pats

A Closer Look at Apple Stock

Dan
I think the growth rates are way understated. The Mac market is on fire growth rates of 40%. Gartner just projected that the US market share would double by CY 11. The Iphone is a whole new market area and is selling well. Apple is accounting for Iphone revenue over 24 months. How are you factoring this into your model. If we assume apple sells 10 Million Iphones in CY08 plus the 4 million already sold. Revenue for the 14 million phones will be recognized in your second year. If we assume a sale price of $400 that becomes 1.4 billion in new revenue. If we assume 75% of the phones carry a monthly carrier payment of $10 we get another 1.26 Billion in new revenue. The numbers for FY 07 understate the revenue stream from the phone because of the deferment. Also why a P/E ratio of 18. Historically Apple has commanded a much higher P/E, I would suggest using 35.
The other problem I have with the analysis is you try to project a 10 year growth rate. I bought apple stock in 1999 for 9.30 a share. I have a unrealized gain of 1355%. So maybe this is a better guess at 10 year growth rate. For folks looking at the current price and trying to determine whether they can make money on the price. I think the stock is a buy. I am modeling for 6.15 EPS for FY08 with a P/E of 35 give me a $215 price. I am assuming 30% YOY revenue growth in MAC, Software, Music and Peripherals and 10% growth in IPOD revenue and then add in the I phone revenue based on the 3.704 Million already sold and quarterly sales of 1.8M, 2.5M, 3.0M for the remainder of the year. My quarterly EPS numbers 1.76, 1.29, 1.44, 1.66