  Since then I made a ton and lost of ton due to crazy economy and irrational market.

    The long trend is very positive with bumps along the way.  I still think we could see a correction that will put us below 200, but in the long run Apple is the best investment one can make.  Once I decrease more debt, I will once again take a 2nd on my house and invest in Apple.  I don’t like so much margin. :-D

         
  • Posted: 19 October 2009 10:55 PM #45

    omacvi - 20 October 2009 01:41 AM
    Downunder - 20 October 2009 01:18 AM

    It looks like I will be in for at least the next 4+ years…..

    4 years?  Try 10 or 15 years.

    You may well have a point…