chicagdan said:
I still haven't stopped laughing from that one. Buddy, have you ever worked for a corporation or owned a share of stock? How old are you? And have you ever heard of something called fiduciary responsibility? In a nutshell, that means you can be sued if you act without regard to your investors -- meaning stockholders.
Believe me, there's not a single person who works in Infinite Loop who doesn't have the Apple stock price widget on his or her screen all day ... and probably a running counter for the value of his or her stock options right next to it. Those stock options created a lot of paper millionaires in the past year and many of them make life changing decisions based on the price of those options when they become available to exercise.
Apple has a PE ratio of 60 to 1. Do you understand PE ratios? If you did you'd know that a normal one is around 20 to 1, meaning that Apple is trading on a lot of speculation of future growth. Intel processors you say? No, that's last year's news, already factored into the price.
Apple's stock took off this year because the iPod took off like a rocket. But how much more iPod growth do you think the company has left? If they double their home computer market share, does that come anywhere close to justifying a 60 to 1 PE ratio?
Don't mock my analysis when you clearly know nothing about investing or corporate strategy. If you think Apple can muddle along selling computers and iPods ad infinitum without stockholders revolting, I can only say that I'm happy you don't actually work for the company.
Where in the world are you getting a pe ratio of 60? Perhaps your analytical skills are decent, but your reading skills aren't.
For the second time (posted this once before in this thread), Apple has a P/E of 48. And its forward P/E is (based on estimates) is about 33. I really have no idea where your numbers are coming from. But don't take my word for it:
http://finance.yahoo.com/q/bc?s=AAPL&t=5y
And to use term fiduciary duty in this context is misguided. Officers have a fiduciary duty to the owners(stockholders) to act in their best interests. Typically, they try to do so by increasing earnings and consequently, increasing returns. And they usually do that by improving the company and executing, whether through organic growth, acquisitions, stock buybacks, dividend increases, whatever. Which is exactly what I said. Perhaps in a roundabout way the stock price is important to them. However, they do not sit around and say things like "if we don't release a plasma tv/computer, our stock price is going to drop 2 points" or "what can we do to get the stock up over 80" or "this new iPod is going to add 10 points to Apple stock." But they do think to themselves, if they have the stock options you talk about, that if they do their jobs well, the company will do well, and their options will do well. And they do think things like, "this new product or process could add 10% to the bottomline." So I suppose in that sense your right. And, to be fair, they do(or did) think the way you describe at some companies. Like Enron. And Worldcom.
What I did say is that Apple officers look to do what is best for the company and execute. If they do so, the stock price will take care of itself. AND guess what, they are then taking care of their fiduciary duty to the shareholders. Funny how that works.
Oh and your wrong about fiduciary responsibility. It means that its your duty, as an officer of the company, to act in what you believe is the best interests of the owners, typically stockholders. Typically they do so by maximizing shareholder return. However, fiduciary responsibility does not mean maximizing sharehholder return.
Apple stock price took off in 2003. Not just 2005. Again, I suggest your use your analytical skills and try looking at a chart. A lot of investors use this thing called a chart. The iPod took off "like a rocket" well before this year. In fact, the biggest gains in Apple stock were not this year, but 2004. I guess you were late to the party.
As for"muddling along selling computers and iPods ad infinitum" Apple, and its stock, has done quite well for the past 3 years doing just that. And as far I know the stockholders haven't revolted. They aren't even muttering...
And as for your analysis of the iPod and dap market, I think you need to do some research. It is projected to double again this year. At least. I'd say that is some decent growth driver for the stock. And considering the overall market for Walkman-type devices was well over 100 million units, the dap market still has some legs.
Sounds like as a shareholder, I'm the one that should be glad your not working for the company. Sounds like you'd have Apple on a ruinous, reactive course, responding to competitors willynilly. Apple tried that once before, and it almost bankrupted them. Oh, or maybe throwing off dividends to "appease" the shareholders, while neglecting the core business. GM has done that for years, and the results have been spectacular...
Oh, and as for "have I worked for a corporation or owned a share of stock" the answer is yes and yes. Not that it really matters here. But you asked. And in fact, I my portfolio, with, among other things, its 6000 shares of Apple, is pretty decently sized, though, in the investing world, I would hardly call it huge. And btw, Apple is no where near my largest holding. Not even close. Though it does seem to be growing every day.
Oh and if my prior post came across as mocking your analytical skills, I apologize, since I was merely questioning it. This post however, is a different story...
