AAPL at 6x After-Tax Earnings?

Well, 80% of Apple revenue comes from iPad, iPhone and iPod. iPod is slowly being absorved by iPhone anyway. So it’s not a stretch to say that Apple is now a mobile device company. The arguments that apply to iPhone should generally apply to iPad, if you ask me.

http://www.macrumors.com/2013/01/23/apple-reports-best-quarterly-results-ever-in-q1-2013-13-1-billion-profit-on-54-5-billion-in-revenue/

I wish there was some way to measure strength of Apple brand, and I wonder how much of this brand loyalty will taper off in the post Jobs world.

brand loyalty is a tricky thing to measure. i think BB has better brand loyalty due to its defendable keyboard, which is quite useful if you write a lot of texts/emails. is BB’s loyal base large enough to ensure profitability, probably not, but IMO they’re more loyal.

i think analysts have to measure brand loyalty progressively. many may say they’re loyal today… that is until something cooler comes along. very few are truly loyal in that they will suffer through poor product just to own that company’s brand. only BB10 owners can say they’re truly loyal.

AAPL has an awesome app offering. they have a great offering the laptop, tablet and phone markets. how long will it take for an equally as good app offering to arise? how long will it take for a single company to have a great offering in the laptop, tablet and phone markets? i bet they’ll be several companies with intuitive and price competitive options in all markets very soon. look at HPQ, DELL - they used to be kings until competition arrived and a market shift took place. who knows the impact that Google Glass may have. maybe it’ll dethrone AAPL as a mobile device leader. there’s a lot of what ifs. combine this with the high valuation relative to its peers and AAPL can’t be expected to have incredible amounts of upside. I think at $500-$600, it is difficult to own the stock, and will be for quite some time. at $400, it may be a better risk/return to just buy the S&P.

I haven’t run the numbers, but if this was after my Level 2 I would be. I’d normalize the EPS/PE ratio using a ‘mean’ profit margins (don’t know if I’d use 10 year smoothing or what, I’d have to figure that out. Probably do a senstivity analysis of this assumption) and see the valuation. Apple isn’t going anywhere but it may not be a “great” company anymore. But I’d “rather buy a good company at a great price than a great company at a good price.”

margins margins margins. 3.1% revenue beat but less than 1% earnings beat. margins far lower than expected. margins also guided to be 0.5-1% less than expected in next quarter. so long as margins continue to fall, AAPL will not find a bottom. BB offered a fantastic lesson on this just 1 year ago. nobody, i mean nobody on the planet, thought that BB would touch $6 when it was trading at $100, $70 or even $30 for that matter. i’ll say again, i’d prefer a mobile hardware company with stable or improving marigns, not falling.

Margins are not that important. High margins are always unsustainable, a lower margin business tends to be more stable and resilient.

Margin direction is very important for determining stock price direction. As with many things, it is not as much about the level as about the trajectory.

Q2 revenue beat by $1.5 (?) billion, but Q3 guidance went down by $3 billion. So still bad news overall! However, they also announced an enormous stock buy back - I wonder what their stock price would be today without that.

Wheres Blake at to rip apple a new one? Given he’s big data, I trust his opinion on going concern quality of their devices.