It's all about the re-investment. I've got some stock that my grandma gave me back when I was a kid and I really only own 29 shares but through dividends my portfolio has a value of over 70 shares.
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Apple Now Worth More Than Google
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It's all about the re-investment. I've got some stock that my grandma gave me back when I was a kid and I really only own 29 shares but through dividends my portfolio has a value of over 70 shares.
Since we're apparently in "stupid mode" now, then I have to say, your logic and math are both kind of stupid. First, Apple doesn't seem to know what to do with their cash. They are just hoarding it, which is not productive. Second, a modest dividend of $1.00 per share would cost Apple under $1 billion a year, which is far less than their cash hoard is growing. Finally, a dividend does not impede growth, it rewards investor patience.
Can we pull the quote by Bill Gates about people never needing more than 640K of memory? Maybe he was talking about toasters. I know my toaster runs fine on just 640K memory, but I would still love a 1MB toaster so it would brown evenly.
well ... from a valuation stand point -- YES --- the earnings are what determine if a company will stay at it's level.
BUT efficient market hypothesis suggests that price (which is a reflection of market cap) reflects that true value -- since value is a matter of perception and agreement by buyer and seller
Humans aren't efficient and neither is the stock market though. Hence why it is possible to consistently make money in what is a zero sum game.
Or how about the IBM owner back in 1938 said he could see a need for maybe 5 computers in the world.
No its about Developers, Developers, Developers.
Sorry, but with all the quotes going around on this thread, I could not resist.
Your first sentence just threw that in my head......It's been a long day..........
You maybe correct, I don't know enough about this. I did see a report that companies that don't pay dividends tend do better in the long run. Was this wrong?
ROA is what counts
Anybody who has taken a 1 week finance course realizes that what counts is not market cap, or revenues, but return-on-assets (ROA).
ROA is the measurement that tells you how well a company is managed. It's a percentage that indicates that for every dollar a company has in it's control, how much money can the management make?
Assets = buildings, cash, inventory in stock, accounts receivable, etc. Good management maximizes cash and minimizes inventory and accounts receivable.
ROA = income (profit) / assets.
For AAPL, ROA for 2007 was $4.6 bn/25.3 bn = 18.2%
18.2% is phenomenal. Anything in the mid-teens = great management.
For Dell, ROA for 2007 was $2.6 bn/25.6 bn = 10.2%
10.2% is pretty good. It's gotten better since Michael has come back to run the show. Not time to sell the business yet.
For MSFT, ROA for 2007 was $14.4 bn/63.2 bn = 22.8%
This is beyond phenomenal. It means MSFT is a money-making machine. I would argue AAPL is appropriately valued, but MSFT is under-valued. If you want a buying opportunity, buy MSFT.
Flamers: I am a total Apple FanBoi. Using Macs since 1994, I currently own 2 running Macs (and an old iBook), 3 iPods, my wife has an iPhone, we have an AppleTV, a bunch of Airports, and I've converted at least 3 people to the fold. I am not a troll, just reporting the numbers.
Anybody who has taken a 1 week finance course realizes that what counts is not market cap, or revenues, but return-on-assets (ROA).
ROA is the measurement that tells you how well a company is managed. It's a percentage that indicates that for every dollar a company has in it's control, how much money can the management make?
Assets = buildings, cash, inventory in stock, accounts receivable, etc. Good management maximizes cash and minimizes inventory and accounts receivable.
ROA = income (profit) / assets.
For AAPL, ROA for 2007 was $4.6 bn/25.3 bn = 18.2%
18.2% is phenomenal. Anything in the mid-teens = great management.
For Dell, ROA for 2007 was $2.6 bn/25.6 bn = 10.2%
10.2% is pretty good. It's gotten better since Michael has come back to run the show. Not time to sell the business yet.
For MSFT, ROA for 2007 was $14.4 bn/63.2 bn = 22.8%
This is beyond phenomenal. It means MSFT is a money-making machine. I would argue AAPL is appropriately valued, but MSFT is under-valued. If you want a buying opportunity, buy MSFT.
Flamers: I am a total Apple FanBoi. Using Macs since 1994, I currently own 2 running Macs (and an old iBook), 3 iPods, my wife has an iPhone, we have an AppleTV, a bunch of Airports, and I've converted at least 3 people to the fold. I am not a troll, just reporting the numbers.
The great Warren Buffett has never paid a dividend at Berkshire Hathaway. His thought is that you only pay a dividend if the company can't find a better way to invest the money to then generate even more profit and thus raise the stock price even more.
Beats me.
which is like saying that nobody asked for my opinion
I didn't mean for it to sound that way
what was stupid (if i remember correctly) apple had $2 billion in the bank! making all its assets worth a mere $0.2 bil
You've deduced MSFT is under-valued based on ROA alone? I don't understand. MSFT's ROA could remain at 22.8% with the stock costing twice as much. Market cap absolutely does count, it's the second component to assessing whether a company is under or over valued. The end point to company worth estimates is not ROA, it's the current revenue and the future growth. You may derive the latter from ROA but if you wish, but in itself it is not the most important means of assessing a company's prospects. You have to use various means to make an accurate assessment.
That depends -- how do you define "do better?"
And how long have you been making this argument? How much of your own money do you have invested in MSFT?
Berkshire Hathaway is fundamentally an investment holding company. You cannot compare them to a manufacturer of consumer products. Even so Buffett's rule-of-thumb for when dividends should be paid holds here. Apple accumulates cash with no apparent plans to use it to expand the company's business. If they did, I would not be arguing for a dividend.
The fall of Dell was predictable. They're whole business plan was to essentially drive their profits to zero. Commoditize computer manufacturing. It worked while they were the first, but there are a lot of companies that are perfectly happy running on lower margins than Dell can survive on.
Much better to have the Apple model-- anyone can outsource their business, but not everyone can continuously innovate.
In the same way the Dot Com boom brought huge innovation because the money was flowing without accountability, Google is accomplishing the same thing single handedly.
To some extent their frenetic development is serving the company quite well-- as long as they're seen as friendly, cool and innovative, people will use their one product.
Much better to have the Apple model-- anyone can outsource their business, but not everyone can continuously innovate.
I think you're selling Google a little short here-- they do a tremendous amount of R&D, and they produce one of the most valuable products out there: quality search. The fact that they've really only got one revenue stream doesn't discount the fact that they have a stack of talent and have improved my life significantly.
Now this is an interesting concept I hadn't thought of before-- with MS hating Google as much as they do, and owning the browser market, I wonder if they'd considered putting ad blocking into IE.
I bought in around the same time with this strategy: once I've made enough on the stock to buy an iMac, I'll sell. You may be holding a bigger financial profit, but the stock I bought back then changed my life.Split-adjusted basis around $5.00 a share, since we seem to be showing off.
I'm convinced they don't know where they're going, but they're making boat loads of money and seeding it everywhere they can. They're stock price has no where to go but down but they'll be remembered as a huge influence on the next decade-- not just because of hype, but because of their randomly targeted innovation.
In the same way the Dot Com boom brought huge innovation because the money was flowing without accountability, Google is accomplishing the same thing single handedly.
To some extent their frenetic development is serving the company quite well-- as long as they're seen as friendly, cool and innovative, people will use their one product.
I don't work for Google, but it seems to me that the Beta thing is cultural. An indication that nothing is ever complete-- we're still innovating here. Or maybe a nod to their shareholders that it's not done because they haven't figured out how to make money from it yet.
I don't know about consistently. But I agree -- humans are not efficient and they can beat the market.
But i don't know if valuation is the way to do it either.
There is a lot of work being done in mechanism design and experimental economics -- really cutting edge stuff ... the math can get a little confusing if you calculus ends at first year though
Google is plugged into such a hefty revenue stream that a lot of people assume that they can do no wrong. But when we get down into the details, we find them pursuing a great many projects which are not obviously directed towards making more money for them, and many of them never seem to get completely finished anyway.
That is freakin' amazing.
Just think...
You start a business and roughly 25 years later it's worth $157 BILLION!!!!
That's gotta give a satisfying feeling
I think Apple should cut a check for every family in America for $100 to offset the economy. Its only fair because they are a large company making billions in profits from us while we buy their over priced machines.
i wish to know what will Dell say about Apple's success now. Somebody should really interview him.
come on it was 10 years ago
whats .8 billion between friends
also they lost .8 bil in a quarter at that time, so both could be correct