you come up with a model that is so far iphone for 4s off base in being forecast anything worth a damn that you put Apple at $335 fair value? Are you completely out of your mind or only partially so? In the last two quarters alone, Apple increased its cash position by $14 billion ($8.7 billion in Q1 and $5.3 billion in Q2). It’s probably going to add another $16 billion between fiscal Q3 and fiscal Q4. That’s $30 billion on the year. Next year, it will probably add close to about $40 billion about $10 billion a quarter and end the year at $120 billion in cash and cash equivalents. Now we’re in 2013, you think the company’s growth is going to stall to 0.00%? Even if it did,
it would end the 2013 fiscal year with $160 iphone for 4s billion and end 2014 with $200. Fiscal 2015 with $240 billion. So despite the fact the company will almost certainly not have less than 80% of its entire market cap in cash $60 enterprise value within 3.5 years isn’t worth more than $335 fair value ($305 billion market cap). If you consider moderate growth after 2013, it will have its full market cap in cash. That’s nearly $300 billion. So the company should trade at a $0.00 enterprise value even though it’s producing $50$60 billion in net cash??What’s next, your failure for a model said Apple’s intrinsic value was $93 during the financial crisis? God this is so idiotic on so many levels.
Jun 20 05:29 AMYour model isn’t anything that hasn’t been used a hundred times before but your assumptions are very flawed. What good is it your to investors if you don’t even understand the company you’re valuating. When is the last time Apple merely met consensus? Do you have any idea what consensus estimates were for the 2011 fiscal year in August? $17.47 in EPS!!! Apple has already reported nearly $13.00 in two quarters and will probably finish the year with $27.50 in EPS.
That’s nearly 70% above the consensus iphone for 4s and you’re using the consensus? This isn’t Microsoft where analysts tend to nail their numbers within a penny. If you want, I can help you run some more realistic numbers. It would be an enlightening experience for you. Your article as written, and the assumptions made isn’t worthy for seeking alpha. I don’t want the individual investor to buy into a model that forecasts $120 billion in revenue. What a joke.
Jun 20 05:15 AM”Another key component to this inverted head and shoulders is that Apple needs to firmly break above $355 a share the neckline on convincing and strong volume. A major break above $355 will lead to an immediate move to $400. The WWDC is also very key. You don’t want to see Apple sitting at technical resistance at the WWDC. So far we’re off to a great start, and I’ll keep everyone updated as to Apple’s trading progress as the week goes on. Suffice it to say, this is the start of really good things. This could very well be the beginning of the rally to $400 that everyone has been waiting for. Now if this does indeed happen, I also believe Apple will easily eclipse $450 by January. Again,
that assumes we do in fact get this JuneJuly rally. Stay tuned.” Follow up to the article 5 days after it was published: “Every piece of news that is known is priced in. If we know x is going to be announced, then the announcement has for all intents and purposes been made. Think about it. If everyone knows that Apple is going to introduce iCloud, then everyone who bought in on the news has already bought in. Hence the saying, “buy the rumor, sell the news.” Now, if Apple introduces something unexpected, then that announcement isn’t already factored in because no one expected it. That is where this phenomenon comes from. In terms of Apple could still run to $400 before the end of July, that really depends largely on the market at this point. If the market goes into freefall selling, then forget about it.
Monday looked as promising as it gets for a rally and the market couldn’t hold on to those gains. So we’ll have to see whether this selling continues. I think that Apple is very likely to selloff on this even now though. Here’s why. The stock has held up nicely since last week. But that is largely because no one wants to sell going into a Steve Jobs lead event. However, once the event is over, if nothing unexpected comes out of it, I fear that Apple is due for some major selling pressure again. Back down to the $330 mark probably and even lower if the market start tumbling. Again, if Apple was going to break out on the event, it would be trading above it’s resistance already. The fact that it’s not trading above resistance suggests clearly that (a) the market is waiting to see if Apple does introduce something unexpected, and (b) if Apple doesnt’ do so, then back down we go.”That article was all about setup, and less about the price forecast. Apple was in a good position to rally provided that it broke through resistance which it looked like it was going to do being up $11 in one day.
Jun 18 09:46 PMSo the $400 by July call was highly dependent on the behavior around the developers conference. We didn’t have confirmation of a breakout like we did in September and I noted that in the article. The June iPhone call was not an easy one to make by any stretch. As for the “chest beating” there are reasons for this. Whenever I don’t post my background in an article, I’m stuck having to answer several comments that pretty much end up demanding that I post my background. Yet, if I lay out my background in the article itself, then I have to deal with those who know my background and are sick of the “chestbeating.” it’s loselose and all I really want to say on the topic.
Jun 18 04:41 PMMark Apple has $65 billion in cash and cash equivalents. It has 940 million shares outstanding (diluted). Apple has $69.15 in cash per share (diluted). For someone who writes an article on Apple’s valuation for Forbes, I would think that you know the balance sheet well enough to at least know how much Apple has in cash. Everyone in the industry looks at cash, long and shortterm marketable securities and cash equivalents as included in what is considered a company’s “cash position.”Moreover, Apple’s cash position is extraordinarily well publicized. I don’t see how there is much of an excuse for you not to know the cash position. For someone who criticizes others for presenting “incredibly bad analysis,” you sure have difficulty with Apple’s balance sheet.
There isn’t much of a debate here. So $69.15 as of today amounts to 21% of the stock’s present value. And as for future cash flows, I think I can speak for the overwhelming majority of readers following my body of work when I say, I have a good handle on this. Apple will see $500 by the close of 2013. It’s a open and closed case. What do you have to say? I’ll bookmark this, and then do a writing cover your story and your prediction as to future price.
If you’re so good at this stuff and you feel that iphone for 4s you can discern from good and bad analysis, what say you here?UPDATE:OHHhhhhh. I see what you did here. You were too lazy to actually look at Apple’s balance sheet and relied on Yahoo finance to come up with Apple’s cash per share. Not a very good idea as Yahoo Finance either takes a long time to update or often times fails at putting up accurate numbers.
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