Thursday, January 24, 2013

Apple, the Company

Apple stock will open something like 8% lower this morning because their quarterly financial numbers were only the records they expected. They bring in over $4 billion in sales per week with a gross margin over 38%, they have more than a quarter of their market value in cash (and liquid securities), and their price to earnings ratio is creeping to under 10! By most valuation measures, even those for steel companies and food producers, a price to earnings ratio of 10 or less is a good buy. Of course, the stock market is rarely about real value, it's about prices. Just look at Zynga.

Regardless, it is interesting that Apple continues to hoard cash and build up it's savings account. I'm just wondering what the board is planning to do with that $137 billion that they keep adding to every month. Buy Facebook with a market capitalization of $67 billion? Perhaps Google or Microsoft, both in the $230-245 billion range? I mean, what better way to expand as a technology company than own the two largest operating systems in the world?

Disclosure: I am long (I own) AAPL. Plus, at this price with these sales and earnings I might buy more.

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