Based on our Discounted Cash Flow (DCF) analysis of the notebook PC businesses of Apple (AAPL), HP (HPQ) and Dell (DELL), we've estimated that Apple's notebook business is more valuable than that of HP and Dell combined. Apple's higher valuation is driven by three factors: (1) higher average notebook pricing compared to HP and Dell (2) growing market share (3) higher margins (making Apple notebooks more profitable).
Notebook PC Valuation
Apple: $22 billion
HP: $12 billion
Dell: $6 billion
For all three companies, the notebook PC business is more valuable than the desktop business given the on-going shift in demand from desktops to notebooks so figures above also give you a sense of the comparison for their overall PC businesses.
Key Valuation Metrics
| Avg. Notebook | Notebook Market | Notebook Margins (2009) |
Dell | $814 | 13% | ~5%* |
HP | $714 | 21% | 7.5%* |
Apple | $1,200 | 5% | 33%** |
Source: Trefis estimates
* EBITDA margin estimate
** Gross margin estimate
Additional Detail on Trefis Forecasts
Pricing: We expect pricing to continue to decline for all three notebook makers.
- Apple: $1,200 in 2009 to $699 by the end of the forecast period
- HP: $715 to $526
- Dell: $814 to $413
Market Share: We expect Apple to have the largest market share gain while HP has a small gain and Dell has a small decline
- Apple: 5% in 2009 to 10% by the end of forecast period
- HP: 22% to 23%
- Dell: 13% to 12%
Margins: We expect Apple margins to decline but still remain relatively high overall and that HP will continue to have higher margins than Dell
- Apple (Gross Profit): Decreasing from 33% to 30%
- HP (EBITDA margin): Increasing from 7.5% to 8.5%
- Dell (EBITDA margin): remaining around 5%
Disclosure: No positions
