Apple has the best business model for generating obscene amounts of cash

“Apple is generating obscene amounts of cash,” Neil Cybart writes for Above Avalon. “The company recently reported nearly $6 billion of free cash flow during what is typically its weakest quarter of the year. Over the last 12 months, Apple earned $51B of free cash flow. This is more than any other company earned.”

“It is easy to chalk up Apple’s financial success to the iPhone and call it a day. However, upon closer examination, Apple’s business model predisposes the company to cash generation unlike any other firm in Silicon Valley,” Cybart writes. “In fact, Apple currently possesses the best business model in the world when it comes to generating cash. ”

“Apple is in a financial league of its own,” Cybart writes. “Apple’s $224B of trailing twelve month (TTM) revenue was nearly as much as that of Amazon ($143B), Alphabet ($95B), and Facebook ($33B) put together… Apple’s $60B of TTM operating income was nearly 50% more than the combined operating income of Alphabet ($24B), Facebook ($15), and Amazon ($3B)… Apple’s $64B of operating cash flow was nearly as much as that of Alphabet ($36B), Facebook ($19B), and Amazon ($17B) combined… Apple’s $51B of TTM free cash flow is $3B more than the free cash flow produced by Alphabet, Facebook, and Amazon combined.”

Tons more in the full article – very highly recommendedhere.

MacDailyNews Take: When will Wall Street fairly value Apple, if ever?

[Thanks to MacDailyNews Readers “Fred Mertz” and “Dan K.” for the heads up.]

13 Comments

  1. I was going to say if Apple has all this so-called potential then why doesn’t Wall Street see this potential. It’s quite obvious the big investors don’t believe any of this malarkey and are putting all their money into the FANG stocks. If Apple were as good of an investment as some people say it is, then I would think the big institutions would be looking at Apple as a long-term investment. However, that is not happening.

    As near as I can tell, Wall Street even sees Microsoft as a better long-term investment based on its P/E than Apple. On another note, Boeing is seriously kicking Apple’s butt in terms of share gains this year in the Dow. Compared to Boeing’s gains, Apple looks like a struggling company.

    So, whenever I hear someone pumping Apple, there are always stocks doing a lot better for shareholders than Apple. Honestly, Apple doesn’t seem like a company actually interested in growth in the traditional sense. Apple seems quite content to grow at a very leisurely pace. I’m sure the big investors sense this much. If Apple wanted to, they probably could have owned half the stock market by now. Apple’s sub-S&P 500 P/E is basically showing Apple has crippled itself.

    This isn’t a complaint but merely an observation of the facts as I see them.

      1. Asked like an investor. Apple does not need to improve. It does not need to prove itself to anyone. Apple does not need to be a Wall St. style “growth company.”

        1. years ago Steve Jobs etc decided to make Apple a public company instead of staying private so they knowingly got shareholders and now must deal with it (legally bound) .

          Apple Corporate Governance Guidelines (I cut and paste from Apple’s website ) :

          NUMBER ONE:

          I. The Role of the Board of Directors
          The Board oversees the Chief Executive Officer (the “CEO”) and other senior management in the competent and ethical operation of the Corporation on a day-to-day basis and assures that the long- term interests of the shareholders are being served

          ——-
          get that?

          The BOD which is elected by the shareholders hire the CEO to run the company and their NUMBER ONE PRIORITY is ” assures that the long- term interests of the shareholders ”

          THAT’s IT.

          the main function of Apple is to serve the interests of shareholders.

          (people can like it or dislike it but that basically what a public corporation is).

          Not serve the shareholders and the BOD will fire the CEO or the shareholders will elect another BOD who will do so.

          (so far the shareholders have been reasonably happy with Tim Cook and no BOD member has been fired for years).

            1. I’m not being a ‘money minded ass’ or anything here, I’m just pointing out the reality.

              this is not my ‘opinion’ it’s just the Apple governance guidelines – (not to mention the laws governing public corporations). Like I said I just cut and pasted Apple’s own BOD Governance document and it is listed as 1 (actually if you read the whole thing it’s all based on the lens of ‘service to shareholders’ ).

              everything Apple does like make great products is in service (or should be) to shareholders ( i.e in great products is to make money for shareholders).

              Don’t want to deal with shareholders Apple or someone can buy up all outstanding shares and go ‘private’ again (like Dell). I doubt anybody has the cash though.

            2. tim Cook has spent about $100 billion on stock buybacks (to push stock price) and dividends over the last few years for the shareholders

              compare this the 3 billion he spent for Beats and the 1 billion plus a year for Apple worldwide marketing (all the TV ads, promotions etc around the world).

              does anybody still think shareholders are not a Tim Cook priority?

              like I said some people might not like investors but that’s just the reality of a public company…

    1. People are so ridiculous with hidden agendas or somethings. For years, people complaining or perceiving Apple endless problems or one pony trick company, but so far Apple business is thriving and continues hoarding more and more cash every quarter. To those who complain, just ask yourself one simple question. Wasn’t business is all about doing well, building a great products which consumers want and need and can’t live without and generates more and more cash every quarter?. APPLE is doing GREAT. so stop complaining whoever you are.

      1. Thanks for the rational replies, especially the Apple quote. So, while it bounded itself by law to to work for its investors when it needed their financial backing, they are not currently truly needed to sustain the company’s operations to function successfully since, if Apple got rid of all of them – like Dell you said – it would be able to continue to finance all of its operations without skipping a beat.

        I would like to see that happen just to get rid of all of the hangers on who seem to offer no real value to Apple, but maybe you or someone more knowledgeable can explain their value to Apple now.

        1. you have a polite reply so kudos on that.

          “who seem to offer no real value to Apple,”
          you have sort of point there as today Apple is so well financed it doesn’t need new investors etc but as a public company it’s simply legally bound to serve the interest of whomever own the current shares.

          The advantage of having investors to some Apple EMPLOYEES though is huge. As more people trade shares and if the shares go up, the compensation of employees who have stock options go up (the vast bulk of top execs pay is in stock). Tim Cook and the SVPs, the Board of Directors, various VPs make millions more if the stock goes up (both in AMOUNT granted to them and by the RISE IN VALUE of the shares they get). I believe that was a Tim Cook plan to give shares to a lot more employees.

          Having employees as owners of course has benefits to the company and it’s customers (in better products and service as the employees are invested in the success of the company).

          ALSO:
          70% of aapl today is owned by funds, so if people have 401 etc savings, bank mutual funds, pension plans (like pensions for school teachers) there is some chance they would (even unknowingly) own some aapl. because Apple has such a large market cap. Without companies like Apple 401s would never grow.

    1. Apple’s investors are the stockholders who own the company. Apple is buying back some of its shares and taking them off the table, but it would be pretty difficult to take the whole company back in the private hands again.

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