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Stephen Rosenman
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Stephen Rosenman enjoys analyzing the financial health of companies and pointing out areas the market is either not recognizing or ignoring. A long time investor, I put my money where my mouth is. That's why I'm passionate about my positions. I trumpet companies I believe in and back my articles... More
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Stephen Rosenman
  • Apple Doesn't Need To Buy Its Growth 0 comments
    Aug 29, 2010 8:32 PM | about stocks: AAPL, HPQ, DELL, IBM, INTC, ORCL

        HPQ, DELL, INTC, IBM, ORCL -- all big techs, all buying their way into growth. They're spending billions on small and mid cap companies.  One only has to look at HPQ and DELL's bidding war for 3PAR to see crazy shopping at the stock supermarket. 3PAR Enterprise Value/EBITDA is currently at 236.  Dell care to raise? Hyperinflation is alive and well when it comes to tech M&A.  Quite frankly, it's getting scary to buy shares of large cap tech companies.

         The one big tech missing from the fray, AAPL, hasn't made the billion dollar buy. The Bank of Apple has $46 billion in cash, short and long term investments.  It could take out fistfuls of midsize tech companies.  So far, it's only purchased microcaps like Quattro and Lala.  

         Why then, is it sitting on the sidelines? Because it's got organic growth, something very few big tech names can say.  For $4 billion in R&D spent from fiscal years 2006 through 2009, they were able to grow their revenue from $14 in 2005 to $56 billion (NYSE:TTM).  Apple didn't takeover RIMM to get its smart phone.  It didn't buy 5 overpriced companies to build the iPad?  AAPL doesn't need to buy billion dollar tech companies to get growth.  AAPL is the Whole Foods of organic growth. 

    Disclosure: Long AAPL

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