Apple is now the world's second-largest company, in terms of market value. In after-hours trading on the US's tech-heavy NASDAQ market, Apple's share value hovered around $293 per share. At that level, Cupertino's market value comes in at over $267bn, surpassing the former number two, PetroChina, which is valued at a paltry $265 …
Anyone would have thought
it would have gone to Jobs' head by now.
It has gone to his head.
Johnathan Ive, not Steve-hai-buddy-i-blacklist-ur-apps-nau-Jobs is responsible for apples market share. Every single design decision apple has made since 1998* has been a direct descendent of his design model and the spin off items since have been market derivatives, Compaq All-in-ones to imac,s Diamonds Rio players (remember those?) to ipods.
Jobs isnt a visionary. Jobs is a tool riding a minimalist design ethos thats now 13 years old.
*portentially 96 or 96, Ive no idea of the internal turnaround on the design before it was marketed.
Maybe it would have gone to his head...
...if it had happened years ago, but Steve is kind of old now and has gone through some very rough patches in his life. He still even finds the time to teach journalism students!
By the way, I am not a fanboy: not only I've never had an iPhone but I refuse to buy equipment with an iPod dock (I like connector standards...)
It is not just design
It is the overall UE and the product management.
So while Ive has had a lot to do with AAPL success it is not just him behind this.
I agree with you though - it is not revolutionary, it is old, but excellently executed till today.
Thanks for your knowledge
I'm sure I can say we're all thankful for your years of experience in making your own companies some of the biggest in the world. With your kind of knowledge you must be absolutely swimming with money/girls/fine things in life.
Which products did you design/bring to market/make into everyday items again?
Jobs may not be a very popular man and his public personality not very likeable. However if you can't see that it is his decisions, as CEO, that have made Apple the success it is then I can only hope the other conclusions you reach in life aren't as wrong as that.
If I were Steve Jobs...
...I'd have made that very point. ;)
"Imagine, you get to Heaven and St Peter asks what you did with your life and you say, 'Oh I just said what other people did wrong!'" - Stephen Fry
Mark McA, CEO, The Charity Engine
Have you not realised
that the ipod dock connector is a standard. Hundreds of millions of units (increasing everyday) worldwide with the same connector.
When cars come with a dock connector........
sorry, I dont follow the specious logic that gives the entire blame and credit for a company to the CEO. I refuse to demonise Bill Gates for the performance and business ethics of MS. I refuse to lionise Jobs over Apples turnaround. I refuse to demand the public lynching of Tony Hayward just because the Transocean fuckup happened on his watch. Life isnt as simple as "CEO = Jeebus".
so yes, If you cant see that the success of a company isnt wholly dependant on the presence of one man, then I can only hope the other conclusions you reach in life aren't as wrong as that.
Johnathan Ive was at Apple before Jobs' return. He's a talented guy, but it's Jobs who made industrial design a priority in a way that his predecessors didn't. You'd have never have heard of Ive if Jobs hadn't returned.
The pod connector ia NOT an international standard
Just because Apple makes a lot of pod connectors which are of relative poor quality does not make it a 'standard'.
A 'standard' connector, such as Molex type, D-connectors, the North American 25-pair telephone connector, etc. are royalty free. Apple milks anyone who uses their connectors.
Apple had a magnetic 'safety' connector which they copied from Japanese rice cooker manufacturers. The difference? The Japanese version worked for hundreds of millions of cookers whilst the Apple version had problems.
The 3-pin connector commonly found on the PSU's of PC power supplies was designed by HP who donated it's exclusivity to make a real standard connector found throughout the world.
'Standard' connectors have to meet stiff criteria which Apple products can't always meet. Witness their burned connectors.
You lot were all warning us how Flash was a 'defacto' standard when Apple were telling us it was a "bad thing", and that without it the internet is 'not complete, and yet here we are, the iPod is the most popular PMP on the market, with by far the largest market share (what, if it's no Micros~1 market share, it doesn't matter?!) and it's connector is the 'defacto' standard that other manufacturers choose to base their products on, and this is a "bad thing"! Hypocrite! You are full of it.
Friends who have and some that still work for Jobs have said that he's an a$$hxxx. But he's one a$$hxxx that they would want to work for.
Give Jobs credit in that he has a skill to spot good ideas and good talent.
Outside of Apple, Jobs was responsible for Pixar which later got bought by Disney.
400 million and counting
At what point does the iPhonePod connector become a standard? Oh wait, when it's free of course.
You get what you pay for my boy - do you really want USB? Three different plugs + 3 different speeds with no analogue out, because all your peripherals have to do their own DtoA then ;-)
Only Exxon Mobil to go, and that's just another 45 billion away (one oil spill should do it).
he didn';t say it was
He said it was "a" standard, not an international standard, open standard, IEEE standard, or anything of the like. Simply that Apple has standardized on the connector, and opened it up to device manufacturers everywhere. It is a proporietary conenctor and use of it requires permission and royalties, but it is standard across an entier line of products and 3rd party adapters.
"open standard", "royaly free standard" and simply "standard" are NOT tro be confused.
Now, if you want to talk about "industry" standards that are not open:
- 1394 is a royalty incurring connector
- HDMI is a royalty incurring connector
- SCSI is a royalty incurring connector
- SAS/SATA ditto
- IDE ditto
- USB was initially, but is now free (though the chip behind it is not)
- PCI? yup
- ExpressCard? yup
- DisplayPort: royalty free, but still "licensed."
- RJ-11/45, yup.
Oh, Apple's FaceTime APIs and protocols: free.
The Apple 30 pin dock conenctor is not listed in IEEE or another standards body as a connector. Why? Well, it was developed entirely within Apple, with no 3rd party support. IEEE managed standards are almost exclusively when multiple companies pool patents together to share royalties. At the time the dock conenctor was developed (originally for Mac Laptops btw), no other laptop vendors supported 1394 onboard, but apple saw that as critical to their design. Sony, Toshiba, IBM, and others all had their own proprietary dock conenctors. Apple chose to make their own as none of the others had the required components. Later, the original iPod inherited this connection, and the idea of apple docking stations was dropped. later still the iPods discontinued use of firewire entirely, but for backwards compatability, the connector was maintained. With the iPhone 3GS, the power pinouts were changed, and have limited compatibility with older devices, butolder cables do stil work with newer phones and iPods. Apple may one day switch to a miniUSB3 conenctor, but at this time, chipset availability and power/heat requirements of that chip are too limited to reliably include in a phone or pocket device. Another issue with using USB, the voltage limits of both USB2-HighPower and USB 3 do not conform to charging devices while under heavy loads. The iPhone 3GS, 4, and iPad can all draw more power in real time than USB alone can support. Apple (as well as HTC and others) choose to use higher power wall worts, and some limited intel motherboards support higher USB voltage output, but that support requires not only power output, but in-line chips to detect support else it might fry other USB devices. Use of the dock connector eliminates user confusion. It will accept power from USB, high power usb, and all aopproved 3rd party adapters at yet higher wattage. An iPhone in a standard USB port might take hours to charge, but on an aproved connector, less than 90 minutes. The connector also allows 3rd party devices like cars, speakers, alarm clocks, keyboards, and more to be used, without the need to customized USB driver stacks and custom software. Certain types of input are simply supported natively, without drivers, at the hardware level, which can not be done on USB.
AAPL is overvalued in the extreme ...
The current price/earnings (P/E) ratio is 23.71 ... Not what I would consider a good investment.
yeah, lets all listen to a guy called jake on theregister.co.uk forums about how good the evaluation of apple is rather than bloomberg of any of those other guys, I mean, bloomberg is way out of their depth here....
Not so bad
Companies like Google and Yahoo have a similar P/E.
Compare with Amazon (P/E: 66), or Baidu (P/E: 102)!!
Actually, most of them are sheep, and just go with the herd. They often don't know any more than jake does about whether a company is a good bet or not.
Personally, I think that Apple can't really grow much more and may even see a slide. Apple survive by being ahead of the game, by making products which are innovative. The problem is that eventually products reach a point of maturity, and then what you deliver compared to your competitors isn't that much different, but they're not attaching a premium price to it.
Look at iPhone 4 and iPhone 3. It's an improvement, but not by much. The screens and storage will get to the same point that megapixels on compact cameras reached, where no-one upgrades because the difference between 12mp and 8mp is almost academic.
I can see iPad 2 having a camera and more storage, but then what?
Apple's valuation isn't even based on "Apple keep making as much cool stuff as they are now". It's more like "and another 50% more than that". A lot of companies had their time in the sun. Record companies made a fortune when CDs came along. Camera companies made a lot in the transition to digital. It could be that Apple goes back to being a niche manufacturer 5 years from now.
The market value
is, according to Jake, 24x higher than their actual profit. While this still means they're very, very profitable it also means that they're probably riding a wave of popularity- this is how companies become so hugely overvalued.
The thing with waves is they break and come crashing down again. Once Apple's lost its shine- which is already starting (the 3Gs is seen by many as just as good as the iPhone 4... which means people are actually evaluating iPhones on their merits now, so the rest of the market suddenly comes into focus for them. And the iPad has nowhere near the iPhone's scale for constant updates and re-releases)- they'll have a really bad time. Their sales projections will be much lower than predicted, causing a massive drop in share price as it tumbles towards a "safer" 1:1 P/E ratio. This tumble will be pretty sharp- once it starts to drop a lot of people will try to sell because it's currently in this precarious situation.
So no, I wouldn't invest in a company that's coming to something of a peak when it comes to market popularity- especially when it's success depends on that market popularity. The iPhone doesn't even have any cache associated with it any more. No exclusivity. No market-leading, superlative features. The sales of Mac computers are fuelled by iPhone and iPod sales, so they'll drop too.
Alternatively, Chris Thomas Alpha, I could be totally wrong. They could continue to grow and... actually, no. They've no real businessy stuff or embedded stuff and to enter that market would be death for such a style-heavy company. And it's the businessy stuff and embedded systems that ultimately rule the world.
If you think I'm wrong, go take out a loan and buy a stack of AAPL shares. I mean you seem pretty sure they're certain to rocket up! Bloomberg say they'll top out $100ish a share higher than they are now- it's a sure bet! Bet you won't, though.
Not according to me, according to NASDAQ:
Apparently "Chris Thomas Alpha" (and the like) can't tell the difference between "a good long-term investment" and "I'm a consumer with no clue beyond ... ooh, shiny".
Its the touch interface, and
...the 'there's an app for that' functionality in a 'safe' regulated space. The show never ends!
who is not a user nor a fan of apple products, I cannot deny the work that Steve Jobs has done.
Looking at it from a business point of view, 13 years ago, Apple were against the ropes with dodgy product lines and a business model people didnt want to be a part of.
Steve comes back and flips the company on its head.
Morally and ethically people could have issues with Apple. However, what about all the people that Apple have kept employed during these recent hardships, and no doubt have employed more in recent years.
If there is anything positive about Apple that I see, its that.
Well played Apple....I still wont buy your sh1t though :D
And at the same time Steve Jobs ran and built Pixar from a company he bought from George Lucas for $5m (with an additional $5m capital injection) into one that won 24 Oscars and he sold to Disney for $7.4bn in 2006.
Very good point
It is a demonstration that even in this economy a company that wants to have a future needs to look up towards future products, not down at cost savings.
Cost cutting may please the city for a couple of quarters, but ultimately it will lead to a defeat by competitors who invested into the future instead.
Market cap != Company Size
Journalists are very quick to throw around Apple's market capitalization as a figure of total company size. Market capitalization is simply one indication. It is more a market perception of value than an actual value/book value.
What a lot of people don't realise is that unlike most other companies, Apple does not pay dividends (and hasn't since 1995). This keeps it sitting on a huge cash reserve. Even given this huge cash reserve, the market cap is around 6 times it's book value.
Due to the lack of dividends, for a return on investment shareholders are far more likely to hold onto shares and that creates a somewhat artificial scarcity of shares and that in turn drives up the price. Due to the simple fact that Apple does not and will not pay dividends, a comparison of company size on market cap alone is not entirely fair.
I do not deny that Apple is a large company, but I do believe that it is quite over valued. In these times, many people are looking for a secure investment and typically companies with high market caps are considered to be quite safe, especially with Apple's 'Reality Distortion Field'. I think in Apple's case, it is too high and it could be set for a bit of a tumble.
But that is just my $0.02.
Yes, the lack of dividends...
paid by cash-rich Apple skews everything. Their market cap is likely more on the order of that of the United States, which is in reality about $USD=ZERO.
Apple is also perched perilously close to the cliff due to Job's health situation. His death will precipitate a plunge in stock price.
Apple, as an investment, is about as viable as Job's health.
Dividend Irrelevance Theory
In some ways you are right, Enterprise Value is a better indicator that Market Cap as it subtracts the value of cash that Apple holds from its value; more cash held, the lower the EV.
Most other companies do not pay dividends, some do, some don't.
Many people believe in the Dividend Irrelevance Theory which states if a company issues divs but wants to reinvest them they will simply buy more shares, or that capital gains in share price due to not paying divs outweighs or equals them anyway (if you pay divs the share price goes down to balance the dividend issue). Moreover, there are benefits of capital gain versus dividends, in that one can get them when wished and not only on management's schedule, but also tax implications (you only pay tax on capital gains when they are realised, not on every div schedule).
I remember a friend telling me how well his SUN shares were doing and it didn't matter that they didn't pay dividends. Where are they now?
Fundamentally you buy shares for the dividend, yes you may buy speculativly on the price but if they never pay a dividend the only way the shareholders get a return is by selling the company.
Pride before the fall?
First off, Apple has to be congratulated on making such a successful business, and whether that is down to Jobs alone is arguable. I do think there will be a big problem when Jobs retires/dies as he doesn't seem to have a successor lined up with either the vision or razzmatazz neccessary. And for those that think Apple is invulnerable, just remember what happened to Sun - a market cap of $200bn at the start of the century rapidly declined to around $4bn due to some bad decisions. If Jobs' successor isn't up to scratch then we could see another record-breaking drop in cap.
It is more a market perception of value than an actual value/book value.?
Perception *is* reality...................
Nobody buys shares for the dividends. They buy them cheap and sell them at as close to their peak as they can get. Then buy something else and repeat the process.
Microsoft only started paying dividends to get people to buy their shares. They're having to increase their dividend to attract more investors.
So lack of dividend suggest confidence as you're not trying to provide incentives for buying your shares.
You start by saying; "Nobody buys shares for the dividends." A pretty big and bold blanket statement which you then refute shortly thereafter with; "Microsoft only started paying dividends to get people to buy their shares."
So which is it? It seems you can't make up your mind. Certainly a lot of people own Microsoft stock and there are roughly 65 million trades each day so they all can't be there for the dividend; but then "nobody buys shares for the dividends". Generally dividends provide minimal risk with price stability along with a modest income but little or no growth. Many mature companies and those that are not in a growth industry pay dividends because they don't plan on a great deal of expansion.
AAPL obviously sees expansion followed by more growth on the horizon and is holding cash to pay for it, hence no dividend in the near future. With five acquisitions in the past year and each in a different field it should be pretty clear that's the plan. The questions that remains is when will they be done shopping and who are they shopping for next. Looking at MSFT they haven't bought anything since December and even then it was all software makers making it very clear they are only interested in software.
That said, with MSFT only having a 5 year dividend yield of 1.8% and a fairly flat stock price is better than most saving accounts nowadays. Needless to say neither MSFT or AAPL is on my shortlist of future buys especially as I recently pulled out of both.
Due to some bad decisions??
That's the understatement of the century. For all we know, McNealy and Schwartz could have been in the pay of IBM. It might sound a tad unreal, but stranger things have happened!
Yes it's time
Sell! Sell! Sell!
Investment trusts, pension funds, those seeking regular income from their portfolio...
But as they only account for over 95% of investors then I suppose your comment is close to the truth - not.
The title is required, and must contain 100% XXX naked Britney XXX.
Other companies which have had a pretty hefty market capitalisation in the past include TheGlobe, Boo, Webvan and Kozmo.
We need a new accounting paradigm
If you've ever wondered what "goodwill" is, it's simply the difference between market cap and book assets. It's the accountant saying "Heck, I don't know why people value this company so much - maybe they just like it. Let's call that goodwill."
I think Apple has taken goowill and applied the Reality Distortion Field to it: I hereby dub Apple's inexplicable market cap to be a product of Goodthink by the fanbois.
Apple make great products,...
... Get over it!
FanMan (i was a feenage fanboi too!!!)
accounting dictionaries... never carried by amateurs...
Roger - goodwill has nothing to do with market cap. It is a difference between book value and acquisition value of a company when it is being purchased by another entity. A premium paid in excess of the book value is 'goodwill' and represents the value of the companies name and possibly their future unrealized earning potential. The calculation has nothing to do with the market cap, since the market is not the purchasing interest in those situations.
Any goodwill Apple might have on their books would be from companies they acquired.
Apple MADE good products.
Diamond Rio pre-dates the Apple iPod and even the Rio wasn't the first MP3 player. The thrust of your argument is right, though, as evidenced by how much of an improvement visually the early iPods were over the fussy Rio's styling.
Pity that the pretty iPod is so flawed by the ugly (to use) iTunes software.
What was Lehman Brothers market cap before the fall?
Market cap doesn't tell anything about a company. It just measure how investor perceive it. I guess Enron and Lehman Brothers had excellent market cap...
It's looking at "artificial" data instead of a company fundamentals that made financial market so dangerous.
>"Market cap doesn't tell anything about a company. It just measure how investor perceive it"
Since Apple doesn't pay dividends, it doesn't have investors, just speculators.
The important distinction is that an investor will tend stick with you, at least until the next dividend. A speculator will clear out the instant they don't think your share price is still headed upwards. When you *only* have speculators, that can make for some pretty spectacular changes in your cap.
Well that's all well and good...
But surely it is revenue that counts? Like all things Apple, isn't share price just an interpretation of the company value and its product worth?
In terms of revenue, and indeed profit, Apple is well outside the top 100 or and probably 200. Even the likes of Tesco and Unilever bring in more money than Apple (and PetroChina nearly double that of Apple).
According to who ?
very odd , according to this they are the 197 th larggest company !!! ???
Revenue != market cap
The Fortune Global 500, according to which Apple was 197th last year, ranks companies according to REVENUE, which is the total amount of money people have paid this company. The first one on this list is Wal-mart, with 408G$, and Apple is 197th with 36G$.
It is very different from EARNINGS, which is revenue less expenses. Gazprom is first on that list, with 24G$, and Wal-mart only comes in 9th with 14G$, because it has smaller margins. Apple must be around 70th with 5.7G$, because it has high margins.
Then, you have the MARKET CAPITALIZATION, which is roughly how much the investor think the company is worth. It is rather abstract and depends not only from revenue and earnings, but also of where the company seems to be headed. For instance, Research in Motion has a relatively low market cap, despite the fact that it is still making a lot of money, because investors assume that in 2012, all the smartphones will be iPhones or Androids, and Blackberries will have disappeared. You do not buy a house if you think it will burn tomorrow. Apple has a huge market cap, because investors assume that everybody is going to buy iPhones in the near future.
That is all
So what happens...
...when the bubble bursts?
Ok, so *when* it bursts (it will, they always do - basic economic theory 101 and Apple is no exception) what's going to be the effect on the rest of the industry? MIght be interesting to see the carve up...
But think, in the days before the burst what can we expect to look for...I guess it won't take much, a few nervous share holders who escape from the cult of Jobs; a nervous trader; questions at a board or shareholders meeting about a dividend?
Or will it be the realisation that the iPhone is a technology that Nokia, Motorola, Sony etc made 5 years previously *and* you have buy all the functionality (cleverly called applications) that were already present in the other manufacturers' phones.
Anybody remember NeXT?
didn't think so.
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