Filed under: Apple Corporate, iPod Family
Buy Apple Stock
Apple reports record earnings yesterday and the stock falls today. W.D. Crotty of the Motley Fool wonders Why? and answers: "In a word, iPod. The company may be called Apple Computer, but perhaps it should be called Apple Computer and iPod, given that while computer sales were $1.5 billion, iPod revenues weren't far behind at a cool billion. . . . But the same market newness that's opened the door for the iPod's growth has invited competition into Apple's arena -- an arena with fickle tastes, to boot." Do the iPods have you smirking now, Steve?Confession: I am one of the most business-naive people you will ever meet; however, I don't think Crotty's assessment is on target. I do think Jobs is still smirking above his iPod minions, because he knows that today's drop was a total fluke.
Buy Apple stock up as quickly as you can, because I have a feeling* that Apple's going to return to their market-defying climb uphill shortly and quickly.
*Don't blame me if this hunch doesn't pay off. I am a superstitious and poor man who tends to doze off when people start talking stocks and bonds.
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Reader Comments (Page 1 of 1)
Michael said 2:40PM on 10-21-2005
Apple's earnings are up an astounding 526% (or something close to that - in the 500's). Great, good for Steve, but can that kind of growth continue? Probably not. The iPod was revolutionary. Have they got more of that in store? Maybe, but it's not worth the risk.
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Kevin Dangoor said 4:16PM on 6-16-2005
Something you see a lot on the Fool regularly is that you really need to by stocks by value. And, not just value relative to other stocks, but real value of the business. According to Yahoo, Apple is worth about $30.5 billion right now, even after the 9% drop.
http://finance.yahoo.com/q?s=aapl
Apple earned about $300 million this past quarter. That would work out to $1.2 billion per year. But, adding in more growth and the fact that the 4th quarter is the biggest moneymaker, maybe they can do $1.5-$2.0 billion. Historical price-to-earnings ratio is about 16, and that earnings range puts them between 15 and 20.
What does all of that back of the envelope calculation boil down to? Beats the hell out of me. Just kidding. Actually, AAPL seems like a good value *if* the iPod business or something like it keeps on chugging.
If the economy goes sour, though, I'd bet that fewer people will pony up $250 for a music player.
(This should in no way be construed as financial advice. Talk to your financial professional. Do not eat AAPL.)
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Small Paul said 4:16PM on 6-16-2005
I think the stock price always goes down just after they announce good results. I guess some people think "Right, that's a peak then, I'll sell", so they do, so the price goes down a bit.
Also, I think Apple reduced it's forecast for revenues in the next quarter from $3.23 billion to $3.2 billion. Or something. I dunno.
But I think the iPod's looking pretty good: from a standing start of nothing in January, Apple now owns a market-leading 43% share of the Flash-based player market in the US.
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Al said 4:16PM on 6-16-2005
There's an old maxim that's been relayed to me by the business people in my family. "Buy on really bad news, sell on really good news."
Don't ask me why, but it does happen a lot.
I think what we're seeing is an aftershock from the big tech collapse a couple of years back, namely that investors are getting skittish and expecting something bad to happen. Good news for those of us who want to get in on the stock (*coughsoldminein1999cough*), but a little painful for the current investors.
And, sometimes, the stock market just has a couple of bad days...
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sam said 4:16PM on 6-16-2005
Quoting Kennth Boulding: Anyone who believes that exponential growth can go on forever in a finite world is either a madman or an economist
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