The fabulous Apple cash machine

Apple “generates profits on a barely conceivable scale,” Jeff Sommer writes for The New York Times. “So what’s the problem? It is simply that Apple’s standing in the stock market has largely been built on that aging little object, the iPhone.”

MacDailyNews Take: Apple’s standing in the stock market has largely been built on that aging little object, the Apple II; has largely been built on that aging little object, the Mac; has largely been built on that aging little object, the iPod.

“A major iPhone rejuvenation is expected in September, the 10th anniversary of its birth. That is likely to spur greater sales, for a while at least,” Sommer writes. “But how long can the iPhone wield its financial magic, and will the company come up with another invention with awesome monetary powers?”

MacDailyNews Take: How long can the Apple II wield its financial magic? How long can the Mac? How long can the iPod?

“For the moment, the stock market remains entranced with what Apple is doing financially, and for understandable reasons,” Sommer writes. “Apple may no longer be a great growth company but it is still extraordinary, said Aswath Damodaran, a New York University finance professor, who has analyzed Apple’s earnings closely since 2010. Come what may, he said, Apple churns out staggering quantities of money with metronomic regularity.”

“On Tuesday, the company provided fresh details of how great a cash machine it is,” Sommer writes. “In just three months, after expenses and investments and payouts to shareholders, Apple’s already colossal pile of cash and marketable securities grew another $10.8 billion, reaching a nearly unfathomable $256.8 billion.”

“When the stock price reached $140, [Mr. Damodaran] sold his own shares. ‘It’s still a great company,’ he said in an interview. ‘But I don’t like the price.’ It isn’t a crazy price, not if you expect that Apple will remain disciplined and highly profitable and, maybe, even have another growth spurt next year,” Sommer writes. “But unless the old Apple magic returns, the company right now is not a bargain.But unless the old Apple magic returns, the company right now is not a bargain.”

Read more in the full article here.

MacDailyNews Take: Let’s build an anti-Apple hit piece based solely on the opinion of some NYU egghead who’s already personally lost out on $8.96 per AAPL share and counting.

No wonder The New York Times seems to be constantly cutting its budget and laying off staff.

In the last hour, Apple generated more profit than The New York Times did last year.

20 Comments

  1. “…In the last hour, Apple generated more profit than The New York Times did last year.”
    I just love rereading this sentence. It says everything we need to know about losers criticizing creative and innovative people. Great take MDN! Reminds me of Fountainhead, or was it Atlas Shrugged? It’s been so long I can’t remember which.

  2. “Unless the old Apple magic returns” — the old magic was due to the whip-cracking, charismatic showman Steve Jobs, driving a rollicking carnival wagon of surprises, outsmarting the pundits at every turn.

    That was the old magic. The new magic is the blinding sheen of their treasure pile, enough to buy Hawaii — the only US state with territorial growth — , secede from statehood and become their own nation. Puerto Rico, or maybe Baja California, could take Hawaii’s place so as to preserve the American flag with its fifty stars.

    The new magic is a shadowy network of secret R&D labs working on an untold variety of innovative designs. If the mythical “pipeline” disgorges only one or two of them in ten years, that’s enough to stuff their coffers, feed the behemoth they’ve become, and swoon the critics.

  3. Actually Professor Damodaran has been a big supporter of Apple over the years. Just because he may not think it’s a great value, at the moment, doesn’t mean MDN should act so juvenile and call him names. Seriously, whomever is writing the takes now, needs to grow up.

    1. MDN is not calling anyone “names” in any sense besides an exact descriptor.

      MDN called him a “NYU egghead.”

      The “NYU” portion is self-evident as that’s where he works. So, is “egghead” because that’s what he is.

      egghead |ˈeɡˌhed|
      noun
      a person who is highly academic or studious; an intellectual.

      The only person acting “so juvenile” is the one who doesn’t understand descriptive english, yet attempts to criticize those who so obviously do.

          1. Thanks. Let’s just pretend that MDN didn’t use “egghead” as a pejorative. Look it up.

            And I love the irony, as I call out MDN for misplaced insults, then I’m called out for criticism. Of course, Brutal Truth used a partial definition of “egghead” not noting that every dictionary definition notes that it is often used disparagingly. Whatever, you guys should work for FoxNews!

  4. Does Apple have a purpose anymore? Back when it was founded, they talked of bringing the power of computers down to the ordinary citizen. They sought to empower the individual as opposed to the computer room staff. Their focus was on the democratization of information technology. Computers for the rest of us.

    It seemed as if they had a goal and a sense of direction.

    These days, not so much.

    Tim and company honestly just seem to be tossing shit out there to see what attracts flies. Every so often they capture a bit of their old magic, but it seems to be by complete accident. The next thing you know, they’re back to tinkering here and there with this technology and that technology and bragging about how they do it environmentally friendly.

    I wonder if they had to put it into words, what is their mission?

    When I started thinking about this I looked up their current mission statement. It’s pretty bad. There is no mission in the statement.

    “Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App store, and is defining the future of mobile media and computing devices with iPad.”

    The mission statement from the Steve Jobs era was “To make a contribution to the world by making tools for the mind that advance humankind.”

    That’s an actual mission. That’s something you can invest in.

    When you invest in Apple today, what are you investing in? The chance that lightning will eventually strike again?

    1. Apple embedded those values in another document, its Vision Statement.

      Vision statement:
      We believe that we are on the face of the earth to make great products and that’s not changing.
      We are constantly focusing on innovating.
      We believe in the simple not the complex.
      We believe that we need to own and control the primary technologies behind the products that we make, and participate only in markets where we can make a significant contribution.
      We believe in saying no to thousands of projects, so that we can really focus on the few that are truly important and meaningful to us.
      We believe in deep collaboration and cross-pollination of our groups, which allow us to innovate in a way that others cannot.
      And frankly, we don’t settle for anything less than excellence in every group in the company, and we have the self-honesty to admit when we’re wrong and the courage to change.

        1. …we’d do it in the spirit of these ideas.

          “We believe that we are on the face of the earth to make great products and that’s not changing.”

          Big whoop. What kind of products? Products for whom? Cause right now it’s everything from cars and watches to realityTV. None of which most people want.

    1. The New York Times Company is a publicly-traded corporation. I have never even heard an allegation before that Microsoft is somehow hiding behind the curtain. Carlos Slim apparently owns a lot of the Class B stock, but that has only limited voting rights.

      The “Failing New York Times” was trading at 12.41/share of Class A stock a year ago. It hit a low point at 10.80 a week before the November election. It is now trading at 16.95, up 36% year-over-year.

  5. “… Apple’s already colossal pile of cash and marketable securities grew another $10.8 billion, reaching a nearly unfathomable $256.8 billion.”

    Not unfathomable for the U.S. government, as that is throw away chump change for those clowns.

  6. Selling because you don’t like the price does seem like an unorthodox strategy to adopt while the stock is still rising healthily ( up 1.66% in the last day of trading ).

    I can understand potential purchasers thinking twice about the price, but if you already own the stock, then a rising price seems rather beneficial.

    We had all this sort of discussion before AAPL split and will doubtless see it again, but for investors the actual price per share isn’t all that important. What matters is how it moves over time, together with the dividends paid.

    He says that right now, Apple isn’t a bargain. When you consider the value of Apple’s cash pile, which is about $50 for every share of AAPL, the remaining $100 or so is a rather low price for what Apple currently represents and for what it is likely to deliver in the future.

    However, what do I know? I’m not professor who has analysed Apple since 2010. I’m just somebody who has invested actively in AAPL since around 2000, have ridden out great rises and hug crashes, but still managed to make so much money out of my investment that it has mostly paid for my current house and I now live mortgage-free and still own a healthy number of shares. I’ve seen the old magic come and go… and come and go … and come and go again, but the magic does keep reappearing in a way that defies conventional logic.

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