Tuesday, January 24, 2012

Apple is simply amazing


Apple today announced earnings and revenues that far exceeded expectations—once again. As the above chart from MacRumors shows (HT: John Gruber), the biggest source of revenue gains was iPhone sales, which totaled over 37 million units in the latest quarter. And as Matt Richman notes (HT also to John Gruber):

In 2009, Apple sold more iPhones than it did in 2007 and 2008 combined. In 2010, Apple sold more iPhones than it did in 2007, 2008, and 2009 combined. Last year, Apple sold 93.1 million iPhones, slightly more than it did in in 2007, 2008, 2009, and 2010 combined. The pattern continued.

The pattern: "iPhone sales double with every new model."


Here's the history of Apple's share price, including today's after-hours gain of (only) 8%. It's amazing to me that a company that has more than doubled its revenues and its profits in the past year can trade at this morning's PE of 12, with an expected PE of only 12. Moreover, as Bloomberg notes, "per-share profit for the quarter was more than the company earned in any fiscal year before 2010." Is this the greatest American growth story ever, or what?

If you focus on the almost $100 billion that Apple now has in cash, and subtract the taxes necessary to bring the offshore portion of that money back to the U.S., Apple shares ex-cash are trading in after-hours right now for a PE of only 10.5.

Conclusion: this is a very pessimistic market.

P.S. Alert readers may note that my "favicon" is a miniature graph of Apple's stock price. Long-time readers will know I've been an Apple fan for more than three years.

16 comments:

Dr William J McKibbin said...

Apple is a testament to exporting labor overseas -- not a single iPhone or iPad is manufactured in the US at this point -- for that matter, no computers are manufactured in the US at this point -- US electronics manufacturing has learned from Apple's success and has abandoned the US completely at this point (except perhaps in the defense sector) -- it's all good for dividends -- the new economy requires CEOs to export all labor except what is essential in the US -- it's a winning formula for electronics manufacturing, no doubt -- those with world-class skills in the US will still find jobs at premium wages -- everyone else in the US should either acquire world-class skills, or get ready to live within poverty wages throughout the remainder of the century -- I'm just being a realist...

Dr William J McKibbin said...

PS: Acquire dividend and rent-earning equities now while they are cheap, and invest yourself and your children into world-class skills that earn premium wages -- that's today's winning formula for we mortals in America...

Public Library said...

It is also a testament to the current state of America. Kids and adults alike with thousand in credit card and little savings running around with iPhones and iPads.

Kudos to Apple but kind of ironic at the same time.

Benjamin said...

I had an interesting conversation yesterday with a Brazilian. He said if Steve Jobs had been born in Brazil he would be running a successful restaurant (or the like)---that's how closed off options are in his nation.

That's how great the USA is---a Jobs can create an Apple.

It is also a reminder that none of us in America are truly self-made. We can make it as we have a government that creates a sound infrastructure and rule of law, and educated workforce.

Junkyard_hawg1985 said...

How long until the government steps in to squelch Apple in order to "protect" us?

Scott Grannis said...

If there is one thing about Apple that worries me, it is that government is going to mess things up. We got a hint of that last night in Obama's SOTU, in which he complained that too many companies are outsourcing jobs, and suggested we need "incentives" for companies to bring them back. This "incentives" could easily take the form of punishments for those unwilling or unable to comply. Obama, like socialists and statists everywhere, cannot resist inserting government into anything and everything that happens to come under the spotlight.

Benjamin said...
This comment has been removed by the author.
Benjamin said...

Obama's SOTU was mediocre at best, and lacked the proper zeal for free enterprise, but it was nice to hear a US president talk about ending wars rather than starting them.

When you are down $4 trillion and counting on Iraqistan, even a socialist like Obama begins to look okay.

The Dems want to fix all the problems of the USA with government. The GOP wants to fix all the problems of the world, with US government.

Can we fix less "problems"?

Seth said...

About the favicon ... i see the new one in Firefox, but not Chrome. Quite odd.

Donny Baseball said...

I agree, the gov't can screw up AAPL too and may eventually. More to the point, it is just bad luck that the company is delivering mindboggling growth precisely at the point when the market chooses not to reward that sort of thing. Someday the market will and who knows what AAPL will be up to then, it may be doing more of the same, it may be stubbing its toe. Even though folks have made good money in AAPL, they could've made alot more in a different place and time. AAPL missed it's window, it's the greatest capitalist story precisely when capitalism is under attack. It is the greatest story of dynamism precisely when stasis is being pressed down onto the world by ruling elites.

Benjamin said...

Interesting move by Bernanke today in announcing he will keep interest rates low through 2014. It is more transparent, and I agree with that.

However, we know from Japan that low rates alone are not enough. Even set amounts of liquidity are not enough, as Friedman told them (and Bernanke, Meltzer and Taylor).

It does no good to say "we have pumped so much air into the tire, it should not be soft now." What matters is what is the tire pressure. You pump to the pressure, not for a set period of time. Fed chiefs should work in a tire shop as apprentices.

The monetary tire pressure is still very low. Inflation is dead, until labor costs are falling, GDP is limp. Real estate is half off, and the DJIA below 1999 levels. Soft, dudes, soft.

It is sad to se the Fed fail us now, as they are bombarded by hoary encrusted shibboleths about the sacredness of paper currency and scoldings by pettifogging gold nuts.

Obtaining zero inflation (as we have) while fighting recession is not a victory. It is abject failure---as we know from Japan.

Benjamin said...

Imagine how this "pessimistic" market would turn around if Bernanke also announced ask that the Fed would buy $100 billion a month in bonds for the foreseeable future.....

sgt.red.blue.red said...

We are more than happy to see, as shareholders in AAPL, its stellar performance and results, in excess of expectations, for its fourth quarter results.

It's great to see that the top two (market cap wise) corporations are U.S. domiciled.

ws4whgfb said...


http://www.nytimes.com/2012/01/26/business/ieconomy-apples-ipad-and-the-human-costs-for-workers-in-china.html?_r=2&pagewanted=all



In China, Human Costs Are Built Into an iPad
...

“We’re trying really hard to make things better,” said one former Apple executive. “But most people would still be really disturbed if they saw where their iPhone comes from.”
...
Employees work excessive overtime, in some cases seven days a week, and live in crowded dorms. Some say they stand so long that their legs swell until they can hardly walk. Under-age workers have helped build Apple’s products, and the company’s suppliers have improperly disposed of hazardous waste and falsified records, according to company reports and advocacy groups that, within China, are often considered reliable, independent monitors.

More troubling, the groups say, is some suppliers’ disregard for workers’ health. Two years ago, 137 workers at an Apple supplier in eastern China were injured after they were ordered to use a poisonous chemical to clean iPhone screens. Within seven months last year, two explosions at iPad factories, including in Chengdu, killed four people and injured 77. Before those blasts, Apple had been alerted to hazardous conditions inside the Chengdu plant, according to a Chinese group that published that warning.
...
Mr. Lai’s college degree enabled him to earn a salary of around $22 a day, including overtime — more than many others. When his days ended, he would retreat to a small bedroom just big enough for a mattress, wardrobe and a desk where he obsessively played an online game called Fight the Landlord, said his girlfriend, Luo Xiaohong.

Those accommodations were better than many of the company’s dorms, where 70,000 Foxconn workers lived, at times stuffed 20 people to a three-room apartment, employees said. Last year, a dispute over paychecks set off a riot in one of the dormitories, and workers started throwing bottles, trash cans and flaming paper from their windows, according to witnesses. Two hundred police officers wrestled with workers, arresting eight. Afterward, trash cans were removed, and piles of rubbish — and rodents — became a problem. Mr. Lai felt lucky to have a place of his own.

sgt.red.blue.red said...

ws4whgfb said.. quoting NYT article ...

Just the kind of hit job on the private sector you'd expect from the 'Slimes'.

I'm sure those job positions were oversubscribed. If there were better opportunities for employment, they'd take them.

Here in America, people sit around and wait for the 'ideal' job situation while they draw long term (taxpayer assisted) unemployment benefits, so they can pay back the huge college debt they've built up while they wait to land one of those great public sector jobs.

Maybe if we had that kind of work ethic, we'd be producing more here, negating the need to be borrowing so many dollars from the Chinese.

Those workers, if they came to the U.S., would run circles around the 'holier than thou' hand wringers.

sgt.red.blue.red said...

Addendum to two posts immediately preceding.

What's going on with Apple's critics, and why we are hearing about it now.

By Rich Karlgaard, Feb. 2 WSJ
Hope this takes. If not, page A11.

In Defense of AAPL's China Plants