Stephen Rosenman

How Apple's Market Share Will Propel Stock to $500, Part 1

Jason:
I've been extremely bullish on AAPL and still am. However, $500 a share would put AAPL's market cap at $451 billion, eclipsing even XOM which is the leader in cap at $357 billion. Still quite a stretch regardless of gaining 10% market share.

It's All About Apple's R&D

utopianzhere: Apple spent $400 million + a year in total R&D. R&D as a percentage of income was far lower than listed techs.

Apple Is Still a Great Investment, Right? Not for Value Investors

You base your argument on FCF. I pointed out earlier that Apple has accelerating FCF. Your 15% FCF is fantasy and has no baring on Apple's last 4 years. You predicate your argument on faulty data. Why write an article that uses invalid numbers to justify a sell on Apple?

Apple Is Still a Great Investment, Right? Not for Value Investors

FCF: 2006 - 1.56 billion; 2007 - 4.7 billion; 2008 - 8.5 billion; TTM - 10.2 billion. I see FCF growth rate far greater than 15%, don't you?

Enormous Downside Risk for Stocks

It's fascinating to see someone gain so many followers after being so consistently wrong.

Enormous Downside Risk for Stocks

Nauful,
I think you underestimate the momentum we're seeing into stocks after the last correction.
Already, since this was written, we've broken through June resistance and moved above the long term down trend of May 2008 (I'm presuming you're speaking of 2008).
In addition, the earnings being presented are quite good which bring investors in. Apple deserves its rise. Investors are pleased with GAAP earnings of $1.35 but, I suspect, are not looking closely at the bigger story of nonGAAP $2.14.
You're previous predictions of a crash have been not fulfilled. I believe you will again be wrong in this prediction.

Why AT&T Is a Strong Growth Story

True they have enough cash flow to cover. But look at their balance sheet: $134 billion in intangible assets. They have -$37 billion tangible equity. The company has $74 billion debt. Current assets $23 billion, liabilities $37 billion. The company never builds real equity with its cash flow. Once the music stops, ATT is in great danger. I believe that VZ and T in the next three years may be the next GM and Chrysler.

Apple: Buy, Sell or Hold?

Apple's share price does not depend on sales growth. Rather, its price hinges on earnings. Nokia, for instance, increased its revenue from $34 billion to $58 billion over the last 3 years. Unfortunately, for Nokia, profit margins fell to 0.04%. Apple, in contrast, has not only grown revenue but driven net profit margins to 14.7% (and its iPhones which command greater margins have not yet been factored in). The author's thesis looks at only one variable (and not the key metric) to derive fair price.

Research In Motion vs. Nokia

Naveen: Thanks for the nice comparison. Eventually enough players will enter the smart phone arena that margins will thin out (that should be a few years out).

Apple's Non-GAAP Earnings Are the Real Story

Thanks, awcabot. I wrote 1.21 rather than the accurate 1.33. 1.21 is the net income in billions. My apologies.

Is Apple Stuck in a Trading Range?

Your argument that AAPL is too big to grow its market cap is way too late. When AAPL was trading at $182, the company was too large to justify the growth that their PE implied. The bear market took care of that. In October 2008, when the stock price dropped, I went positive on AAPL. The company is still quite a ways from those lofty market caps and still is undervalued. Per my article: seekingalpha.com/artic...
" Think about it this way: When AAPL was trading at $182 it had a $156 billion dollar market cap but was slated to earn $5.22 for 2008. At that market cap, AAPL was the eight largest company in the world. Only Exon, EON, China Mobile, GE, Walmart, MSFT, and PG had market caps over $200 billion at the time.

In order to vault to a $200 billion dollar market cap, AAPL needed to demonstrate either big profits or growth in earnings. The $5.22 just didn't do it. By the law of mass, companies that become larger grow more slowly; hence, small companies can have startling growth while large firms begin to slow theirs. "

Unfortunately, it appeared to me that AAPL had a heavy load to lift if it was to increase its share price to a level of a $200 billion dollar company, $240 a share. At the time, it seemed AAPL had no where to go but down.

The bar just got lowered substantially. AAPL is now a $99 billion market cap company, no longer a member of that tiny club of behemoths. It's a stock that has room to run. "

Apple Could Take 20% of China Smartphones Market - BofA / Merrill

Analysts have spent these past 2 years bashing Apple. They have low balled Apple's earnings and been proven wrong time and again.
Scott Craig has been among those who have underestimated Apple's
sales. It is significant that analysts are rethinking Apple's upside potential.

What's in Apple's Wallet? Cash

relayer75: Unfortunately, Seeking Alpha typed a comma instead of a period.

crazylegs: Please see my previous article for rising cash positions.

seekingalpha.com/artic...

With a King's Ransom in Cash, Why Still No Buying Spree in the Tech Space?

Steve Jobs in October 2008 said: "...we have almost $25 billion safely in the bank and zero debt. This provides us tremendous stability and the ability to invest our way through this downturn. This is what we did during the last downturn. We [increased] R&D investments and created some of our best new products and businesses, like the Apple retail stores for one."
Apple is usually not a buyer of companies. Rather, it makes its own way through innovation. And it does it on a relatively low budget compared to other tech companies.
In any case, a fool and his money are quickly parted. I don't think that Apple is a fool. What better time to sit on your cash.

How About a Piece of the Apple Pie?

"Another worry that plagues many investors is whether Apple's heyday is behind it; that the company's phenomenal cycle of innovation now is a thing of the past. Perhaps. No one, me included, can really confirm that possibility."

R&D has increased from $782 million to $1.1 billion year over year ending 9/08, a 41% increase. Last quarter's R&D rose from $246 million to $315 million (Q1 08 to Q1 09).
Apple has made fantastic use of its R&D. The higher budgets indicate that Apple is not done innovating.