THE APPLE INVESTOR: What Could Apple’s Cash Hoard Buy?

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AAPL Climbing In A Down Market
Stock are down on reports that Greece will not allow supervision of its budget decision, which was part of the conditions for its receiving financial aid. Shares of Apple are up slightly while rest of tech is trading in the negative. Investors continue to be focused on iPhone adoption; update to the iPad; market share growth of the Mac business; further penetration in China and emerging markets; the evolution and potential re-conception of Apple TV; and platforms such as Siri, iAd, iBooks and social (Ping). Shares of Apple trade at 7.9x Enterprise Value / Trailing Twelve Months Free Cash Flow (including long-term marketable securities).Three Carriers In China Could Bring 40 Million Incremental iPhone Sales (AppleInsider)
Analyst Katy Huberty at Morgan Stanley notes the vast untapped potential for the iPhone in China. Currently, Apple can only possibly reach 10% of the 150 million “high-end Chinese subscribers” in the country through its partnership with China Unicom. She believes Apple will partner up with both China Telecom and China Mobile “over the next year” to make the iPhone available on all three Chinese carriers, bringing incremental sales of as many as 40 million units next calendar year.

When Will iPad Sales Catch Up To iPhone Sales? (TechCrunch)
Apple’s quarter was driven by iPhone and iPad sales. iPhone sales went from 17 million the quarter before to 37 million. They more than doubled in a single quarter. If you look closely at the iPad line, you’ll notice that Apple sold almost as many iPads last quarter as it sold iPhones in the previous quarter. And now it is selling as many iPads as iPods. That red line is going to keep on going up. Will it ever catch up to iPhone sales?

Want To Know All The rumoured Specs And Features Of The iPad 3? (Business Insider)
We have them all right here.

What Apple’s Cash Hoard Could Buy (The Motley Fool)
Apple now has $97.6 billion in cash. What does that mean?

  • That means Apple was adding $1,200 to its cash pile every second.
  • In GDP terms, Apple’s cash pile alone would make it the 58th largest country.
  • Apple could buy every single NFL, MLB, NBA, and NHL team. And still have $31 billion left in the bank.
  • After next quarter, Apple’s cash hoard will be able to pay the entire total the federal government’s costs for education in a year.
  • In two quarters, Apple’s cash hoard will be able to pay for the inflation-adjusted cost of the Marshall Plan ($115 billion).
  • By the end of next year, Apple’s cash hoard will be larger than all of the corporate taxes America collected in 2009 ($138 billion).

I really just have no words. That’s a lot of cash.

Apple Buying (Or Buying Into) Hollywood Is A Bad Idea (TechCrunch)
Apple should not use its $100 billion in cash to buy, or buy into, Hollywood. That would actually kill Hollywood. Here’s why: tech companies have proven a keen disability when it comes to marketing and promotion. In contrast to the Hollywood marketing machine, tech companies devalue content. What is missing from all digital entertainment services are efficient, effective promotional platforms. Throwing algorithms, ratings and popularity and trending data at the problem, or gobs of display ad inventory are not solutions.

Why Is Apple Stock So Cheap? (Financial Times)
The question frustrates analysts and existing shareholders alike. The company destroyed earnings estimates, doubling earnings versus a year ago. Yet the stock only rose 6%. On consensus earnings for the full year, Apple’s price-to-earnings ratio is still only ~10.5x. That’s about 15% less than the overall market. Apple is neither growing less fast than companies with much higher multiples, nor are its return metrics, either on equity or on assets, inferior. Perhaps deep down investors worry that even if Apple puts that cash to work, future returns may drop.

Murdoch Says Apple Cheap If Facebook Valued At rumour Levels (Forbes)
Rupert Murdoch tipped the Twitter blogosphere last week that Apple shares at the $448 level are resoundingly cheap if the Facebook’s public offering values the company at $75-$100 billion. “Facebook a brilliant achievement, but $75-100bn? Would make Apple look really cheap.” Murdoch’s amazing decision to plug another company must be a first for Murdoch or any other media and entertainment bigwig. And not just one company, essentially two. One of which crushed News Corp. acquisition MySpace.

Tim Cook Slams Reports That His Company Doesn’t Care About Its Supply Chain Workers (Scoople)
Apple was recently ripped to pieces in an article highlighting the poor working conditions in the Chinese factories that make Apple products. Apple CEO Tim Cook sent an email to employees that addresses allegations surrounding work conditions at its supplies factories, noting that the company “never turns a blind eye to problems in our supply chain”. He told his staff that “we care about every worker in our worldwide supply chain” and calling the accusations “offensive.” We’d certainly hope so. Do you agree with how Tim Cook is handling the Foxconn issue? 71% of those questioned said yes.