Enormous Apple market cap swells and swells ... like a bubble Apple's total share value pushed beyond the totemic $500 billion mark it reached two weeks ago to hit a heady $542 billion in trading this morning. That made the iPad seller worth more than the entire American Retail Sector, as defined by the Standard & Poor's survey of the top 500 American retailers. Apple v Retail Sector, …
To quote the article: "That made the iPad seller worth more than the entire American Retail Sector, as defined by the Standard & Poor's survey of the top 500 American retailers"
Shouldn't that rather read "iPad, iPod, iPhone, iMac, MacBook and AppleTV 'manufacturer' and iTunes & Apple Store outlet"..
After all there's more to Apple than just the iPad, whoever authored that report needs to take a stroll into the Apple Store one fine day...
Not meant to big up or take down Apple in any way, just my observation of a piece of mediocre journalism
"Shouldn't that rather read "iPad, iPod, iPhone, iMac, MacBook and AppleTV 'manufacturer' and iTunes & Apple Store outlet"."
Since with the exception of iPhone they all together hardly match the current golden product (iPad) numbers no, it shouldn't. Macs are still a single-digit market share and it's not going to change anytime soon, people are not flocking from Windows 7 to Macs regardless of what Apple-wet fans are thinking.
"Not meant to big up or take down Apple in any way, just my observation of a piece of mediocre journalism"
Nah, it's just typical knee-jerk nitpicking from a bored reader.
Let's not forget that the iPad is less than 2 years old. Saying that Apple depends on a relatively new product means nothing, unless you are suggesting that they will not produce anything else new.
Moreover, any other company would kill to have the income from any of the other products Apple sells. That the iPad dwarfs them all does not mean that Apple would not be able to survive without it. After all, it did survive before the iPhone and the iPad, and in fact it brought itself back from the brink of bankruptcy before even the iPod.
So, Apple "relies" on the iPad today as much as it "relied" on the iPhone before it, and the iPod before that, and the Macs before them all. It has always relied on the products it just happens to be selling at the time.
dZ.
Mac marketshare is still going up rather than down. So his point still stands. Apple is responsible for more than one product that can be considered successful.
Give the state of the Mac before Jobs re-joined apple and Microsoft's monopoly it's amazing it's still around let alone growing.
"Macs are still a single-digit market share and it's not going to change anytime soon, people are not flocking from Windows 7 to Macs regardless of what Apple-wet fans are thinking."
(sigh) Not this bollocks again...
Don't trust the "market share" statistics unless they've separated out the "Consumer sales" numbers too. If they haven't their numbers aren't worth a damn, because they'll also include every single PC in every office, every storage cupboard, every server room, every data-centre, and so on. None of which are even slightly relevant to Apple's target market.
Apple do not target the corporate sector. They've even canned their server range! They don't mind if businesses decide to buy iMacs, but they're that bothered if they don't because their primary market is—and always has been ever since Jobs returned to the company—the consumer market. As businesses are starting to move away from rigid IT infrastructures and towards the fashionable and trendy "BYOD" approach, we'll hear more about them buying Macs and iPads too, but this really isn't Apple's core strength.
Big Corporate is where Microsoft tends to shine, but Windows 8 isn't ready yet, and they're probably not expecting much uptake before Windows 9's release anyway. (Windows 8 may be a big hit, but past performance suggests it'll be Windows 9—or whatever they decide to call it—that gets the big sales, given that Windows 7 is still being rolled out in many companies.)
Apple have an installed user base of over 58 million OS X computers. That's Macs, not "all Apple devices". Just the Mac range. To put that into context, that's not far off the number of XBox 360 consoles sold in total around the world (the most recent figure I can find is 53 million by March 2011).
So, yeah, their market share is small. As "small" as the most successful games console currently on the market.
"Don't trust the "market share" statistics unless they've separated out the "Consumer sales" numbers too. If they haven't their numbers aren't worth a damn, because they'll also include every single PC in every office, every storage cupboard, every server room, every data-centre, and so on. None of which are even slightly relevant to Apple's target market."
But entirely relevant to the computer market figures as a whole. Which is kind of the point. Counting areas where Apple do not hold a significant share is not actually cheating.
The point about going to the consumer market is that consumers don't care about the actual quality of the product. They are much more influenced by brands and style. That's why consumers rarely have, for example, business style ThinkPads, but are more likely to buy computers with glossy displays and sometimes even ugly ornaments, for the same price. And if the product fails, they are more likely to blame it on themselves.
In a nutshell one can say that in the business market, success depends more on the engineer, while in the consumer market, success depends mostly on marketing.
As and engineer I'd prefer to make products to which I can contribute, so I'd prefer the business area. I can only infer that this is similar for marketing people. So they obviously want to move in somewhere where they can make an impact, and that simply is the consumer market.
Apple simply went from an engineering driven company to a marketing driven company. That is a decision one may or may not regret, but it's a fact.
And certainly not because a stock price bubble bursts. However, if I was one of the lucky buggers who held Apple stock since it was cheap, I hope I'd have the good sense to take some profits (as the smart money surely is, while the bubble inflates).
Yep - for a company that doesn't issue a dividend, and has too much cash in it to be subject to a takeover, I can't for the life of me see why the stock is valued so highly. Sure, it's a stable, profitable company, but if shareholders can't realise a return from investing then what's the point?
In a nutshell, the price can't keep rising at this rate. Not forever. That's when the bubble will burst. Hell, it might not even burst, but just settle and stop - then a lot of people are going to be sitting with very expensive pieces of paper...
"Yep - for a company that doesn't issue a dividend, and has too much cash in it to be subject to a takeover, I can't for the life of me see why the stock is valued so highly."
Uh, "too much cash to be subject to a takeover" is exactlt ass backwards.
Having a lot of cash makes you a prime target foir a takeover - all a raider has to do is borrow money on a short term loan, buy you with that, then repay the loan with your cash.
What's saving Apple is that they don't have much cash *compared to their market cap*
Man.... That's exactly what I thought when it was at about $200.00. "No point in buying stock now, I mean, how much higher can it get?"
Then, when it reached about $300.00 I thought, "for real, this is it, I should have invested at $200.00, but I didn't and now I missed the boat."
Now I wish I had, though.
dZ.
I am always surprised by the people who consider that not paying a dividend means it is not possible to make money on the stock.
The point is: IF Apple ever wanted to give back a dividend — which they technically could at any time, even if they prefer not to — they would be able to pay a dividend corresponding to the current stock price. That is enough to justify the stock price.
You might as well wonder why people try to accumulate these little pieces of paper called "money", considering they do not give back a dividend either — and do not even give you a right to anything tangible like a piece of gold. What proves that the barman will be enough of a sucker to accept it in exchange of a beer?
Wut? You "make money on stock" by disregarding its supposed value as given by the underlying assets and just selling it to some other guy in Armanis who is more eager to put it into his portfolio than you.
Note that "a dividend corresponding to the current stock price" is a rather subjective criterium. Would you be content with 1 dollar per share per annum at USD 300 per share for example?
"You might as well wonder why people try to accumulate these little pieces of paper called "money", considering they do not give back a dividend either"
"Money" par essence, does not give off a dividend. People "accumulate money" only insofar as they can exchange it for something else later. In this case, the friendly government actually forces you gun-in-hand to use its "paper money", which can conveniently be made worthless at the roll of a printing machine. Trade in gold is forbidden. Trade in bank-specific notes is forbidden, too. Instead you get EURO rammed up your backside. This tanks due to politicians not able to stop themselves paying off cronies and buying voters as well as banks handing out more money than they have in their coffers. Nice.
"What proves that the barman will be enough of a sucker to accept it in exchange of a beer?"
If you start asking yourself that question, you know that Zimbabwe or Weimar are near. Go to home depot and buy a wheelbarrow.
Many people think Apple is cheap - until their recent rise their market capitalisation was just 9 times their earnings (excluding the cash they hold) or about 12-13x including it. As a comparison I think Amazon are trading at around 90 times (or more) of earnings - so are Apple cheap or Amazon expensive? A few years ago (when they were making less money) they were trading at about 30x earnings - so are they really expensive now??
People say it's a bubble - but they are making real products and real profits and real cash - at their earnings ratio they trade on a valuation more like a fairly static business (like a supermarket) not a tech company with a market that is rapidly growing.
As the reg said in another article the tablet market is due to grow over 50% this year and Apple have the vast majority of it (certainly by value). Many people are actually buying the iPad 2 now it is a bit cheaper - putting the squeeze on other-brand tablets. They sell a lot of iPhones but their share of total phones shipped is not that great (as a lot of people have not moved to smartphones - yet). More iPhones and iPads shipped = more iTunes users and revenue from that and the App Store. Then there are new products rumoured for later this year - maybe another iPad, a new iPhone, a subscription 'media' service??
I would be more worried if they were trading at a very high earnings ratio - but they are not. I would be worried if the markets they were in were stagnant - but they are not.
This post has been deleted by its author
That's because Berkshire Hathaway is an investment company, if you want to make money from Berkshire Hathaway, you give them money and they invest it. Paying shareholders would reduce the return given to customers, it's not the same as Apple not paying a dividend. Berkshire Hathaway also don't hold a fifth of the value of the company in the bank doing nothing other than making the company a takeover risk.
Despite their size Apple are a genuine takeover target - they are worth $550bn but have over $100bn 'cash' in the bank (and rising) - so someone would have to find $450bn. For a company generating profits of over $50bn a year and rising that is cheap (just 9x earnings).
With interest rates being relatively low and a company that is growing that is a great return.
Ass backwards again.
Apple don't own Apple shares. Apple shareholdsers own Apple shares.
At the current price it would cost 550 billion to buy Apple - the shareholders get that cash.
Then you, having bought Apple, own all their assets - inluding 100 billion in cash.
So you are only out of pocket 450 billion.
Google trade at 21 times earnings, Apple are trading at 16.5 times earnings (forward P/E of around 12) - so are Apple shares really expensive and who has the better chance of growing their profits in the next 6-12-24 months?
To correct an earlier post - Amazon actually trade at over 130 times earnings - still think Apple are expensive?
http://www.jdpower.com/content/press-release/py6kvam/2012-u-s-wireless-smartphone-and-traditional-mobile-phone-satisfaction-study--v1.htm?utm_source=loopinsight.com&utm_medium=referral&utm_campaign=Feed%3A+loopinsight%2FKqJb+%28The+Loop%29
When was the last time the most valuable company in the world was leading in customer satisfaction surveys?
Not being investigated the world over - Google are
Not being fined for price fixing - Samsung are
not just mediocre journalism, a story with absolutely no relevance at all. how can the market cap of one company be compared against the size of a retail market. le3ts compare apples to apples, what is the market cap of the companies making up the retail market, y bet is that then, apples market cap will appear trifling, much like the useless gadgets they sell.
Eh, perhaps ypur comprehension is lacking. Apple is part of the retail market, therefore it's value can never exceed the entire retail sector. Shoddy journalism, even more shoddy commenting, still what else can one expect from ElReg, or it's editors. Perhaps you should try, Apple has the largest market cap in the entire retail sector
Your first post - on this.
"not just mediocre journalism, a story with absolutely no relevance at all. how can the market cap of one company be compared against the size of a retail market. le3ts compare apples to apples, what is the market cap of the companies making up the retail market, y bet is that then, apples market cap will appear trifling, much like the useless gadgets they sell."
The article compares the market cap with Apple with the market cap with the entire US retail sector. That is in your terminology "apples to apples".
You criticised us - wrongly - for not doing this. So you changed your argument. And you are still wrong.
bubbles burst. if Apple is worth more than the rest of retail market in US then some clever
people have hopefully already planned for what happens to the stock market when the Apple ship tanks - because it will have a dramatically skewed affect - even worse is that people will think it MATTERS - it doesnt. they just make some electronic tech that your life doesnt depends on.... instead what will happen is panic and huge rises in eg oil which will REALLY affect people
But when you're the size of the whole retail market, where do you grow to? You have to invent new things and convince people they want them, it worked with the iPad and iPod, (both technically not new to the market) but where else? What is there to do, where is there to grow? They aren't going to get the Mac to be the defacto business desktop, they've pulled out of the servers market hell, even MS runs half of their cloud services for them.
I wouldn't be surprised if a consortium of companies buy Apple and split the cash and the company up between them. If it can happen to ABN Amro, it can happen to Apple.
I think the point of the article was that Apple are worth more than the US Retail Sector, which (tongue-in-cheek) may point to an Apple market bubble..
The fact they sell more than the iPad - examples being the iPad mini (iPod), iPad mini 3G (iPhone) and a few strange iPads with broken upright touchscreens, arm rests with bumps decorated by letters and won't let me update to the latest iOS (Macbook / iMac) really doesn't matter in the context of what the article is trying to tell us...
The author is simply trying to give the world fair warning that the global financial market is about to go into melt down again when the Apple bubble bursts.. or something.
According to the latest info I could get, Apple's P/E ratio is 16 or 17. That is not usually considered a bubble. So... I must conclude that Apple's high price is justified by its enormous profits.
Will those profits continue? They are based on high market share and high margins, both of which will likely drop in the future. Will Apple find another blockbuster product to maintain such a high level of profitability? Nobody knows...
I'm kind of perturbed by the "Software-reskinning box designer" subtitle.
Not very objective, for journalism.
Not very true, either.
It come across as pretty damn petty to whinge and bitch about a company, which is shipping actual physical product to make their money.
Let's give them their due, no matter what OS you prefer, they've all been made better by Mac.
Any "bubble" status of Apple stock is being created by investors and brokers, not the company themselves. I'm pretty sure that if any PR department could gin up a $400 stock price, KMart/Sears would be a happier place.
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