Would Apple be worth more if broken up, jettisoning the Macintosh business?

“The iPod is a raging success–but not the rest of Apple. By some estimates Apple, now at $11.9 billion in market value, would be worth $15.1 billion broken up, jettisoning the Macintosh business. In a Microsoft-dominated world, Mac’s share is down to a scant 2%, and the business is valued at less than one-half times sales, one-fourth the level at Dell,” Victoria Murphy writes for Forbes.

“Then again, Apple stock has doubled in two years and trades at 37 times projected earnings (versus 25 at Dell). That owes mostly to the iPod. In the past year iPod sales have more than doubled to $890 million, 12% of total sales and roughly 30% of Apple’s $247 million in earnings before taxes, interest and nonrecurring items. (Song sales at iTunes are near $90 million a year),” Murphy writes. “But the bet on iPod is a risky one. Many stores run out of the popular Mini iPods, and Apple can’t say when supply will catch up. New music players from the likes of Dell, Sony, Gateway, Creative Labs and Rio are set to launch before Christmas, some at a lower price than iPod’s $249 Mini. Creative’s device has longer battery life, and the Singapore firm is shamelessly emulating the iPod’s white earphones and sleek design.”

Murphy writes, “Already Apple’s margins on the music players are shrinking. The iPod’s operating margins peaked at 13% in December and, since then, have fallen a jolting five points. (These are estimates. Apple doesn’t break out profits by product line.) The gadget’s price is down so much this year that Apple will have to sell 20% more iPods next year to maintain profits; no problem, as analysts expect a 70% rise.”

Full article here.

31 Comments

  1. Worst. Idea. Ever.

    The market will soon be saturated with mp3 players. Eventually, nobody will be selling these things at their current rate. At that point, I’m sure Apple’s planning (or at least hoping) to make money on iTMS.

  2. Victoria, you ignorant slut!

    Where the hell is this 3.2 Billion coming from? You’ve got some ‘splaining to do, grrrl. But, of course there won’t be any of that, you’re brand of ‘journalism’ has a tint of jaundice.

    Does you mother know that you get paid to be a liar?

  3. Ah, yet another pundit quoting from their M$ FuzzyMath Calculator�.

    Reliable sources say, ‘that 101% of these ‘pundits’ use the same unbiased numbers that place all M$ ‘operating systems’ since 1991 at a collective 89% mark on 3.75 continents’.

    Other sources say, ‘85% of ALL stastics are made up!’

  4. That 89% M$ marketshare number is generated from the same unbiased source as the 3% Apple number.

    Or so a very reliable source, who told my nephew’s neighbor’s uncle’s best freind, who read it to him over the phone once. But I just finished 6 Canadian beers, I could be a little off.

    It may have been my Great-niece…

  5. Short answer to MDN’s headline question: No.

    And once again this poor “writer” allows the market share myth to rear its ugly head as a viable reason for Apple to just give up the hub of their totally elegant and technologically superior solution for working seamlessly with photos, movies, music and overall creativity all at the same time. How likely is that to EVER hap…..ha, HA! AhhhhHAHAHAHAHAHA!

    Sorry, I had to laugh at even the thought of finishing that question.

    <Sigh>

    Well, I suppose now we’ll have to suffer through yet another round of distortions and inaccuracies and confusion on all the market share vs. installed base vs. length of ownership vs. TCO nonsense…

  6. I’ve got one more thing to say before I let you other folks have a turn.

    There’s two kinds of people that walk into an on going Thankgiving day football game.

    Those that walk in and ask:

    a) “who’s playing” then roots for a favorite of the two teams
    b) “who’s winning” then roots for the team currently ‘winning’.

    Here’s an easy riddle. Which is Victoria?

  7. It is amazing the amount of influence and Mindshare that Apple has considering their “tiny” market share. That really should tell windoze users something and make them take another look.

    With the incredible value that the G5 iMac represents coming on market I think we will be seeing more switchers than ever. The iPod halo effect is just starting to be felt.

  8. Do you people actually think that Victoria Murphy, owing to her astounding display of ignorance and bias, is to be considered a reliable expert concerning the tech industry?

    Murphy would have much more credibility if she chastised Microsoft for their abysmal performance to develop Longhorn (nearly 10 years from the originally announced release date), their promulgation of their infamously vulnerable Internet Explorer (considered the least secure of all browsers), and their decrepit and listing flagship of an OS (Xpee).

    This is just another wretched release of putrid press from perennially pious purveyors of mental excrement.

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