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OT: FCP X reminded me of a finance link

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Steven Gonzales
OT: FCP X reminded me of a finance link
on Jul 7, 2011 at 5:00:52 pm

There is much discussion here of why Apple would behave in the manner it displayed with the FCPX rollout. This reminded me of a link I recently spotted which discussed Apple's outstanding shares, or how many mouths it has to feed.

"Some may argue with reason that sales and profits should be considered yet the purpose of this analysis is singular, to tune out everything except the number of mouths a company has to feed with respect to future dividends and capital appreciation.

To simply ask the following question: How many shares would each firm have outstanding if the stock values of each were adjusted to $20 per share via a stock split. The answer for Apple is almost 16 billion, that is approx 2.3 shares for every person on the planet."

http://blog.billparish.com/2011/01/18/why-shares-os-matter-apple-intel-goog...



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Andrew Richards
Re: OT: FCP X reminded me of a finance link
on Jul 7, 2011 at 5:17:06 pm

[Steven Gonzales] "There is much discussion here of why Apple would behave in the manner it displayed with the FCPX rollout. This reminded me of a link I recently spotted which discussed Apple's outstanding shares, or how many mouths it has to feed. "

To which mouths are you referring? Shareholders? I'm not sure I follow. Apple doesn't issue dividends, they hoard cash and then use it pseudo-monopsonistically.

Best,
Andy


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Steven Gonzales
Re: OT: FCP X reminded me of a finance link
on Jul 7, 2011 at 5:29:46 pm

Yes, shareholders. Apple, since it doesn't pay dividends, owes them share appreciation. This need may override support for marginally profitable markets in favor of mass market share.



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Andrew Richards
Re: OT: FCP X reminded me of a finance link
on Jul 7, 2011 at 5:48:45 pm

[Steven Gonzales] "Yes, shareholders. Apple, since it doesn't pay dividends, owes them share appreciation. This need may override support for marginally profitable markets in favor of mass market share."

Yes, but their stock price hasn't been stagnant for a decade like MSFT. If you bought Apple ten years ago, you're doing pretty well now. I don't follow finance that closely, so maybe I missed it, but I haven't heard of Wall Street complaining Apple has too diversified a product portfolio.

Apple makes very little profit on the iTunes Store, it is all about selling iPods. They make very little profit on software, it is all about selling Macs. Growth is the driver of Apple's stock price, and they are growing their mobile business very rapidly. Even the Macs are selling at an accelerating rate. Investors will probably continue to like this, in general.

I don't think FCP7 is a victim of anything more than Apple's historically decisive hand in dealing with legacy products when they'd rather move on for whatever reason.

Best,
Andy


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Chris Kenny
Re: OT: FCP X reminded me of a finance link
on Jul 7, 2011 at 8:51:28 pm

[Andrew Richards] "Yes, but their stock price hasn't been stagnant for a decade like MSFT. If you bought Apple ten years ago, you're doing pretty well now. I don't follow finance that closely, so maybe I missed it, but I haven't heard of Wall Street complaining Apple has too diversified a product portfolio."

Wall Street, if anything, worries about the opposite -- that Apple has too few products, and therefore is overly susceptible to a single important product having an off quarter.

--
Digital Workflow/Colorist, Nice Dissolve.

You should follow me on Twitter here. Or read our blog.


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Tim Wilson
Re: OT: FCP X reminded me of a finance link
on Jul 7, 2011 at 9:47:50 pm

[Chris Kenny] "Wall Street, if anything, worries about the opposite -- that Apple has too few products, and therefore is overly susceptible to a single important product having an off quarter."

I know nothing about Wall St....or much of anything else...but no Apple products have off quarters. :-) Even the decline in iPod sales that Apple reports every quarter has been lower than predicted, with no major impact in market share -- and that's it. Everything else is crazily up.

There's also quite a diverse product refresh this year -- Mac Book Pros, Air, iPhone, iPad, Lion, a cloud story that's actually compelling....

The consensus has a 1 year target of 450-ish, from today's 350-ish. I'll take a 30% return, thank you.

That's even in a world where Steve Jobs is not in the office, and no date given when he'll return.

(Speaking from a family-only perspective, I hope he stays home. He and his family have more than earned the time together.)

So other than wondering about Apple's future when Steve is actually no longer at the helm, I don't see any holes in Apple's financial future. Certainly not FCPX, which will surely make them a bundle.


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Chris Kenny
Re: OT: FCP X reminded me of a finance link
on Jul 7, 2011 at 9:58:22 pm

[Tim Wilson] "I know nothing about Wall St....or much of anything else...but no Apple products have off quarters. :-)"

Heh. Well, yes, in general. iPad did miss estimates last quarter, but that was because of supply constraints, probably (at least partially) related to the Japan quake.

But Wall Street doesn't quite understand or trust Apple (lot of that going around lately, apparently), which is why the stock is trading with a forward P/E ex cash that might be lower than your local gas company's, despite growing revenue 60 to 90% a year. There's some interesting discussion here.

"On a forward basis, there is widespread agreement that Apple has the reward (yield) profile of a bond without the risk of inflation."

It's hard to come up with any remotely plausible set of assumptions that could make such a conservative valuation reasonable, but it's what the markets have somehow decided.

--
Digital Workflow/Colorist, Nice Dissolve.

You should follow me on Twitter here. Or read our blog.


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