BW: Apple Stock Past its High Prime

At a price of above US$77, BusinessWeek columnist Robert Barker wonders in his latest online column if stock in Apple Computer (AAPL) is too high priced and not worth the investment.

In his "Barker Portfolio", Mr. Barker writes, ""Lately hitting a new high above 77, stock in Apple is not just high-priced -- 37 times this yearis estimated profit -- but high-fashion. Which got me wondering: Besides a reflected glow as part-owner of todayis most glamorous gadgeteer, what does 77 a share get an Apple buyer?

Commenting that Appleis stated net worth is $13.82 a share and estimates of $2.05 a share for calendar 2005, Mr. Barker cautions that the future isnit always rosy for high tech companies.

"Itis worth recalling what happened to eBay (EBAY ), another great company whose shares went in weeks from 118 to 80 on hints of slower growth," he wrote. "Were something similar to befall Apple, all the cash on its balance sheet would act as a cushion. But that cushion is not as cushy as it was. Apple closed fiscal 2002 with enough cash per share to cover 82% of its stock price. The next year, the figure was 57%, and it was 35% last September at the end of fiscal 2004. Today, cash per share comes to less than 20% of Appleis stock price."

In the end, Mr. Barker opted to recommend no investment in Apple shares. "Apple doesnit tempt me," he told readers.