Apple’s valuation isn’t at risk any time soon 3 May 2012 Its $550 bln market cap is mind-boggling, but the fast-growing iPhone maker nevertheless trades at an absurdly low 12 times earnings. A new Breakingviews calculator shows how even if growth and margins decline improbably fast, Apple should still be worth far more in 2016.
It’s too soon to be doubting Apple 24 Apr 2012 Fears over a slowing U.S. smartphone market and chip problems sent investors scurrying in April. But the company smashed expectations yet again, almost doubling profit in the latest quarter. The trends powering Apple - China, rising margins and the halo effect - still have legs.
3D printing deal enhances sector depth illusion 16 Apr 2012 Making items from digital files is a hot technology - maybe too hot given the market reaction to Stratasys’ deal for Objet. Despite few cost cuts and an odd poison pill, the buyer’s shares rose some 25 pct on the promise of revenue synergies. But the future isn’t quite here yet.
So what’s Apple really going to do with its cash? 19 Mar 2012 It will hand about $45 bln to shareholders over three years, mainly as dividends. That’s a good start. Yet Apple could make $50 bln in free cash flow this year. With sales and profit rocketing - and the bulk of its $100 bln hoard still stuck overseas - bigger payouts will follow.
Apple’s latest iPad looks sufficiently incremental 7 Mar 2012 The new tablet device comes with a sharper screen, more powerful chip and better camera. The update is evolutionary, not revolutionary. That may disappoint gadget fiends hoping for something more. But history suggests it should be plenty for Apple investors craving growth.
Apple needs good, not just better, supply chain 7 Mar 2012 Despite the bad press, Chinese workers preparing the iPad 3 are treated less badly than many in electronics - which in turn beats the toy and clothing sectors. But with the “lonely leadership” of Apple’s brand and cash, doing things relatively well isn’t enough.
$500 bln valuation may still be only half an Apple 28 Feb 2012 The market cap of the world’s largest company is edging toward that landmark threshold. But it could just be a pit stop on the way to $1 trln. A quick tour of Apple’s other eye-watering numbers explains why.
Apple ties Cook into Jobs’ boots – at a price 10 Jan 2012 The maker of functional but expensive gadgets now has a $376 mln CEO retention plan to match. Tim Cook will get that if he’s around for a decade. He deserves much after standing in for Steve Jobs, and Apple needs continuity. But in future the board can pay Cook more like Jobs.
Next digital tidal wave target: 3D objects 28 Dec 2011 The ability to turn music, books, films and newspapers into easily transferable electronic files up-ended these industries, destroyed old businesses and created new ones. The rise of printing technology now threatens to wreak similar havoc on producers of physical things.
Canaries in Q4 earnings coal mine looking sickly 9 Dec 2011 DuPont and Texas Instruments now expect weaker fourth quarters. Both say customers in most sectors are reducing inventory to be conservative and raise cash. U.S. multinationals’ earnings have been surprisingly robust – but these bellwethers suggest that may be changing.
Oracle needs to read Cisco cautionary tale 5 Dec 2011 Empires built on acquisitions can run into problems as they sprawl. That’s doubly so in tech, where obsolescence is a risk. Oracle has used database profits to buy new businesses. So far, so good - but Cisco’s record suggests success will be hard to sustain.
Buffett’s IBM has rare mix of growth and value 15 Nov 2011 Berkshire Hathaway’s investment success is built on common sense stock picks such as the tech-turned-consultancy firm. But only four other global large-cap stocks match Big Blue’s downhome growth-and-value qualities of a sort so admired by the Sage of Omaha.
IBM bet doesn’t mean Buffett’s tech spots changed 14 Nov 2011 The Oracle famously avoids tech stocks but bought a $10.7 bln stake in Big Blue. Once at the cutting edge of supercomputers, IBM just pulled out of a next-generation project. It’s now a predictable, well-branded consulting firm. IBM’s investment profile evolved, not Buffett’s.
Apple effect far greater than $350 bln market cap 6 Oct 2011 The company changed the world several times. It introduced the spreadsheet, made computers into consumer goods and its phones helped make the Cloud realistic. Jobs’ genius for design and user-helpfulness turned IT from nerdish to uber-cool. Apple has been tech’s good Pied Piper.
Jobs, no ordinary CEO, leaves no ordinary company 6 Oct 2011 The force behind the iPod, iPhone and iPad not only created and then rescued Apple, building it into the most valuable tech company on the planet. He also changed the way people live. It’s a rare entrepreneur who leaves that legacy – and a company that can thrive without him.
Can Microsoft be trusted not to buy Yahoo? 5 Oct 2011 The Internet group is gently looking for buyers for bits of its business or the whole shebang. Microsoft boss Ballmer would be remiss not to run the ruler over his strategic partner. But shareholders may justifiably wonder if he can refrain from another overpriced acquisition.
HP would make lucrative Oracle target 3 Oct 2011 A selloff has left HP vulnerable, possibly even to Larry Ellison’s firm. HP is cheap, despite its pricey deal for Autonomy. Even paying a 40 percent premium, Oracle could reap a hefty 16 percent return on investment, a Breakingviews analysis suggests. And that’s before any cost savings.
HP’s lack of direction continues apace 29 Sep 2011 The battered U.S. tech firm, now led by Meg Whitman, has hired Goldman Sachs to fend off activists. And Oracle is baiting HP, suggesting its offer for Autonomy is profligate and the UK firm’s CEO forgetful, at best. An uppity investor with a strategy could be just what HP needs.
Amazon and Apple’s historic paths collide 28 Sep 2011 The online retailer’s cheap new Kindle Fire tablet reflects the company’s roots - it’s a tool for the sale of content. Apple, by contrast, used music and movies to hook customers into buying its gadgets. The two currents are now clashing, and survival requires strength in both.
Patent spats getting pricier for tech shareholders 23 Sep 2011 The likes of Apple and Samsung are spending millions to sue each other. But new research shows it’s the trolls that own little more than legal rights to inventions levying the heftier toll on investors and innovation. It’s more evidence of why patent law needs to change.