Analyst Brian J. White of Ticonderoga Securities “and a handful of other analysts think Apple watchers on Wall Street may be substantially underestimating the potential of the company, which still only has a single-digit market share in mobile phones and personal computers,” Roben Farzad reports for Businessweek. “‘I don’t remember a company of this size growing at this pace,’ says White, who recommends the stock and predicts it could be worth $617 billion within a year — the Street’s highest target. ‘We can’t even model out some of the possibilities: an Apple TV set, huge growth in China, businesses racing to buy Apple laptops. It’s like a religion. It sounds crazy, but it could still be early for Apple.'”
“Wall Street has had trouble getting a read on the prospects of the Cupertino (Calif.) tech wonder for some time. In fairness, Apple’s management is notorious for lowballing financial projections. Even so, Apple’s profit has topped analysts’ average forecasts for 25 straight quarters, according to Bloomberg data,” Farzad reports. “Throughout this period, while Apple shares have soared higher, they’ve become cheaper in relation to earnings. That’s because Apple’s profit, seemingly defying the law of large numbers, keeps growing faster than the share price. Apple hasn’t so much ‘beat the Street’ as humiliated it. ‘There’s simply never been another large company growing at this rate,’ says Eric M. Jackson, managing member of Ironfire Capital, a hedge fund in Naples, Fla., that owns Apple shares. ‘We look at today’s stocks through the lenses and biases of our past.'”
Farzad reports, “If Apple keeps it up, the company will soon have a shot at breaking Microsoft’s record tech company valuation [$607 billion in 1997]. Then, says White, $1 trillion isn’t so absurd. ‘Why not?’ he says. ‘Apple is an industry, not a company.'”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Since84” for the heads up.]
We are in te middle of the beginning.
i can’t believe microsoft was worth that much once. they have dropped tremendously. shh! don’t let the board of directors know about this.
Let’s look back at 1999 when Microsoft was worth $600B, how good were their financials?
Sales were $19.7B, an increase of 29%.
Profit was $7.8B, an increase of 73%.
Cash was $17.2B.
EPS was $1.42.
Since the price ranged from $24 to $47, actually from $47 to $95 in the 1999 fiscal year due to a subsequent split, that would mean the market was giving Microsoft a PE multiple as high as 66.
By the way, those are the FULL YEAR numbers. Let’s just look at Apple’s last quarter:
Sales were $28.6B, 45% higher than Microsoft’s full year numbers.
Profit was $7.3B, just $500M from Microsoft’s full year numbers.
Cash was $76B, dwarfing Microsoft’s cash.
EPS was $25.17 for the last 12 months.
Since the price is currently $390, Apple’s PE is currently 15.5. Back out the cash and it’s 12.4.
Clearly, Microsoft’s valuation was totally inflated due to the internet bubble.
Why do they always have to equate it to some religious reference? Why can’t they just say people are just discovering the Apple experience and are far more excited about it than we ever thought.
It’s not a brainwashing scheme. We already went through that in the 90’s with Microsoft.
A bit over-sensitive, might you be, Macromancer?
Possibly. But people have a way of establishing erroneous or meaningless relationships between two things and then turning that against the first. Fans of Apple products have been described by many terms over the years – zealots, fanatics, brainwashed, drinking the kool aid, etc. Many of those have negative religious denotations/connotations.
Many of us feel that describing Mac fandom as a “religion” undermines the legitimate reasons for preferring and choosing Apple products. It isn’t a religion, but it is a way of life.
I have no desire or intention to ride your ass, given the disagreements of yesterday, but what do you think a religion is? It is a way of life.
You shouldn’t equate religious with pejorative concepts such as brainwashing – you sound like an ex-Catholic. People usually intend positives such as belief and loyalty. Relax!
“Apple is an industry, not a company.”
I’m stealing that.
I like that line too.
This just released: “Noting the confession posted on MacDailyNews, the DA charged a heretofore little known poster of many years with intellectual property theft as well as a possible threat to steal Apple® itself. Although the self-described ‘Cubert’ denied the accusation, saying that his post had been ‘misinterpreted’, charges were expected to be filed later today. “Bogus!” was the only response to repeated questions prior to Cubert being silenced by his attorney.”
Cubert, just know we are on your side! You can beat this thing!
Nice going Ballmer, down from $607B in 1997 to $236.79B on July 26, 2011.
As a shareholder and Apple aficionado, I hope they are right. But a dose of humility is in order here, many of us will remember Cisco’s long streak of earnings beats, and look where they are today. No closed system can grow forever; Apple may sell something to every one of the world’s population, but eventually the growth has to be limited. So let’s not get carried away.
The point is not that we should expect growth forever, but that the potential for growth today is still so great.
I don’t recall Cisco ever making products that people across all demographics were clamouring for, or having a retail business to die for. Not to say Apple are fail-proof, but Cisco were hardly a consumer’s wet dream.
“no closed system can grow forever”
This is the lie that causes Wall Street to undervalue Apple. The only reason Microsoft’s “open” system prospered is because they cheated.
Like Sun Microsystems, Cisco was synonymous with the Internet and Networking… When that bubble burst, so did these two giants of the booming Internet age.
While consumers are fairly fickle, in hard economic times people tend to either hang on to their money or spend a few more bucks on higher quality goods that will last longer than something that is inexpensive and made of cheap plastic parts – disposable.
I’ve always disagreed with the term “closed” with reference to Apple.
I feel it is “controlled”, not “closed”.
If it were “closed”, Apple would not only be the exclusive hardware developers for their devices, but the only software developers also.
Any more sheep moron dumbass analysts want to chime in?
Are you saying you did not like his opinion?
Does your use of the letter, X indicate you are illiterate or are ashamed of your opinion?
Most analysts look at APPL through eyes that are used to examining other businesses. APPL is truly different and doesn’t operate by all of the same rules. The upside potential is still tremendous.
Some lessons? It may be more about what they don’t do.
Don’t go on a gratuitous acquisition spree.
Don’t bring out competing/copy products
Don’t think in the short term.
I’m sure there are many others, but it’s early. 🙂
This sounds like the logic in vogue around 2000 – “The digital dot com economy is different”
We all know what happened there.
Apple will continue to succeed as long as it continues to disrupt the market with radically new products. When Apple is disrupted by someone else, then Apple’s reign on top may be at risk.
Just when the analysts think they have a bead on Apple, Apple will do something outrageous and introduce an entirely new category of product. Then it takes years for the head scratchers to adjust their thinking. Meanwhile we Apple users are having fun! and getting lots of great work done.
Apple falling from tree befuddles analysts.
Oh Yeah! … How sweet it is! ….
Apple… Please make a car…