Seeking Alpha

Gary Morton

 
View Gary Morton's Comments BY TICKER:
  • Apple's EPS And All-Time High Are Higher Than You Think [View article]
    I used the average total diluted shares outstanding as Apple reported in the preceding July earnings reports for both the September 2012 and hypothetical calendar Q3 2014 numbers. This way the comparison is Apples to Apples, no pun intended.
    Aug 12 12:46 PM | Likes Like |Link to Comment
  • Apple's EPS And All-Time High Are Higher Than You Think [View article]
    Constable, It is often difficult to predict investor sentiment. A three year review of today's darling Netflix (NASDAQ:NFLX) serves as an example. After some missteps in the third quarter of 2011, the share price of Netflix started to fall precipitously from around $300 per share to $55 per share by September of 2012. It seemed the Netflix story was over. Sentiment for NFLX was highly negative. Nonetheless, after a few smart moves by the company and some positive results, positive sentiment returned. In this case, it returned with a fury as NFLX is now approaching $500 per share. I am not claiming that same scenario will happen with Apple, but sentiment is a fickle thing. If the investment community does get excited by this "best in 25 years" pipeline that Apple is about to unveil, the institutional underweighting in AAPL ownership vs. the S&P and other indexes could lead to some very interesting scenarios for Apple stock.
    Aug 11 01:09 PM | 5 Likes Like |Link to Comment
  • Apple's EPS And All-Time High Are Higher Than You Think [View article]
    Apple has two parts of its current buyback program. One part, the smallest part, is to avoid the dilution you are talking about from employee stock based compensation. The second and largest part, $100B total thru December 2015, is to repurchase and essentially retire the shares.
    Aug 10 12:07 PM | 1 Like Like |Link to Comment
  • Apple's EPS And All-Time High Are Higher Than You Think [View article]
    I am not really making an argument about the effect of buy backs on market capitalization. I am simply stating the mathematical fact that for Apple to reach it's all time high in market capitalization with the current number of shares outstanding, it would have to trade north of $110.0 per share vs. the $100 per share that many think.
    Aug 10 12:02 PM | 5 Likes Like |Link to Comment
  • Apple's EPS And All-Time High Are Higher Than You Think [View article]
    Interesting point, Apple makes about $200M per quarter in OI&E on about $150B in cash and equivalents. If we attribute that all to income to interest on the cash, that would mean that on $51B more in cash, they would have delivered an extra $68 Million in the Mar-June quarter, about $.01 per share more. In that light, the buyback seems like a much more shareholder friendly use of funds.
    Aug 9 10:28 PM | 2 Likes Like |Link to Comment
  • Apple's EPS And All-Time High Are Higher Than You Think [View article]
    I would be glad to see Cramer tout a similar analysis whether he credited me or not. He is, in many cases, able to articulate simple facts that many overlook.
    Aug 9 10:14 PM | 2 Likes Like |Link to Comment
  • Apple's EPS And All-Time High Are Higher Than You Think [View article]
    Thank you for the insightful comments. It often becomes interesting when the math for an outlier does not fit into widely regarded financial metrics. We are likely to see much of that for Apple in the upcoming quarters.
    Aug 9 10:09 PM | 2 Likes Like |Link to Comment
  • Apple's EPS And All-Time High Are Higher Than You Think [View article]
    The buyback does not increase the value of the company, but if the value remained constant, it affects the share price. Mathematically for the market cap to remain constant on a smaller total share count, the individual share price must increase. More importantly, if value investors liked AAPL at $95 per share thinking that the PE was 15.35 would you agree that they would like it even more at a14.67 PE?
    Aug 9 10:05 PM | 8 Likes Like |Link to Comment
  • Apple's EPS And All-Time High Are Higher Than You Think [View article]
    Thanks, I am sure that Michael would find something negative in Apple's up to date EPS and PE which are more favorable than commonly thought.
    Aug 9 06:14 PM | 8 Likes Like |Link to Comment
  • Apple Earnings Preview: China Is Critical [View article]
    Bill, Your articles are always insightful and well written. I am curious as to your take on one important difference in the comparison sheet between AAPL, MSFT, INTC, CSCO, and GOOG. Why do you and others give GOOG and even CSCO the benefit of using non-GAAP numbers to measure their earnings and PE ratios for these comparisons? Is it simply because those company's report a consolidated non-GAAP number? In reviewing Google's financials, it appears that its non-GAAP report is really nothing more than a throwback to the 1990s when companies were not required to include stock based compensation as an expense in their P&L. Apple also has stock based compensation and Oppenheimer reveals how much of it is included in their gross margins and SG&A every quarter. Wall Street glosses over Oppenheimer's comments and the even more impactful deferred revenues, but investors give Google the benefit of non-GAAP financials. Even worse, Google's stock based compensation results in never-ending dilution where Apple entered its original buy back program to prevent the dilution from stock based compensation. What am I missing?
    Jan 23 06:20 PM | 2 Likes Like |Link to Comment
  • Apple's Still A Better Value Than Google [View article]
    It is refreshing to see a look at some actual facts. Here are some more interesting numbers. Google (GOOG) grew earnings per share about 9.7% over the trailing twelve months with an actual decline in the latest reported quarter. Apple delivered 61% earnings growth in the trailing twelve months. However, the market seems to believe Google's future is somehow brighter as GOOG has been able to maintain a multiple in the low 20s. While Apple, with dramatically better actual results, only merits an 11 PE. To compound the confusion, with a share of Google you get: No dividend, no say in how the company is run, no ability to influence the board (Brin, Page, and Schmidt together have controlling interest). If you believe the unfocused, undisciplined Google can turn-around and deliver market beating financial results in the future, you can buy a share at a 33% premium to the market PE. If you believe that Apple might be able to squeak out earnings growth at one third of their five year average (that would still be double Google's current growth), AAPL might be worth a look. At an 11 PE, Apple might be attractive for those who invest on facts and demonstrated performance.
    Dec 31 08:34 AM | 13 Likes Like |Link to Comment
  • Apple: A Look At The Chart, Historical Comparisons, And Academia [View article]
    The Article points to an interesting but flawed comparison of other tech companies meteoric rise and fall to the situation with Apple in Dec 2012. Certainly there is a reasonable argument about the 2000-2002 decline in MSFT and CSCO being based on reestablishment of fundamentals in their valuation following the .com bust. Eventual recognition of the slowdown in their growth rates was reasonable justification for their fall. Apple today is in a totally different universe from a fundamentals perspective. Cisco and Microsoft's stock rose during the .com boom and were given valuations far beyond a PEG of 1.0. They fell when expectations for future growth came back to earth and their PEGs have been about 1.0 since the .com bubble bust. Apple has never been bestowed a PEG anywhere approaching 1.0 in the past several years. The fundamentals underlying the valuations of Apple today vs. Cisco and Microsoft in the boom are worlds apart. If Apple was trading at 61 times earnings (a PEG of 1) it would be at $2693 per share, then a horrendous fall to $1000 per share would seem about right. That is obviously not the valuation scenario we face in 2012. Apple's PE and PEG are so far from any reasonable fundamental value model that comparisons with situations out of the .com bubble to Apple in Dec 2012 don't pass the sniff test.
    Dec 17 03:29 PM | Likes Like |Link to Comment
  • The Real Truth About Apple's Q4 Results [View article]
    Apple consistently emphasizes that the investment strategy with its cash is capital preservation. I would guess that they invest in low risk short term treasuries that currently pay little return. Before the financial crisis, their OI&E returns were higher as a % of cash because those rates were higher. During the crisis, they did not lose any cash and kept growing the balance based on their earnings contributions. Apple could probably get better returns, but would have to take greater risk.
    Dec 15 11:54 AM | Likes Like |Link to Comment
  • Betting On Apple's Operations Team And Gross Margins [View article]
    I have definitely observed the facts vs. opinions (or even wild speculation) phenomenon happening with Apple this quarter. History would clearly show that in the long run, actual financial results matter and ultimately drive the valuation of a company. But, that long run can seem a long time coming in some cases.
    Dec 13 02:41 PM | Likes Like |Link to Comment
  • Betting On Apple's Operations Team And Gross Margins [View article]
    It is interesting to look at the sentiments regarding mp3 players during the 2004 to 2007 time period. There were more iPod killers launched than can be imagined, but the iPod juggernaut continued to move forward. Some of the alleged "killers" were very nice products with interesting new features. What the history showed; however, was that the competition was really about the eco-system, the product, and where the consumer was in the technology adoption curve. By 2005, no company made significant advances in the mp3 player market because they lacked one or several important elements of the ecosystem. The tech enthusiasts and early adopters would rave about the features of the Zune, Dell Mp3, SanDIsk player, but the early and late majority wanted the tried and true. The mass consumer market bought iPods and iTunes during that time. I am not sure, but the train may already have left the station for windows 8 phones and Microsoft surfaces.
    Dec 13 02:25 PM | 2 Likes Like |Link to Comment
More on AAPL by Gary Morton
COMMENTS STATS
33 Comments
89 Likes