The Apple Investor - February 22, 2010 - Analysts Apple Expectations Are Crazy And The Stock Is Overvalued

Analysts Apple Expectations Are Crazy And The Stock Is Overvalued, Says One Idiot (Seeking Alpha)
The “Sane Investor” takes a look at why Apple is the fourth largest holding in the S&P 500 (SPY). Based on discounted cash flow, price-to-earnings and other ratios, he concludes that the stock is “overvalued right now and the analyst estimates seem downright ridiculous, putting it at a market capitalisation of $225 billion one year from now.” If you compare Apple to Exxon, ignore its enterprise value, throw out historical price-to-earnings trading ranges, strip away margin expansion (or even maintenance), and assume the company is done innovating, we might agree.

How To Turn Apple Into An Income Stock Without The Company Paying Dividends (Seeking Alpha)
Apple trades at a price-to-earnings growth (PEG) of about 1.05, just above the widely accepted fair-value cutoff of 1.00.  A Seeking Alpha contributor argues that selling put options on Apple would lower the potential entry point (thereby lowering the P/E and PEG) and allow investors to generate income now, instead of buying the stock and waiting for appreciation.  Of course, if the stock went up, you’d be screwed (unless you already own it, in which case you might be forced to sell it at $190.  There’s no free lunch…).

Apple Will Never Dominate The Laptop Market Because Dells Don’t Look Totally Crappy Anymore (CNet)
Dell is finally selling good-looking plastic laptops with amazing pricing and solid specs (Intel’s newest Core i3 and i5 processors). Brooke Crothers at CNet News argues that Dell’s new product offering highlights why Apple will never completely dominate the laptop market. Apple refuses to sell laptops below $999, a price point that many consumers cannot afford, and those computers aren’t even equipped with the most recent specs. That may be true today, but what happens when the iPad ships? Apple is likely to pick up some share with the $499 iPad, which is $200 cheaper than the cheapest Dells.

TV Networks Still Fighting Those Price Cuts On iTunes (The New York Times)
Apple is still trying to force TV networks to cut the price of TV episodes from $1.99 to $0.99 so people will buy more of them. Networks, meanwhile, are worried about harming more profitable deals with affiliates and cable distributors. On the other hand, although digital revenues are still small, the networks don’t want to sniff their noses at 125 million paying iTunes customers and direct distribution to the consumer.  Price cuts would cost Apple money on a per-episode basis, but the higher volume would likely offset this.  Also, iTunes would become a more powerful distribution platform, which will be great for Apple in the end.

iPad Presale Could Provide Insight Into How Many People Will Actually Buy It (App Advice)
Sources say that Apple will begin the presale of the iPad as soon as this Thursday, February 25, despite the fact that the device won’t be delivered until the end of March. Presale will likely be US only and limited to the Wi-Fi version for now (AT&T’s 3G will have to wait). If Apple holds to the announced schedule, iPads should be received within approximately 30 days. The iPad must be approved by the FCC before it can be offered for sale in the US. If the rumour is true, expect to see the device approval soon. A presale would give the company (and possibly us) a better gauge for the demand for the product.

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