Larry Gude
Strung Out
Ah, OK. Verizon is simply buying phones and then selling them at prices of their own choosing; get them the phones, make money on the service. Got it.
Exxon-Mobil and Apple
- Thread starter Tilted
- Start date
Ah, OK. Verizon is simply buying phones and then selling them at prices of their own choosing; get them the phones, make money on the service. Got it.
Tilted
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I think the pricing (to customers) is more so determined by Apple, though perhaps in consultation with the carriers.
But yes, that's the model - sell customers phones at a loss and lock them into service long enough to make it back (and then some).
). It's currently above $471 / share, which equates to a market cap of almost $440 Billion. Apple is putting some distance between itself and ExxonMobil - Exxon's market cap is a little below $410 Billion.
Tilted
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$618 right now, touched above $621 earlier today. I can't keep track of how many days it's touched new all-time highs over the course of the last 2 months - it's been a lot of them.
Current market cap: $576 Billion, greater than that of Microsoft, Google, HP, and Dell combined.
Sorry I get geeked out about such things.
Current market cap: $576 Billion, greater than that of Microsoft, Google, HP, and Dell combined.
Sorry I get geeked out about such things.
Tilted
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Wow, the gap between XOM's and AAPL's market caps is now $180 Billion ($586 Billion versus $406 Billion). It's now big enough to slide a JP Morgan, Pfizer, or Coca Cola in between there and almost big enough to fit a Walmart. That's right, Apple is now just $30 Billion shy of being worth as much as Exxon-Mobil and Walmart combined.
Larry Gude
Strung Out
Is there any better symptom that Wall Street is still ####ed up? Stunningly so?
Tilted
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Why? In this case, the fundamentals support the valuation. This isn't like in the late 90's when companies were getting ridiculous valuations that couldn't be justified by what the businesses were actually doing - where they were being expected to 'grow into' the valuations by increasing their profits many fold (or, in some cases, they hadn't even proven that they could make money at all).
Apple's stock price is just now getting to where it's actually debatable (given downside risk and upside potential) as to whether the stock price is right based on the businesses performance. From a technical standpoint (i.e. having nothing to do with the actual business, considering only stock price dynamics) some might be able to argue that it's run too far too fast, but from a fundamentals standpoint the current price is not at all unreasonable. This company makes money - lots of it - and its positioned to keep growing the amount it makes for a while. If the company were 10,000 times smaller such that someone could buy all of it as a smallish, turn-key business, 1/10,000th of its current market cap would seem like a fair price for the business - it would be justified by the cash on hand and how much money the business made (especially considering that there's a considerable amount of upside).
How much of an expected return do you think would make the purchase of a business (as opposed to putting the money into bonds or investing elsewhere) seem attractive? I'm talking about returns from the business' operations, not stock valuation returns - and let's assume that owning the business didn't mean having to invest significant amounts of one's own time to run it.
Again though, my statements about what constitutes a reasonable valuation for the company (based on fundamentals) aren't meant to suggest that its a good stock at this price - the stock market is often driven by technical factors not fundamental ones, it can be quite whimsical and, of course, the company's business performance could change going forward.
Tilted
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We're through another earnings cycle for Exxon and Apple (as well as most other companies) now. Apple again blew through estimates to post earnings of $11.6 Billion and beat Exxon for a second consecutive quarter. It's starting to look like Apple might actually beat Exxon when it comes to full year earnings and, more impressive still, it could challenge the all-time single year earnings record set by Exxon back in 2008 - $45.2 Billion. (That's when oil hit $8,642 / barrel, remember?)
All things considered, this past quarter for Apple was probably even more impressive than the previous one was. In addition to it not being the Christmas quarter, it didn't have an extra week like the previous quarter did, it didn't have a brand new iPhone and pent-up demand there for, and the new iPad was only available for the last 2 weeks of the quarter. Additionally, the desktop Mac lines are even older and in more need of refreshes than they had been in the prior 3 months. (Come on Apple, how the heck can you compete in the global PC market with 1 to 2 year old products?)
To put some more perspective around what Apple - as a business, not as a stock - is accomplishing: When Walmart reports later this month, Walmart and Exxon-Mobil will have combined to make about $27.7 Billion in the last 6 reported months. Apple alone has made $24.7 Billion in the last 6 reported months. Apple made almost as much money in the last 3 months as Microsoft made in the last 6 ($11.6 B versus $11.7 B). It wasn't too long ago that Microsoft made significantly more than Apple did, and the change isn't much on Microsoft weakness - its last quarter was pretty strong. Their reporting periods don't line up exactly, but Apple has made more in the last 3 months than Walmart and Target combined have made in the last 6 reported months (including each's holiday quarters).
How about some of the other big tech players? Microsoft, Google, HP, Dell, Facebook and Amazon combined made less than Apple in the last 6 months.
I think earnings will be down in this next quarter, the question is how much. iPad sales will probably increase some (Apple ended the last quarter behind demand on the new iPad), but iPhone sales will surely fall off - perhaps significantly - and that's their biggest earnings driver. Apple said that it achieved supply-demand balance on the 4S toward the end of January and was able to fill the channel with enough inventory to get within their normal target range (4-6 weeks). I don't see much reason to think Mac sales will improve meaningfully, unless we get the new line-ups introduced soon. I'd guess they will go on sale pretty close to the end of the quarter, if not in the next.
Anyway, things could of course change for Apple. It faces a number of meaningful headwinds at this point, and we can't just assume that it will continue to execute as remarkably as it has in all of the aspects of its business that it has. At the same time, there are a number of potentially important tailwinds that aren't as apparent to some as they should be. Who knows where Apple goes from here? But the story that's unfolded so far is just amazing. Years from now, I think college economics courses will teach whole segments based on what Apple accomplished and how it was able to do it - this business success goes well beyond the innovation and Apple's seemingly innate ability to understand what consumers wanted before even they did. They've done a long list of things right.
EDIT: Oh, the cash pile is now about $110 Billion. Over $18 Billion of that is loaned to the U.S. Treasury and another $21 Billion is in U.S. agency debt.
All things considered, this past quarter for Apple was probably even more impressive than the previous one was. In addition to it not being the Christmas quarter, it didn't have an extra week like the previous quarter did, it didn't have a brand new iPhone and pent-up demand there for, and the new iPad was only available for the last 2 weeks of the quarter. Additionally, the desktop Mac lines are even older and in more need of refreshes than they had been in the prior 3 months. (Come on Apple, how the heck can you compete in the global PC market with 1 to 2 year old products?)
To put some more perspective around what Apple - as a business, not as a stock - is accomplishing: When Walmart reports later this month, Walmart and Exxon-Mobil will have combined to make about $27.7 Billion in the last 6 reported months. Apple alone has made $24.7 Billion in the last 6 reported months. Apple made almost as much money in the last 3 months as Microsoft made in the last 6 ($11.6 B versus $11.7 B). It wasn't too long ago that Microsoft made significantly more than Apple did, and the change isn't much on Microsoft weakness - its last quarter was pretty strong. Their reporting periods don't line up exactly, but Apple has made more in the last 3 months than Walmart and Target combined have made in the last 6 reported months (including each's holiday quarters).
How about some of the other big tech players? Microsoft, Google, HP, Dell, Facebook and Amazon combined made less than Apple in the last 6 months.
I think earnings will be down in this next quarter, the question is how much. iPad sales will probably increase some (Apple ended the last quarter behind demand on the new iPad), but iPhone sales will surely fall off - perhaps significantly - and that's their biggest earnings driver. Apple said that it achieved supply-demand balance on the 4S toward the end of January and was able to fill the channel with enough inventory to get within their normal target range (4-6 weeks). I don't see much reason to think Mac sales will improve meaningfully, unless we get the new line-ups introduced soon. I'd guess they will go on sale pretty close to the end of the quarter, if not in the next.
Anyway, things could of course change for Apple. It faces a number of meaningful headwinds at this point, and we can't just assume that it will continue to execute as remarkably as it has in all of the aspects of its business that it has. At the same time, there are a number of potentially important tailwinds that aren't as apparent to some as they should be. Who knows where Apple goes from here? But the story that's unfolded so far is just amazing. Years from now, I think college economics courses will teach whole segments based on what Apple accomplished and how it was able to do it - this business success goes well beyond the innovation and Apple's seemingly innate ability to understand what consumers wanted before even they did. They've done a long list of things right.
EDIT: Oh, the cash pile is now about $110 Billion. Over $18 Billion of that is loaned to the U.S. Treasury and another $21 Billion is in U.S. agency debt.
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Tilted
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Apple will release quarterly earnings again this afternoon. This figures to be a difficult quarter, speaking relatively of course, for Apple for a number of reasons: the iPhone, which is their biggest revenue and earnings driver, is deep into the product cycle and unit sales are likely already suffering from the next generation anticipation effect; FX effects probably hurt them this quarter (e.g. because the Dollar was strong versus the Euro); gross margins will probably be down (e.g. because margins on the new iPad and the reduced-price iPad 2 are lower); and there's also the general decline in economic conditions / expectations globally. I'll be somewhat surprised if they're able to beat consensus estimates this time. But they've surprised me to the upside a number of times before. I suppose I should stop looking for reasons to expect something less than hard-to-believe good from them. The new portable Macs should help a little, but they were released toward the end of the quarter so the effect probably won't be too big in this quarter. IPad sales will surely be strong (I'm guessing they'll match or beat the 15 million or so that they sold in the Christmas quarter), but iPhone sales will just as surely be off.
At any rate, anticipating less than amazing results, I'm less-long APPL right now than I've been in quite a while. I still believe in the stock long-term, but I've sold a few shares thinking I might get a better deal if this quarter's results disappoint a little.
Back to the original point of this thread though, it seems very likely that Apple will have greater earnings this year than Exxon-Mobil will. The remaining question is whether they'll break Exxon's record for fiscal year earnings of $45.2 Billion set in 2008. Apple needs to earn an average of about $10.3 Billion for the last 2 quarters of its fiscal year in order to do that. Will they get to $10 Billion or $11 Billion this quarter? Their own guidance was for a little over $8 Billion, but they always beat that and I'm sure they will this time as well - but by how much? I guess we'll know soon enough.
At any rate, anticipating less than amazing results, I'm less-long APPL right now than I've been in quite a while. I still believe in the stock long-term, but I've sold a few shares thinking I might get a better deal if this quarter's results disappoint a little.
Back to the original point of this thread though, it seems very likely that Apple will have greater earnings this year than Exxon-Mobil will. The remaining question is whether they'll break Exxon's record for fiscal year earnings of $45.2 Billion set in 2008. Apple needs to earn an average of about $10.3 Billion for the last 2 quarters of its fiscal year in order to do that. Will they get to $10 Billion or $11 Billion this quarter? Their own guidance was for a little over $8 Billion, but they always beat that and I'm sure they will this time as well - but by how much? I guess we'll know soon enough.
Tilted
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Ha! I finally got one right.
Earnings were $8.8 Billion versus expectations of around $9.7 Billion - a strong iPad number (17 million units) and a weak iPhone number (26 million). I think that puts the total number of iPads sold in 2-1/4 years over 80 million.
Seeing little reason to think that the September quarter will be a lot stronger, I doubt Apple will get to $45 Billion in earnings for its 2012 fiscal year. The December quarter may be record breaking and Apple could easily break the annual earnings record with its 2013 fiscal year though.
Earnings were $8.8 Billion versus expectations of around $9.7 Billion - a strong iPad number (17 million units) and a weak iPhone number (26 million). I think that puts the total number of iPads sold in 2-1/4 years over 80 million.
Seeing little reason to think that the September quarter will be a lot stronger, I doubt Apple will get to $45 Billion in earnings for its 2012 fiscal year. The December quarter may be record breaking and Apple could easily break the annual earnings record with its 2013 fiscal year though.
Tilted
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I must confess to being somewhat (pleasantly) surprised with how strongly Apple stock has rallied since the last earnings report. It closed at an all-time high yesterday, touched an all-time intraday high today, and is currently trading above $643. It had traded down below $570 after the last earnings report. I thought it would rally, but didn't think it would regain these levels again for a while. We're in between 2 quarters that are likely to be relatively weak by Apple standards (one already was, the other seems to me likely to be). I didn't expect a major upward move from APPL until the next generation iPhone was released (and we got initial sales numbers and projections) and then based on results from the Christmas quarter, which I expect will be the greatest quarter in corporate history. Perhaps the market has learned from its mistakes when it comes to Apple.
Oh, and if my math is correct, as of this moment Apple has a market cap of over $600 billion - greater than Microsoft, Google, Amazon, and Dell combined.
Oh, and if my math is correct, as of this moment Apple has a market cap of over $600 billion - greater than Microsoft, Google, Amazon, and Dell combined.
TPD
the poor dad
So, how many shares of Apple do you own?
Our investment club has been following Apple on and off again for the last year or so, but have never made the plunge. I guess part of the reason is that Apple does not have a DRP. It would have been a great investment, but we know how that goes.
Tilted
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I'd forgotten about this thread until it just showed up in search I did. I guess I abandoned it during a time when I had kinda stopped posting on the forums.
Anyway, I revive it now to update something I was talking about back when I was posting in this thread: Apple just reported what is, to the best of my knowledge, the most profitable (private) corporate quarter in history - even adjusting for inflation (at least, as far as inflation goes, when it comes to fairly modern businesses). It made more than $18 Billion last quarter, even with what I suspect were significant currency headwinds (i.e. the dollar is so strong now and that's hurting profits for many U.S. companies that do a lot of business abroad). I'm curious to hear what they say about that effect on the conference call.
So... Exxon-Mobil, BP, Shell... none of them have ever made that much (after-tax) money in a single quarter. And other than Apple, the only companies that have made anything close to that in a quarter are the huge energy conglomerates.
Anyway, I revive it now to update something I was talking about back when I was posting in this thread: Apple just reported what is, to the best of my knowledge, the most profitable (private) corporate quarter in history - even adjusting for inflation (at least, as far as inflation goes, when it comes to fairly modern businesses). It made more than $18 Billion last quarter, even with what I suspect were significant currency headwinds (i.e. the dollar is so strong now and that's hurting profits for many U.S. companies that do a lot of business abroad). I'm curious to hear what they say about that effect on the conference call.
So... Exxon-Mobil, BP, Shell... none of them have ever made that much (after-tax) money in a single quarter. And other than Apple, the only companies that have made anything close to that in a quarter are the huge energy conglomerates.
Tilted
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They've come a long way, that's for sure. And they didn't just merge or acquire their way into being a behemoth. They built a business, one sound brick at a time.
I spend a considerable amount of time following what various companies do and how they behave (not as much as I used to, mind you
). Apple stands out, not just in its size and success but in its conduct - in the way it does things, so many things. It makes for a great case study in how to build (or rebuild) a business and how even a huge corporation can comport itself - be more than a profit machine, be also a conscientious part of society. Along the way they focused on more than the bottom line, and by doing so they've built to the greatest bottom line the world has yet seen.But to return to the notion of how big Apple has become, how much they've grown: Consider this, they're responsible for more income tax for last quarter ($6.4 B) than they had total revenue for an entire year as recently as FY 2003 ($6.2 B). That's revenue, not profit. That tax bill for last quarter is also larger than their net earnings for all of FY 2008 ($6.1 B). And to compare the size of their business to others, not just to their own history - the iPhone business alone, not including anything else Apple sells, was bigger last quarter ($51.2 B) than Google and Microsoft's entire businesses combined ($44.6 B). And I might note that that's even with the way they account for iPhone revenue. They defer a portion of the revenue they receive for each new iPhone over a period of 2 years because they view it such that they haven't, in a sense, delivered the full product to the customer - they consider it such that they owe the customer software upgrades for at least that long. (In practice, they've been making software upgrades available for longer than that.) The point being, in a quarter like this last one where they sell so many iPhones, the net effect of that accounting is that their reported revenues are a bit lower than they were in reality.
To finish on the size if that iPhone business - they sold more than 74 million iPhones last quarter at an ASP of $687. That's not the average retail price, that's the average price that Apple is getting; though Apple does sell a disproportionate number of its iPhones itself through its website or its stores. And that ASP reflects not just sales of its newest models (the 6 and 6+), but factors in sales of the now reduced-price older models (the 5S and 5C). The numbers are staggering; but as I suggested, the story behind (or beside) the numbers is even more so impressive.
Tilted
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Forget comparing Apple to Exxon-Mobil. With a market cap approaching $720 Billion as I begin typing this, Apple is now valued by the market at more than the big 3 U.S. oil / gas companies combined. That's Exxon-Mobil, Chevron, and Conoco Phillips. Combined. And it isn't just in market cap that Apple bests them. Apple also had more net income than the three of them combined last quarter - and not by a little either. To be fair though, last quarter was particularly (comparably) bad for companies like those (i.e. large oil / gas companies), especially from an accounting perspective. But even if we were to take the previous quarter's results (i.e. those for July through September) for those 3 companies - which were considerably better - and compare them to Apple's December quarter, Apple made more after-tax money.
Some of this stuff is staggering to think on.
Some of this stuff is staggering to think on.