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AAPL Down/Flat In Up Market
The market is up on positive trades in Europe and GE’s earnings beating expectations this morning. Apple shares are currently down marginally. Potential catalysts for the stock include news regarding Steve Jobs’ health and return; the launch of the second generation iPad in the second quarter; monthly NPD data (Mac / iPod business); iPhone sales updates (under new carrier Verizon) as well as the launch of the iPhone 5 anticipated this summer; new revenue streams such as video, books, newspapers and social (Ping); moving iTunes into the cloud; and the continued evolution and adoption of Apple TV. Shares of Apple trade at 13x Enterprise Value / Trailing Twelve Months Free Cash Flow (incl. long-term marketable securities).Apple Beats Goldman Sachs In Terms Of Return On Capital (The New Yorker)
As everybody knows, Goldman Sachs and Apple both make tons of money. On the face of it, the two firms’ profit margins seem pretty similar. For every dollar of revenue generated, Goldman makes a profit of about 20-one cents; Apple makes about 20-three cents. From an economic perspective, the real measure of a business is the return it generates on the capital it employs. By this metric, whether it’s shareholder’s equity or return on assets, Apple leaves Goldman in the dust. And Apple employees earn a lot less than their counterparts at Goldman. Go figure.
- Apple grew very nicely from 1985, when Jobs was fired, until 1997 when he returned to power (because of the Mac which he put in place before he left).
- Apple is a “network” of consumer products. It’s the halo effect.
- Apple is building in incremental growth from its tie-up with Verizon.
- Some 62% of all Apple sales are foreign and bound to increase by leaps and bounds.
Not to mention the stock is selling for 15x forward earnings per share, after a quarter when it reported net earnings per share gained 75%.
Apple Doesn’t Have To Disclose Anymore About Jobs Says Former SEC Chief (Bloomberg)
Arthur Leavitt, former chairman of the U.S. Securities and Exchange Commission, believes Apple’s board of directors has acted appropriately when revealing information about its company’s CEO. “It’s easy to criticise the board, but I think the reality is that someone who owns Apple stock has got to be deaf, dumb and blind not to know that Jobs has an illness that can reoccur at any time.” No mincing of words.
Here’s A New One: Apple Should Announce A Dividend (Seeking Alpha)
Because there apparently aren’t enough articles written on the topic, here it is one more time: Apple should issue a dividend. What is Apple going to do with all of its cash? It has four options:
- Continue to hold it in the company’s coffers while earning a measly rate of return.
- authorise a minimum stock buyback of $20 billion over an extended time period.
- Use the funds for strategic acquisitions of a size and type consistent with past practices.
- Declare a one-time dividend of up to $20 per share.
Apple criticised In China Environmental Report (CNet)
The Institute of Environmental and Public Affairs (IPE) ranked Apple dead last among 29 other tech companies for their responsiveness to health and environmental concerns in China. Specifically, the report claims that Apple ignored concerns at Wintek, a factory that allegedly exposed workers to n-hexane poisoning. Apple reportedly refused to confirm that suspected polluters were among its suppliers and avoided taking responsibility for environmental problems related to its products.
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