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The big tech selloff that's occurred over the last few weeks has resulted in valuations for many...

  • Saturday, June 2, 2012, 11:05 AM ET
    The big tech selloff that's occurred over the last few weeks has resulted in valuations for many large-cap names once more falling to historically low levels. Here are some trailing P/Es for prominent large-caps, none of which take into account net cash and investments: Intel (INTC): 10.6. Microsoft (MSFT): 10.3. Apple (AAPL): 13.7. Google (GOOG): 15. Cisco (CSCO): 9. IBM: 13.6. EMC: 14.7. Dell (DELL): 6. H-P (HPQ): 5.1. On the other hand, Facebook (FB) still has a trailing P/E of 64.5.
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This news story has 29 comments:

  •  
    Cash is king... and the companies that have it are royalty. They need to spend it wisely. The companies above should not increase their dividends. They should look for opportunities to acquire good assets that will strenghten their positions in the market place before the economy turns around which will happen as soon as America gets leadership in the executive branch and the Senate that knows what the hell they are doing. In the meantime I plan to keep a large cash position until the bottom falls out of the market which it is already showing signs it's doing.

    America is in deep trouble and in need of some REAL "Hope & Change" !
    1 Jun 2012, 10:06 PM Reply Like
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    "America gets leadership in the executive branch and the Senate that knows what the hell they are doing. In the meantime,"

    Actually as soon as we get big money and influence out of government, this isn't going to happen. I long for the 90s. The parties in power really have little to do with any of this, certainly a Republican isn't going to fix it, they too have favors to pay back.

    Don't get your hopes up on politicians, but you can hove hope in your fellow countryman.
    5 Jun 2012, 10:33 AM Reply Like
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    Are the above comments meant for the article on the tech sell off or on the latest airing of Fox and Friends? Strange.
    2 Jun 2012, 01:20 AM Reply Like
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    Camden, I was thinking the same thing. Perhaps he works for Fox News. Eisenhower was in the White house when I was born, and it took three(3) more administration before the Dow hit 1,000!
    What is the difference who is in the White House, all of Congress(535 well paid) elected Senators & Congressmen(women) are on their long summer "recess" . Remember that, from grade school? I think many of the above mentioned names, esp. AAPL will have a big rebound out of the gate tomorrow...see hope & change is the way we all live.
    3 Jun 2012, 10:01 PM Reply Like
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    Regardless of the comments above, it is my opinion that there is some real bargains today in both Apple and Microsoft...don't know enough about the others to comment except that Facebook was a social media bubble the day it opened and since it hasn't become a darling momentum stock it will continue to fall in value until it proves it can monetize the value of its subscribers.
    2 Jun 2012, 02:19 AM Reply Like
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    I agree that there are some bargain valuations there, but a sinking tide still drops all boats. I am afraid this market is going to trade substantially lower, and these good names could become even greater bargains. And the only thing to do with FB is short it, or buy puts...
    2 Jun 2012, 11:38 AM Reply Like
  •  
    An iPhone, an iPad and T or VZ, and some cloud services are all you really need. And maybe Google Docs.

    The recent DELL, HP news items are evidence IMO that the Wintel ecosphere is waning.

    The iPad has been a great productivity tool. Like a Swiss army knife. Amazing all the stuff you end-up doing with it that you never think about up front.
    2 Jun 2012, 12:43 PM Reply Like
  •  
    I am thinking of getting an ipad but have not done so because i cannot figure out why I need it. Is there anything that a laptop cannot do that an ipad can?
    3 Jun 2012, 03:55 PM Reply Like
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    Yes and no. It's not what it does but how it does it. I read books all the time on my iPad. It feels very natural and very much like reading a normal book (except that I can carry as many books as I want with no increase in weight). I also have the ability to read books on my computer, but I never do because it doesn't feel right.

    Watching videos is similarly more personal. You can do these things on a laptop, though, so the difference is not one of capability, just experience. I can see why the advantages may not be justifiable for everyone. But I can also see why some folks choose to buy both a laptop and a tablet (in this case iPad).
    3 Jun 2012, 05:14 PM Reply Like
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    Content creation on a laptop is much faster and easier on a laptop. All of the benefits Dialectical mentions books and such are all very good and probably better on the iPad.

    We have a nook and an iPad 2 in the house and the nook is used more for books/reading iPad is basically just searching the web for things.

    The iPad (or any tablet) is basically a consumers dream having a content consumption device that is lightweight and can be taken almost anywhere. PC's will always be needed in businesses. Although now that MSFT office for the iPad is in the works possibly even businesses can slow down their PC refresh cycle or eliminate some all together.
    4 Jun 2012, 09:12 AM Reply Like
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    PE calculations are not correct unless you back out cash held per share.Most glaring error is (AAPL) holding more then $110/share in cash for a PE more like under10. #1 Goldman conviction buy target $850 we took a little bite of Appple yesterday at $561.
    2 Jun 2012, 06:24 AM Reply Like
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    Are we to infer from this data that FB still needs to come down below $6 to be on an even keel with the rest of its industry peers? Poor Mark!
    2 Jun 2012, 09:53 AM Reply Like
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    The answer is quite simple. The other companies are well - established with a good earnings record and generally with prospects for a steady growth that is reflected in their P/E ratios.

    On the other hand FB has been described as 'Wow' and 'Awesome' and sometimes even 'Wow it's Awesome' by a number of analysts, some of whom have even left school! On that basis I'm surprised that the valuation is so low, but the psychology of crowds is not one of my areas of expertise.
    2 Jun 2012, 11:17 AM Reply Like
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    Just ask yourself - would I rather have $10,000 in Intel stock or in Facebook stock right now?
    2 Jun 2012, 12:17 PM Reply Like
  •  
    Right on !
    3 Jun 2012, 11:11 AM Reply Like
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    If we see a sustained serious global slowing, or significant inflation as a result of central planning actions, we could see single digit PEs. As we did in the 70's.
    2 Jun 2012, 12:18 PM Reply Like
  •  
    In 1972 (INTC) was selling at 2 cents (yes, pennies) per share. http://bit.ly/LXh6s1
    2 Jun 2012, 12:34 PM Reply Like
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    You are actually wrong windsun33. That 2 cents is a split adjusted price. The actual price in 1972 would have to take into account the splits that have occured since then. The correct 1972 price would therefore be

    2 cents x 1.5 x 2 x 2 x 2 x 2 x 2 = 96 cents a share.
    3 Jun 2012, 12:26 AM Reply Like
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    I realize that is the split adjusted price, but that does not affect the fact that what is now a $26'ish stock would have cost 2 cents in 1972 (if you could buy 1/48th of a share).
    3 Jun 2012, 12:30 PM Reply Like
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    And don't forget Intel. When the market turns around it should go to 32 - 33, and if the mobile chips take off, it will go even higher. While I wait for that I'm earning over 3%.
    2 Jun 2012, 03:21 PM Reply Like
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    The market may not turn around for a very long time don't forget Japanese investors are still waiting for the Nikkei to turn around after 30 years .
    2 Jun 2012, 04:35 PM Reply Like
  •  
    Some investors seem to think that earnings and revenues go up forever, which they certainly will not with weakening global economies nearly everywhere now. Tech share prices will continue to decline as long as global economies continue to weaken.
    2 Jun 2012, 04:58 PM Reply Like
  •  
    According to the best research done over the last 100 years by Robert Prechter's EW price to earnings valuations are the most useless ways to evaluate stocks because both the e and the p can change very rapidly . Just as improving growth earnings or sales results in higher valuations such as Facebook so it works even more rapidly when things reverse lower earning results in lower PE . Just look at HPQ and RIMM charts if you want to see the result .
    The only useful way to evaluate under today's conditions are Price to book because this is independent of sales and shows the over all valuation based on what you are buying compared to what you are paying .
    On this basis IBM is one of the largest overvaluations of any mega Cap ever . Its chart tells a story of a coming collapse in price until it at least reaches the PB of AAPL a far higher growth story than IBM ever has been.That would put IBM $92 a share . If you think that AAPL with its enormous appeal and innovation deserves a higher PB then IBM could fall much further than $92 .
    I believe most of whom portaray themselves as analysts should go back to school and learn a few other valuation teqniques from bear markets of the past where average PBs for the S&P 500 went as low as 0.30 not 10.75 as IBM presently is IF you ignore the $32B debt which gives IBM a negative Book value of $9.01 which really makes the PB infinite .
    2 Jun 2012, 04:27 PM Reply Like
  •  
    Using PB you'd be tempted to think RIMM with its .53 is a better value than AAPL with its 5.27. RIMM could trade at 80 and still have a better PB than AAPL. Does that close the book on whether PB is really a ratio to hang your hat on?
    2 Jun 2012, 08:08 PM Reply Like
  •  
    Looking only at P/B can give just as much of a false picture as looking at P/E can. There are several factors you have consider, and basing it only on one single metric can lead you down the wrong path.

    From Investopedia: "A lower P/B ratio could mean that the stock is undervalued. However, it could also mean that something is fundamentally wrong with the company. As with most ratios, be aware that this varies by industry".


    Read more: http://bit.ly/LZUTW2
    3 Jun 2012, 11:01 AM Reply Like
  •  
    I don't understand how book value can meaningfully be used for a tech company where much of the value of the company is in intangibles? Most of AAPL's and MSFT's value is in intellectual property. That's even so with Intel, although unlike the former names it does have considerable hard assets in plants and equipment. If I were looking to buy stock in a coal miner, I can see how comparing P/B between coal miners would be meaningful, but as a general metric across any industry it seems obviously flawed.
    4 Jun 2012, 02:48 AM Reply Like
  •  
    BUY BLIND we have the ultimate consensus divergence
    3 Jun 2012, 01:50 AM Reply Like
  •  
    Buy IBM now at the 200 dma. The stock is set to double in price.

    http://bit.ly/NzK9Rx
    4 Jun 2012, 11:28 AM Reply Like
  •  
    Yep... You must be right... Who controls the interest rates, tax rates, and money supply will never effect the stock portifolios of someone born way back in the Eisenhower admininstration. What was I thinking. In the future I will stay on message.

    Maybe you and I can compare our networth in 2016... No... Maybe we should do it now while you still have one thinking as you do.
    10 Jun 2012, 09:13 AM Reply Like
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