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Tuesday
Apr202010

Apple (AAPL) Is A Long-Term Buy

DateTuesday, April 20, 2010 at 03:26PM

Apple reports earnings after the close today and just about everyone is expecting blowout numbers.  An onslaught of positive developments from Apple has served as a major catalyst for the stock price over the past few months: from iPad mania to a revamped Macbook Pro line to recent announcements around iPhone OS 4.0 and coming hardware updates to the iPhone 3GS.  That being said, when compared to a basket of “peers,” Apple’s stock price still looks very reasonably valued (see analysis below).

Apple (AAPL)currently has a PE of 20x expected 2010 earnings (based on an average of 40 analysts).  That’s a PEG Ratio (PE to Growth) of 1.1x, compared to the average PEG Ratio of 1.4x on a basket of Apple peers consisting of Google (GOOG), Amazon (AMZN), Cisco (CSCO), HP (HPQ), and Microsoft (MSFT). Among these peers, only Google has a lower (very slightly) PEG Ratio at 1.0x.

We also think there is a very strong halo effect occurring in which long-term Windows supporters are (will be) switching to Macs based on their extremely positive relationship with other Apple products (iPods, iPhones, and now, iPads). This, coupled with the fact that Apple is currently armed with $25 billion of cash (no debt) and delivers a superb 32% Return on Equity (17% Return on Assets), makes the stock a compelling long-term investment at its current valuation.

AuthorCraig | CommentPost a Comment |
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Wednesday
Feb102010

Bill Gates Doesn't Get the iPad: Its About the Media Stupid

DateWednesday, February 10, 2010 at 10:35PM

AllThingsD has a post on a BNET interview about the iPad with Bill Gates. AllThingsD points out that Gates has long been an evangelist for tablet PCs, but that he’s not impressed by Apple’s new variation on the device. Referencing the BNET interview, AllThingsD says: Gates–who evidently finds the iPad neither magical nor revolutionary–diplomatically dismissed it.“You know, I’m a big believer in touch and digital reading, but I still think that some mixture of voice, the pen and a real keyboard–in other words a netbook–will be the mainstream on that,” Gates said. “So, it’s not like I sit there and feel the same way I did with iPhone where I say, ‘Oh my God, Microsoft didn’t aim high enough.’ It’s a nice reader, but there’s nothing on the iPad I look at and say, ‘Oh, I wish Microsoft had done it.’”

How could Bill Gates (and so many others) not understand that the iPad is, first and foremost, a media consumption device? The iPad will only be as good as the media that can be consumed on it and the user experience associated with consuming that media (ease of use, cost, etc). Much of this will be driven by Apple's unmatched iTunes, which offers a near flawless experience for accessing music, movies, TV, audio podcats/books, and soon "physical" books with the launch of iBooks, and, of course, apps/gaming. This is what seperates Apple's products from any other "media gadget." It is also why the iPad cannot be compared with previous incarnations of a tablet device. Those were all focus on offering a PC-like experience, not a media consumption experience (partially due to the fact that digital media simply was not available to be consumed the way it is today).

Read the full AllThingsD post here: http://digitaldaily.allthingsd.com/20100210/bill-gates-on-ipad/

AuthorCraig | CommentPost a Comment |
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