“Nothing lasts forever. Academics rightly point out that the average lifespan for a growthie is 5 years. Only a handful hold their primacy for a decade or more. Polaroid flamed out. Xerox ended up buying a brokerage house,” Martin Sosnoff writes for Forbes. “The Watsons called in an outsider, Lou Gerstner to reorganize the structure and tiers of management at IBM.”
“Carl Icahn probably topped out Apple with his noisy acquisition of a 1% holding and afterward his pronouncement that Apple was headed to $250. Luck and pesetas, Carl,” Sosnoff writes. “Nobody wants to face clear indicators of market saturation of the worldwide iPhone market. Further, Apple’s diversification and new product development outside telephony is long cycle in nature.”
“What investors have to work with is Apple’s balance sheet and income statement, which is as powerful as it gets. From a liquidity standpoint Apple is a financial fortress with enormous free cash flow and a low multiple of enterprise value to free cash flow of 6.4 times,” Sosnoff writes. “Apple’s quarterly dividend is currently 52 cents a share. Assuming Apple falls into the no-to-minimal growth category comparable say with AT&T, Pfizer and Verizon Communications, it would need a 4% dividend yield to attract value and income biased shareholders.”
“The history of growth companies making great acquisitions or major diversification gambits is nearly entirely negative. Apple’s board of directors should pound the table. Put a $4 a share dividend in place and buy back 25% of the stock tout de suite,” Sosnoff writes. “Apple is a wait ‘n’ see piece of paper, best underweighted.”
Read more in the full article here.
MacDailyNews Take: For 30+ years, people have underestimated Apple. When Apple IIe was selling like hotcakes, these zero imagination dullards thought that was all there was. That’s it. Just like Polaroid. A one-hit wonder.
Puleeze. You don’t have the foggiest understanding of Apple, Marty.