The apple selloff is all fiscal cliff hedging:
http://taxfoundation.org/blog/fiscal-cliff-capital-gains-and...
Apple loses $34.9 billion in market cap
21–28 of 28 posts
Re: Apple loses $34.9 billion in market cap
#22Earlier quoted context omitted.
And they are right. Amazon is the next Walmart, but on a global scale. Apple is just a high-end tablet maker, and they are getting hit very heavily by their competition. You can't ride forever on the fanboy wave and the brand wave. Fanboys will realize the competition is better, cooler, cheaper, and Apple brand is already toxic, it's not cool anymore.
Are you serious? Apple defines the market.
Not anymore. Andoid phones and tablets are way ahead of what Apple is offering, spec-wise. Android OS is even further ahead of iOS, which has been a stale grid of icons for what, almost a decade now.
I agree that Apple used to be on the cutting edge of technology and innovation. Now they are desperately trying to catch up with the competition, and fail every time. They still do have good sales, but that won't last.
Re: Apple loses $34.9 billion in market cap
#23Apple's share price has not had any correlation to its fundamentals for the last few years. If you were to compare its P/E ratio to that of other tech companies out there (Amazon's is 3628) it would technically be undervalued even at its current price. That said, most of the volatility comes from all the prop trading firms trying to turn a profit. AAPL is considered a bullish stock amongst fund managers and is often…
But it's also not reasonable to compare Apple's P/E with Amazon's. There's more to valuation that industry; Apple and Amazon are both "tech companies", but they have wildly differing business models. In particular, Amazon is aggressively buying market share and the market is financing that. The market says Amazon could radically more lucrative in the future, in a way Apple won't (it's already absurdly profitable).
I understand this point of view, but it doesn't seem likely to me that the expected future profits of Amazon can be realistically expected to be 283x the expected future profits of Apple. I just don't see any way to support such a big multiplier.
Re: Apple loses $34.9 billion in market cap
#24The key risk for Apple is what its future earnings will be. Given that its current earnings dwarf anyone else, one must believe they will be able to be maintained which is equivalent to a bet that the iPhone will continue to be sold in high quantities with high margins. In the last year Apple generated $55B in pre-tax earnings. They had $80B in revenue from the iPhone at a margin of >60% or $48B. They sell the iPhone…
The Nexus 4 sells so cheaply because Google subsidizes its price heavily. Google is losing money on every single one that is sold, which is why it sells in such low volumes. It is a competitor to the iPhone in concept only.
A better comparison would be a recent 4G smartphone like the Samsung Galaxy Note 2. It lists for $699 and is available with a 2-year contract for $299 from Verizon--$100 more than the iPhone 5. Or the HTC Droid DNA, which lists for $599, available on contract for $199. Like Apple, Samsung and HTC are actual competitors in the market and need to make money on each phone they sell.
The flaw I see in your analysis is that it presupposes that competitors to Apple are going to be able to significantly undercut Apple on price. Apart from subsidized Nexus phones, I don't see much evidence that is true.
Re: Apple loses $34.9 billion in market cap
#25Earlier quoted context omitted.
But it's also not reasonable to compare Apple's P/E with Amazon's. There's more to valuation that industry; Apple and Amazon are both "tech companies", but they have wildly differing business models. In particular, Amazon is aggressively buying market share and the market is financing that. The market says Amazon could radically more lucrative in the future, in a way Apple won't (it's already absurdly profitable).
I understand this point of view, but it doesn't seem likely to me that the expected future profits of Amazon can be realistically expected to be 283x the expected future profits of Apple. I just don't see any way to support such a big multiplier.
Without getting into the specifics, we can think of the P/E both as a measure of how speculative the future earnings are (Amazon, which is consistently and deliberately barely profitable, reflects little of its upside in its earnings; Apple, on the other hand, is milking its cash cows for all they're worth); another way to think about it is, Amazon is plowing more of their earnings back into efforts to buy market share, where Apple is extracting them into cash reserves right now.
Remember, Apple's market cap is still much larger than that of Amazon. Even though Amazon has what over the long term might end up being a much more lucrative model, in that it is poised to more or less control retail and retail logistics everywhere.
They're both great companies, but the P/E of each company tells a different story about their business (neither story is bad).
Re: Apple loses $34.9 billion in market cap
#26Earlier quoted context omitted.
But it's also not reasonable to compare Apple's P/E with Amazon's. There's more to valuation that industry; Apple and Amazon are both "tech companies", but they have wildly differing business models. In particular, Amazon is aggressively buying market share and the market is financing that. The market says Amazon could radically more lucrative in the future, in a way Apple won't (it's already absurdly profitable).
I understand this point of view, but it doesn't seem likely to me that the expected future profits of Amazon can be realistically expected to be 283x the expected future profits of Apple. I just don't see any way to support such a big multiplier.
Sorry, I misspoke above. Rather than edit I'll just correct myself here.
What I should have said is: The expected future profits of Amazon would have to be 283x their own current profit (sorry, not Apple's profit), to arrive at a P/E similar to Apple's now. (In other words, to match Apple's strategy of extracting max profits to cash.)
That is a smaller number than I implied above, but it would still require Amazon at some point in the future to make a profit of $178 billion in 2012 dollars--more than 4x Apple's current profits.
To achieve that with, for example, the profit margin of Walmart (the current dominant retailer), they would need to do about $5 trillion in sales, again in 2012 dollars--about one third of U.S. GDP, or 1/14 of world GDP.
If we spot them Apple's current profit margin, sales would still need to be about $670 billion--about $180 billion over Walmart's current sales (at much higher product prices).
So while I totally understand the idea that Amazon is reinvesting for future growth, I just don't think future growth could ever be high enough to justify the stock price now.
Re: Apple loses $34.9 billion in market cap
#27Earlier quoted context omitted.
And they are right. Amazon is the next Walmart, but on a global scale. Apple is just a high-end tablet maker, and they are getting hit very heavily by their competition. You can't ride forever on the fanboy wave and the brand wave. Fanboys will realize the competition is better, cooler, cheaper, and Apple brand is already toxic, it's not cool anymore.
Are you serious? Apple defines the market.
On HN and in San Fransisco bay, I'm sure. The rest of the world is choosing Android, as seen in all sales-figures reported this year.
Needless to say, "the rest of the world" is much bigger than San Francisco. Apple has already peaked.
Re: Apple loses $34.9 billion in market cap
#28Were there any rumors/news/anything today that triggered the movement? AAPL is behaving more like a penny stock than the $500-billion behemoth it is. It's also interesting to see how its P/E is lower than Microsoft's now. Given the generally lukewarm reception towards Windows 8 / Surface, you'd think more investors would be fleeing from MSFT. I sold my MSFT shares and went short last month after buying (and returning…
Were there any rumors/news/anything today that triggered the movement?
I guess China Mobila signing a deal with Nokia for its Lumia Windows-phone 8 for it's 700 million subscribers, wont mark any improvements for Apple's already declining global market-share among smartphones.
Soon Apple's iPhone and iOS will be a sub 10% market-share actor, and then people are going to ask themselves if they are going to bother to develop for the platform at all.
Seeing as Apple currently lives on two products only, the iPhone and the iPad, both dependent on each other for its success, being in the position where one of those two products turns into a failure speaks badly about its future.