Tuesday, July 24, 2012


Good commentary [pdf]:

"When we look at our cash flow models, assuming Apple can maintain its current operating margins (a heroic assumption in the face of increased competition in the tablet market), to justify the current stock price, it appears to us that Apple will have to sell about $2.6 trillion worth of total products and services over the next ten years. Last year’s revenues (for the fiscal year ending 9/24/11) totaled $108 billion. [...] Since not all 310 million people in America use Apple, those who
do need to spend a lot more and the vast majority of those sales will need to be on devices because iTunes sales do not bring much profitability."

1 comment:

Josh said...

I find it annoying when people talk about CSCO and MSFT and compare they neglect to look at the PE ratio.

Let's take CSCO in 2000

Numbers are Valueline which is free for the dow 30.


EPS of 0.53 and trading at an average multiple for the year of 99.7 for a price of 52.84. Since that time earnings have increased from 0.53 to 1.50 (valueline estimated for 2012).

If CSCO had traded at a reasonable multiple in 2000, CSCO would be up!

You can do the same type of analysis for MSFT if you would like.


Even stocks like KO and WMT had what I would call a 'lost decade'. At least the stocks held their value and are now at new highs (and paid solid dividends)